Dow down in early trading; Citigroup to help borrowers

By Jon Ward (Contact) | Tuesday, November 11, 2008

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U.S. markets on Tuesday morning dived once again, with the Dow Jones Industrial Average dropping more than 200 points in its first hour of trading, as financial institutions across the credit and consumer markets continued to absorb major damage.

The Dow was down 229 points, or 2.59 percent, while the stock-heavy NASDAQ was down 40.46 points, or 2.5 percent. The S&P 500 had fallen 25.38 points, or 2.76 percent.

Global markets were also down Tuesday. The main stock indexes in Britain, France and Germany had all fallen on the day by almost five percent each.

Late Monday, Citigroup became the second bank in a week to announce measures aimed at reducing the number of foreclosures on mortgages they hold, in an effort to reduce losses.

The bank said that they will not initiate foreclosure proceedings, or complete a foreclosure sale, on any borrower who wants to stay in their home as long as it is their principal residence, they have enough reliable income to make affordable payments, and they are working in good faith with Citigroup.

JPMorgan Chase announced last Friday that they would cover $110 billion in loans through a similar mortgage-refinancing program.

The bad news from financial institutions has come in waves already this week.

General Motors said it was at risk of violating debt payments after its stock fell Monday to its lowest point since 1946. The plight of the Big Three automakers prompted President-elect Barack Obama to ask President Bush on Monday to do more to help them, a step the Bush administration so far has been unwilling to make.

Mortgage behemoth Fannie Mae, meanwhile, reported on Monday that they are losing money so quickly that they may need to tap a special $100 billion fund set up by the Treasury Department to protect them from becoming insolvent.

And American Express was given approval by the Federal Reserve Bank to become a bank-holding company, opening the way for the credit card company to receive capital infusions from Treasury.

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