Spring Break
Bailout hits home: WKU Foundation could lose WaMu corporate bond
Christina Howerton
Issue date: 10/7/08 Section: News
The WKU Foundation might lose a $120,000 bond because of the crisis in the financial industry, said Tom Hiles, vice president for institutional advancement.
He said the corporate bond is invested in Washington Mutual.
Corporate bonds are bought by companies and paid off through interest, according to investorwords.com.
The bond holder makes more money if interest rates rise, Hiles said.
That bank failed and was taken over by government officials on Sept. 25 before congress passed the bailout bill to aid troubled banks, The New York Times reported.
JP Morgan Chase bought Washington Mutual from the government, The New York Times reported.
Officials aren't sure if they will receive all, part or none of that bond, Hiles said.
He said they aren't optimistic about a full return.
So far, the Washington Mutual bond is Western's only bond that is in danger, but officials are looking at other vulnerable financial areas and making adjustments, Hiles said.
The U.S. Treasury Department will appropriate $700 billion dollars to bailout troubled firms, said William Davis, chair of the economics department.
Those firms are suffering because lenders approved too many loans for mortgages that borrowers couldn't pay back. Then those mortgages defaulted, the Herald reported.
Davis said the bailout bill, which passed last week, allows the treasury department to purchase mortgage assets from those firms.
The affects of that bailout won't be noticeable right away, Davis said.
Davis said government officials will spend several weeks deciding how to appropriate the money from the bill.
"It might be months before we know if we're on the right track," he said.
But banks will be more careful about how much money they lend, Davis said.
Davis said the crisis hasn't seriously affected Bowling Green yet.
He said residents will notice in about a year that requirements to get loans for purchases such as cars and mortgages are tougher.
Government and financial industry officials hope to fix the banking system, Davis said.
"There are some things that we want to make sure we don't do again," he said. "We don't want to restore it as it was and repeat mistakes."
Ann Mead, vice president for finance and administration, said the financial crisis hasn't affected university funds outside of the WKU Foundation because state laws protect them.
Western's funds will only be affected to the degree that the crisis affects the whole economy, Mead said.
Reach Christina Howerton at news@chherald.com.
He said the corporate bond is invested in Washington Mutual.
Corporate bonds are bought by companies and paid off through interest, according to investorwords.com.
The bond holder makes more money if interest rates rise, Hiles said.
That bank failed and was taken over by government officials on Sept. 25 before congress passed the bailout bill to aid troubled banks, The New York Times reported.
JP Morgan Chase bought Washington Mutual from the government, The New York Times reported.
Officials aren't sure if they will receive all, part or none of that bond, Hiles said.
He said they aren't optimistic about a full return.
So far, the Washington Mutual bond is Western's only bond that is in danger, but officials are looking at other vulnerable financial areas and making adjustments, Hiles said.
The U.S. Treasury Department will appropriate $700 billion dollars to bailout troubled firms, said William Davis, chair of the economics department.
Those firms are suffering because lenders approved too many loans for mortgages that borrowers couldn't pay back. Then those mortgages defaulted, the Herald reported.
Davis said the bailout bill, which passed last week, allows the treasury department to purchase mortgage assets from those firms.
The affects of that bailout won't be noticeable right away, Davis said.
Davis said government officials will spend several weeks deciding how to appropriate the money from the bill.
"It might be months before we know if we're on the right track," he said.
But banks will be more careful about how much money they lend, Davis said.
Davis said the crisis hasn't seriously affected Bowling Green yet.
He said residents will notice in about a year that requirements to get loans for purchases such as cars and mortgages are tougher.
Government and financial industry officials hope to fix the banking system, Davis said.
"There are some things that we want to make sure we don't do again," he said. "We don't want to restore it as it was and repeat mistakes."
Ann Mead, vice president for finance and administration, said the financial crisis hasn't affected university funds outside of the WKU Foundation because state laws protect them.
Western's funds will only be affected to the degree that the crisis affects the whole economy, Mead said.
Reach Christina Howerton at news@chherald.com.
Be the first to comment on this story