Global crisis deepening: IMF Chief

[---]

Global crisis deepening: IMF Chief IMF head Dominique Strauss-Kahn says global financial crisis worse that originally believed, and worsening.
March 17, 2008: 10:13 AM EDT


<div align='center'>
</div>PARIS (AP) -- The collapse of a Wall Street institution over the weekend shows the global financial crisis is broader than policy makers realized and it is growing worse, the head of the International Monetary Fund said Monday.

"The financial crisis which started in the United States is more serious and more global than it was a few weeks ago," IMF Chief Dominique Strauss-Kahn said in Paris.

"The risks and dangers are very high. The economic environment is still worsening."

The current crises will require a "global answer," Strauss-Kahn said.

JPMorgan Chase & Co.'s, backed by the U.S. government, bought Bear Stearns Cos. for the shockingly low price of $2 per share, or $236.2 million over the weekend. U.S. regulators fast-tracked the deal to keep Bear Stearns out of bankruptcy. A complete bank collapse, which traded at $30 on Friday, could easily have crushed already-dwindling confidence in the global financial system.

Strauss-Kahn spoke at a conference on structural reforms in Europe organized by the Organization for Economic Cooperation and Development, or OECD.

U.S. economic forecasts will be downgraded by both the IMF and the OECD, said Strauss-Kahn and Angel Gurria, the OECD chief, in a joint news conference.

Worry about the damage of the growing credit crisis led the Federal Reserve to make a rare weekend move, lowering a key lending rate before Wall Street opened Monday.

The Fed cut the discount rate, its lending rate to financial institutions, to 3.25% from 3.5% effective immediately. The Fed also created another lending facility for big investment banks to secure short-term loans that would be available to big Wall Street firms on Monday.

Both Strauss-Kahn and Gurria approved the move as an appropriate response.

The Bank of England on Monday offered an extra 5 billion pounds _ around $10.1 billion -- of reserves for short-term money markets because of the dire conditions.

The U.K.'s benchmark FTSE 100 dipped 2.5% to 5,493.8 while France's CAC 40 slid 2.7% to 4,473.39. Germany's DAX slipped 3.4%. Financials were especially hard hit, with Switzerland's UBS down 14.5%.

Dow Jones industrial average fell 125.38 at the opening.

http://money.cnn.com/2008/03/17/news/inter...on=money_latest