By James B. Kelleher

By James B. Kelleher

Dusting off Depression-era emergency powers, the Federal Reserve is extending its reach over the economy as never before, pushing the limits of its authority, if not exceeding them.

Bank shares tumbled Tuesday on fears that worse-than-expected third-quarter results by industry bellwether Bank of America Corp. may indicate how others in the sector will fare when they report earnings in coming weeks.

Dusting off Depression-era emergency powers, the Federal Reserve is extending its reach over the economy as never before, pushing the limits of its authority, if not exceeding them.

The former chief lawyer for UBS's investment bank has agreed to pay $6.5 million to settle an allegation that he dumped his investments in auction-rate securities after getting a company e-mail warning that the market was in trouble, state officials said Tuesday.

As the stock market swoons, investors are watching their paper losses mount and their retirement accounts dwindle. As the most trusted names in banking and brokerage have fallen like dominoes — despite reassurances from top executives that nothing was wrong — what message or slogan could possibly reassure a jittery public? The New York Times has the story.

The government's new plan for rebuilding the deposit insurance fund at a time of banking turmoil would more than double the industry's average premiums next year. It also could bring higher costs for bank customers.

The FDIC is considering a plan to increase the fees paid by U.S. banks and thrifts to replenish the deposit insurance fund.

By Muralikumar Anantharaman and Jennifer Ablan

By Muralikumar Anantharaman and Jennifer Ablan

Amid ebbing public confidence in banks, the head of the FDIC promises there will be no cost to taxpayers if the agency needs to borrow from Treasury to cover the new increase in the federal deposit insurance limit to $250,000.

The head of the FDIC says the new increase in federal deposit insurance limits will not solve all banking industry ills but will bolster public confidence in banks' safety. And she said a resolution was near in the legal tussle between Citigroup and Wells Fargo over which one will buy Wachovia.

Disgraced CEO Richard Fuld, who oversaw the demise of venerable Lehman Brothers that helped tip the credit crunch into a full-blown crisis, will testify at a congressional hearing this week.

As the credit crunch weighs on the financial services sector, credit card issuers are tightening lending terms with consumers, from lowering borrowing limits to closing dormant accounts, to lower their risk profile.