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According to analysts at Merrill Lynch (stock ticker: MER), the announced deal that Citi will acquire Wachovia´s banking businesses should be very favourable. Nevertheless, Wachovia (WB) will wait for Citi´s shareholders to vote in favour of this arrangement.

Citi (stock quote: C) will immediately become the third branch banking player in the US and the largest US depositary, since it would have $1,2 trillion of deposits, versus $0,9 trillion of JPM (JP Morgan Chase). Read the rest of this entry »

Rescue plan defeated on Capitol Hill; Dow falls 777 points

Despite pleas from President George W. Bush and leading lawmakers from both parties, the U.S. House of Representatives voted 228-205 against the $700 billion rescue plan. The development sent markets plunging — the Dow dropped 777 points — and left leading lawmakers scrambling. Only 65 Republicans, or about a third of those voting, supported the plan, while 140 Democrats, about 60%, said yes, although many voiced concerns. Both presidential nominees, Sens. John McCain and Barack Obama, supported the bill.

Citigroup buys Wachovia’s banking operations for $2.2 billion

Citigroup (stock ticker: C), with help from the U.S. government, agreed to acquire the banking operations of Wachovia for the cut-rate price of $2.2 billion. Wells Fargo, which also was in the running for Wachovia — one of the largest lenders in the U.S. — pulled out of negotiations. The move makes Citi the biggest retail bank in the U.S., with more than 4,300 branches and $600 billion in deposits. Read the rest of this entry »

Ireland officially tumbles into recession

In the first half of 2008, Ireland’s economy suffered a 1% contraction, making it the first nation in the eurozone to officially be in recession since the credit crisis began. “As expected, lower levels of new house building had a major restraining influence on growth in the second quarter, as is evident from the very weak investment figures,” a government representative said. “Other factors at work include higher commodity prices, global financial market problems, weak demand in our major trading partners and adverse exchange rate movements.”

Talks on rescue plan stall with GOP dissent

Talks on the $700 billion rescue plan broke down when a bloc of GOP legislators broke ranks with the Bush administration. A plan by House Minority Leader John Boehner, R-Ohio, drew attacks from Democrats, who said he was working on behalf of Republican presidential nominee Sen. John McCain. The impasse came just hours after the White House announced an agreement had been reached on the fundamentals of the deal.

Academic economists oppose $700 billion rescue plan: 

Many economists disagree with the premise of a $700 billion Wall Street rescue plan being pushed by Treasury Secretary Henry Paulson and the Bush administration. About 200 academic economists have signed a petition opposing the plan. The economists say the proposal could create unintended incentives, that it is overly vague and that its long-run effects are not clear. Read the rest of this entry »

Price of crude oil soars a record $25

At one point Monday, crude oil was up more than $25 a barrel. It closed at $120.92 in New York, an increase of $16.37. While investors rushed to oil and other safe havens, the U.S. dollar and the Dow Jones index fell. The drop in equities came as experts questioned the effectiveness of the U.S. government’s rescue of financial markets.

Japan’s MUFG plans to buy as much as 20% of Morgan Stanley

Morgan Stanley (stock ticker: MS) agreed to sell as much as a 20% stake in itself to Mitsubishi UFJ Financial Group. The price of the deal would be based on the U.S. investment bank’s book value after due diligence is completed by the Japanese bank. Morgan Stanley Chairman and CEO John Mack said the combination would help both financial institutions expand globally. Read the rest of this entry »

Goldman Sachs, Morgan Stanley become bank-holding companies

The Federal Reserve said in a statement Sunday night that Goldman Sachs‘ and Morgan Stanley’s applications to become bank-holding companies were approved. The move effectively put an end to the industry of independent investment banking, although boutique security firms remain. The Fed will have oversight of and lend to Morgan Stanley and Goldman. The firms also will be subject to bank-capital requirements.

Australia, Taiwan, Netherlands join short selling ban

After crackdowns in the U.S. and the U.K. on short selling, Australia, Taiwan and the Netherlands announced restrictions to the strategy. Australia banned short selling of any stock, Taiwan plans to restrict short selling of the market’s 150 top stocks and the Dutch regulator prohibited naked short selling of banks for three months. The U.S. Securities and Exchange Commission is expected to alter its temporary ban on short selling. Read the rest of this entry »

COMPLETE fraud as U.S. Government takes over two entities that have sufficient reserves to meet obligations for six quarters and are nowhere near bankruptcy.
Major Class Action lawsuits will begin shortly.
Secty of the Treasury Paulson announced two weeks ago that both FRE/FNM had enough in reserves and that there was not a problem. Citi and Lehman also reported their analysis that FNM/FRE had sufficient reserves.
Only warning former FED. RESERVE chairman Greenspan (who works for a hedge fund that earned 12-billion dollars last year shorting financial stocks). We also were privy to a completely unsubstantiated White House and Treasury “leak” via an article in Barons. If White House was aware of a problem…they should have stopped trading two weeks ago instead of having Secty of Treasury Paulson calm investors that FRE/FNM had enough reserves and did not warrant government intervention.
We must initiate CLASS ACTION LAWSUITS or have the government reimburse investors who relied on government issued reports that failed to warn of any impeding government take-over.
Bear Sterns had a $10. bailout….government is responsible for this massive decline in equity position of both FNM/FRE AND should be held accountable.
This is no different then when Russian Government took over privately held oil conglomerate.
SEC must investigate and Supreme Court must rule on this illegal and unauthorize seizure of a privately held entity.

The past week has been very positive for FRE/FNM . Freddie Mac (stock ticker: FRE) gained 60% last week, and Fannie Mae (stock quote: FNM) gained 41%.

I will list the positive points sequentially below with links explaining why these mortgages companies are a strong buy right now:

1.Naked shorting soon to be banned permanently and the ban enforced.
http://www.cnbc.com/id/15840232?video=833966553

2.The intense and “urgent” negative media campaign by those hedge funds wishing to aquire the 5 trillion in assets of FRE/FNM for nothing has failed
http://online.wsj.com/article/SB121979831489375015.html?mod=hps_us_at_glance_columnists

3. Many big funds have much increased their FRE/FNM holdings including Lehman, Credit Suisse, Citi, and UBS
http://www.mffais.com/fnm.html

4. The debt Offerings of FRE/FNM have sold well
http://www.bloomberg.com/apps/news?pid=conewsstory&refer=conews&tkr=FRE%3AUS&sid=aK4fcq0RlHGA

Read the rest of this entry »