NEWS AT A GLANCE
Paulson details Fannie and Freddie takeover
Treasury Secretary Henry Paulson said the U.S. is taking conservatorship of Fannie Mae and Freddie Mac, in perhaps the largest government bailout in U.S. history. Fannie and Freddie's CEOs were forced out, shareholders lost most of their investment, bondholders will be fully compensated, and the firms will be barred from lobbying Congress. Each firm may get up to $100 billion in government capital. (The New York Times) Most of the restructuring decisions will be made by the next administration. (Bloomberg) China and Japan, the No. 1 and No. 2 holders of Fannie and Freddie debt, lauded the plan. U.S. investors were more skeptical. "The takeover of Fannie and Freddie is actually a testament to how broken the financial system is at this time," said Merrill Lynch economist David Rosenberg. (Reuters)
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Washington Mutual ousts CEO
Washington Mutual's board of directors ousted CEO Kerry Killenger, after the nation's largest thrift lost as much as $19 billion in mortgage-related assets and saw its stock price fall 85 percent over the past year. Alan Fishman, the chairman of commercial mortgage broker Meridian Capital Group, has been tapped as Killenger's replacement. Killenger has been CEO since 1990. (The Wall Street Journal) But with all the recent bad results, “we've been surprised that it hasn't come sooner,” said Patrick Becker Jr. at Becker Capital Management in Portland, Ore. (Bloomberg) Lehman Brothers also shook up its management, replacing the global head of its fixed income division and CEOs for Europe and the Middle East. (Reuters)
Global markets jump on U.S. bailout
Asian markets closed sharply higher today after news of the U.S. takeover of mortgage giants Fannie Mae and Freddie Mac bolstered investor confidence. Japan's benchmark Nikkei 225 index closed up 3.4 percent, the Hong Kong Hang Sang index rose 4.3 percent, and Seoul's Kipsi jumped 5.2 percent. European markets were also up sharply in early trading. (AP in Yahoo! Finance) The London Stock Exchange, however, suffered a computer failure that halted trading in the middle of a broad rally that had the FTSE-100 index up 3.8 percent. “Today's meltdown from the LSE couldn't have come at a worse time,” said London-based trader Sejal Patel at CMC Markets. (Bloomberg)
Outside world, 1; Hollywood, 0
In the slowest weekend at the U.S. box office in five years, the Nicholas Cage movie “Bangkok Dangerous” took top honors with a relatively paltry $7.8 million. The weekend after Labor Day is usually slow, said Paul Dergarabedian of Media by Numbers, “but this year was really significantly slow—people were distracted by [political] conventions, the weather, and the fall television season.” (Los Angeles Times)
