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September 12th, 2008

Why Is Major Financial News Announced Over the Weekend?



The bailout of Bear Stearns occurred on a Sunday evening. The takeover of Fannie Mae and Freddie Mac was announced late last Sunday morning. The latest news about a potential buyer of Lehman Brothers said it could happen as early as this weekend. Why are most of the major financial developments announced over the weekend?

The simple answer is you never want to risk panicking the markets on a Monday. It’s much easier for regulators to strategize and plan when the stock market is closed and quiet. Developments that formulate over the weekend have more time to be planned out without the potential flux of the stock market to worry about.

It also allows the market to digest the news and prepare the best it can for the change that has happened — it gives traders and investors a sense of their position and strategy before Monday morning. A Monday morning panic could result in a swift loss of billions of dollars.

The government announced they will help Lehman Brothers search for a buyer, but has no plans in assisting them the way they did Bear Stearns or Fannie and Freddie. If no buyer can be found, the Fed and the Treasury Department will be forced to assess Lehman’s systemic risk in accordance to their potential affect on other financial institutions. If the failure of Lehman presents too much of a risk to another entity, the government may be forced to step in, much to the chagrin of taxpayers.

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Tim Manni

Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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