House Rejects Bailout Package, 228-205; Stocks Plunge

By CARL HULSE and DAVID M. HERSZENHORN

WASHINGTON — In a moment of historic import in the Capitol and on Wall Street, the House of Representatives voted on Monday to reject a $700 billion rescue of the financial industry. The vote came in stunning defiance of President Bush and Congressional leaders of both parties, who said the bailout was needed to prevent a widespread financial collapse.

The vote against the measure was 228 to 205, with 133 Republicans joining 95 Democrats in opposition. The bill was backed by 140 Democrats and 65 Republicans.

House Rejects Bailout Package, 228-205; Stocks Plunge....

FDIC Announces Citigroup to Buy Wachovia

By Binyamin Appelbaum, Neil Irwin and Howard Schneider
Washington Post Staff Writers

Citigroup has agreed to buy Wachovia bank in a deal backstopped by taxpayers and brokered by the Federal Deposit Insurance Corporation to avoid another major corporate failure in the midst of the ongoing financial crisis.

Citigroup will pay the Charlotte-based Wachovia about $2.16 billion, or $1 per share, for its banking operations. Wachovia will retain its wealth management and brokerage operations.

The deal boosts Citigroup as a third rival for Bank of America and J.P. Morgan Chase in the new category of financial behemoths that are emerging from the current financial crisis. Those three banks will now control almost a third of the nation's deposits.

FDIC Announces Citigroup to Buy Wachovia....

The Real Costs of the Bailouts

Last week, as federal regulators seized Washington Mutual in the largest U.S. banking failure, Congress was grappling with whether to spend $700 billion of public money to fix the financial industry's troubles.

Lawmakers' initial reaction to the Treasury Department's staggering request: shock. That sum amounts to about a quarter of the U.S. government's annual spending. It's more than the Pentagon's annual budget, more than the nation pays out each year in Social Security benefits and more than the federal government's cost for Medicare and Medicaid.

The Real Costs of the Bailouts....

Big payoffs off table for Morgan Stanley, Goldman

NEW YORK (Associated Press) - The reorganization of Morgan Stanley and Goldman Sachs marks a historic end to a period of investment banks driving Wall Street and leaves open what _ if anything _ will assume the role of taking big risks that have powered the market's booms and busts.

The move to convert to a commercial bank structure will help the two companies avoid the fates of Bear Stearns, Lehman Brothers and Merrill Lynch by giving them broader access to borrow federal money and the ability to build a stable base of deposits.

But it also likely means an end to the sky high profits that were topped by few other companies. The strict rules set by the Federal Reserve will limit opportunities for big payoffs from bets on the price of oil and other investments usually funded with borrowed money.

"The Fed is a much more intrusive regulator," said Brad Hintz, an analyst with Sanford C. Bernstein and a former chief financial officer at Lehman Brothers.

Investment banks provided a wide variety of services from managing initial public offerings to repackaging and selling various forms of debt to trading of stocks and bonds.

They profited from deals completed with borrowed money and took risks that commercial banks either opted not to or were unable to because of regulations.

The absence of stand-alone investment banks will leave a void in proprietary trading, which is when a financial company uses its own money or borrowings instead of clients' cash to complete trades. Those units _ which were often responsible for making billions or losing billions _ placed big bets on interest rate changes and commodities prices.

The investment banks had been the biggest players in such trading. Now, experts expect smaller companies _ including private equity firms and hedge funds _ to take their place.

Big payoffs off table for Morgan Stanley, Goldman....

U.S. Treasury Department Fact Sheet on Plan to Buy Assets

(Bloomberg) -- The U.S. Treasury today issued the following statement on its proposed proposed authority to purchase troubled assets:

The Treasury Department has submitted legislation to the Congress requesting authority to purchase troubled assets from financial institutions in order to promote market stability, and help protect American families and the US economy. This program is intended to fundamentally and comprehensively address the root cause of our financial system's stresses by removing distressed assets from the financial system. When the financial system works as it should, money and capital flow to and from households and businesses to pay for home loans, school loans and investments that create jobs. As illiquid mortgage assets block the system, the clogging of our financial markets has the potential to significantly damage our financial system and our economy, undermining job creation and income growth. The following description reflects Treasury's proposal as of Saturday afternoon.

U.S. Treasury Department Fact Sheet on Plan to Buy Assets....

