BEIJING, Sept. 19 (Xinhua) -- As the ongoing widespread credit crisis threatens the very survival of many renowned financial institutions, the most pressing and also the hardest job is to restore the already collapsed investor confidence, analysts say.

    The mortgage crisis in the United States last summer has caused serious upheavals in the financial sector in the country and the rest of the world, with many banks facing bankruptcy.

    The collapse of Lehman Brothers Inc. and the sharply falling share prices of HBOS, Britain's biggest mortgage lender, have made the situations more sensitive and jittery investors now become more cautious when making investment decisions.

    The process to rebuild market confidence can be painstaking and determination to make systematic overhauls is needed to breeze new life into the beleaguered financial sector, analysts say.

    LACK OF TRANSPARENCY CAUSING CONFIDENCE CRISIS

    "It was a problem at the very core of the financial system which in size and scale meant everyone was affected and from which no-one escaped," said an article appeared on the CNN website.

    The article titled "Banks vulnerable as 'rotten' foundations crumble" argued that the basic financial instruments that make up the core of the world's investment banks are problematic.

    The operation at an investment bank has to be transparent for investors to be able to judge for themselves, it said.

    What's happening now is nobody knows for sure "if counterparties to deals are financially secure and will be around tomorrow," it noted.

    The opinion was echoed by Hector Sants, Chief Executive of the Financial Service Authorities (FSA), regulator of all financial services providers in Britain, who also believed a lack of transparency in asset management has led to a loss of confidence.

    "The loss of confidence was, in many ways, due to a lack of transparency and understanding, with both sellers and buyers of products forgetting the golden rule of 'don't sell or buy a product you don't understand,'" he said.

    WORLD JOIN HANDS TO FACE SQUEEZE

    Authorities around the globe have taken emergency actions to quell the upheavals.

    The U.S. Federal Reserve, the European Central Bank, the Swiss National Bank, the Bank of England, the Bank of Canada and the Bank of Japan Thursday pooled up to 247 billion U.S. dollars to rescue the plummeting stock market.

    The U.S. government is considering a more comprehensive solution to the financial crisis. Reports said that Treasury Secretary Henry Paulson is mulling the formation of a vehicle like the Resolution Trust Corp. which was set up during the savings and loan crisis in the late 1980s and early 1990s.

    Buoyed by Paulson's rescue plan, the Dow Jones industrial average Thursday jumped 410.03 points, or 3.86 percent, to 11,019.69, and the Nasdaq Composite Index shot up 100.25 points, or 4.78 percent, to 2,199.10.

    In the latest developments, the U.S. Securities and Exchange Commission's new rules against abusive short selling of stocks in all publicly traded companies have also taken effect.

    British financial regulator has also adopted a similar measure, announcing on Thursday a ban on short-selling against financial companies on the London Stock Exchange to quell speculation.

    "We have taken this decisive action, after careful consideration, to protect the fundamental integrity and quality of markets and to guard against further instability in the financial sector," said Sants.

    FUNDAMENTAL CHANGES DEEMED NECESSARY

    Among all the measures to ensure order on the stock market and boost investors' sense of security, analysis pointed out that what matters was whether or not they could effectively repair the instruments of the financial institutions and make operations in banks more transparent.

    Otherwise, they said, the rescue could only be partial with some banks getting saved while others going bust, and their effect would not last.

    That can also help explain a widespread sense of perplexity among Americans when the U.S. government Tuesday provided a loan of 85 billion dollars to bail out insurance titan American International Group Inc. (AIG), only two days after the venerable Wall Street investment bank Lehman Brothers went bankrupt as the government refused to offer a helping hand.

    The U.S. authorities are becoming increasingly aware of a "systematic problem" in its financial market.

    "What we are working on now is an approach to deal with the systemic risk and the stresses in our capital markets," Paulson said Thursday at a brief Capitol Hill news conference.

    "We talked about a comprehensive approach that will require legislation to deal with illiquid assets of the United States on their balance sheet," he said.

Feature: Wall Street at crossroads

People walk past the New York Stock Exchange September 15, 2008. (Xinhua/Reuters Photo) Photo Gallery>>>

    NEW YORK, Sept. 17 (Xinhua) -- Tuesday, Sept. 16. It was meant to be a desperate day, especially for some people on Wall Street.

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U.S. stocks rally on possible financial crisis rescue plan

    NEW YORK, Sept. 18 (Xinhua) -- Wall Street rallied Thursday as news the U.S. government is considering a more comprehensive solution to the financial crisis.

    Reports said that Treasury Secretary Henry Paulson is considering the formation of a vehicle like the Resolution Trust Corp. that was set up during the savings and loan crisis of the late 1980's and early 1990's. Full story

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The exterior of the world headquarters for Lehman Brothers can be seen in New York, May 19, 2008. (Xinhua/Reuters Photo) Photo Gallery>>>

    BEIJING, Sept. 17 (Xinhuanet) -- Barclays Plc on Wednesday announced that it had agreed to a 1.75-billion dollar deal to buy bankrupt Lehman Brothers Holdings Inc's North American investment banking and capital markets businesses.

    The deal, which saves around 10,000 jobs on Wall Street, came two days after Lehman filed for bankruptcy protection after it was unable to find financing or fresh capital to shore up its balance sheet. Full story

U.S. Treasury announces debt auctions for central bank 

    WASHINGTON, Sept. 17 (Xinhua) -- The U.S. Treasury Department announced Wednesday it will begin selling bonds for the Federal Reserve to help the central bank deal with unprecedented borrowing needs resulting from the current credit crisis.

    The first auction to raise cash for the Fed will take place later Wednesday and will be for a total of 40 billion dollars, according to Treasury officials. Full story 

Fed puts up $85 bln loan to rescue AIG 

   BEIJING, Sept. 17 (Xinhuanet) -- The U.S. Federal Reserve announced Wednesday that the Federal Reserve Bank of New York will lend an 85 billion-U.S. dollar-bridge-loan to American International Group Inc. (AIG) to save the country's biggest insurer from bankruptcy.

   The U.S. government, according a source quoted by the reports, is trying to rescue the troubled insurance giant to stave off a bankruptcy because if AIG fails, it could trigger a wave of problems for banks around the world, and could throw the global stock markets into the ugliest chapter of the financial meltdown. Full story

U.S. Fed holds key interest rate steady at 2%

    WASHINGTON, Sept. 16 (Xinhua) -- The Federal Reserve decided Tuesday to hold a key interest rate steady at 2 percent even as the collapse of the nation's fourth-biggest investment Lehman Brothers sent financial markets at home and abroad tumbling.

    The U.S. central bank has kept the interbank overnight interest rate unchanged at 2 percent since April to help the economy recover from a deep housing market decline and sharp lending pullback. Full story