Gold surges, pulls back in response to credit news

By STEVENSON JACOBS

NEW YORK (AP) — Gold briefly shot above $900 an ounce Thursday as panicky investors poured money into safe-haven assets, but the metal later gave back its gains on a report that the government may move more aggressively to steady the teetering financial system.

Gold had gained over $110 in a frenzied two-day rally, including the largest ever one-day price advance on Wednesday. But late Thursday, after regular gold trading ended, investors began selling and shifting money back into stocks on a report that the U.S. government may create an entity to absorb banks' bad loans.

Gold for December delivery jumped as much as $75.50, or 8.8 percent, to $926 an ounce on the New York Mercantile Exchange before easing back to settle at $897, still up $46.50. In aftermarket trading, prices fell $36.30 to $860.70 an ounce.

On Wednesday, gold rose as much as $90 before settling $70 higher at $850.50 an ounce, the biggest one-day jump ever.

Gold had languished for months, but found new life this week as turmoil in the financial sector dramatically increased with the bankruptcy filing of Lehman Brothers Holdings Inc. and the government's bailout of American International Group Inc. The metal regained its appeal as a safe haven in rocky economic times.

Gold surges, pulls back in response to credit news....

MidAmerican Energy to buy Constellation for $4.7B

By MARK WILLIAMS

Warren Buffett's Berkshire Hathaway Inc. is reaching into its deep pockets to give a steady hand to Constellation Energy Group Inc. and, at the same time, grab a bargain.

Berkshire's MidAmerican Energy Holdings Co. said Thursday that it will buy Constellation for $4.7 billion and give it an immediate $1 billion infusion after shares of the nation's largest wholesale power seller plummeted and liquidity concerns had analysts worried it would go out of business.

"Obviously we're in unprecedented times," MidAmerican President and CEO Gregory Abel said. "Liquidity and solvency issues are a top priority for many companies. We don't have any of those concerns, again, at MidAmerican and Berkshire."

Des Moines, Iowa-based MidAmerican will pay $26.50 per share in cash for Baltimore-based Constellation, well off the utility's 52-week high of $107.97 reached Jan. 8. The shares traded as high as $67.87 last week before hitting a low of $13 Tuesday.

Constellation shares fell 57 cents, or 2.3 percent, to $24.20 Thursday.

The companies planned to sign a definitive agreement by the end of business Friday, and Constellation will receive $1 billion by giving MidAmerican preferred equity, the companies said.

MidAmerican Energy to buy Constellation for $4.7B....

WaMu still weighing sale, capital raising

PHILADELPHIA/NEW YORK (Reuters) - Washington Mutual Inc, the large U.S. savings and loan beleaguered by mortgage losses, continues to explore all options, such as talking to potential buyers or raising capital, sources familiar with the situation said on Thursday.

Washington Mutual has yet to secure a quick takeover bid, although sources cautioned it was early in the auction process.

Potential suitors such as JP Morgan Chase & Co and Wells Fargo & Co have yet to submit formal offers, although negotiations are continuing with several parties that have expressed interest, sources said.

In addition to JP Morgan and Wells Fargo, the possible suitors include HSBC Holdings Plc and Citigroup Inc, a source familiar with the situation previously told Reuters.

WaMu still weighing sale, capital raising....

AIG to Get $85 Billion Loan, Give Up 80% Stake

American International Group will get an $85 billion loan from the federal government in exchange for an 80 percent stake in itself, sources have told CNBC.

Sources said the loan, which will allow AIG to avoid bankruptcy, will be secured and include incentives for quick asset-sales by AIG.

The deal severely dilutes existing shares of the company.

AIG has been racing the clock to avoid a bankruptcy filing on Wednesday, making efforts to work out a deal with the Federal Reserve to shore up its finances.

Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke met with Senate and House leadership Tuesday night to discuss how to assist AIG, sources said.

The Fed's financial aid for the troubled insurer marks a reversal of its decision on Monday to refuse a bridge loan to AIG.

The Fed met with the company's advisers throughout Tuesday and came to a better understanding of what is needed to help the company through its current crisis, people familiar with the negotiations told CNBC.

AIG to Get $85 Billion Loan, Give Up 80% Stake....

Government Officials Said to Consider AIG Conservatorship Plan

By Hugh Son, Craig Torres and Erik Holm

Sept. 16 (Bloomberg) -- Regulators are considering putting American International Group Inc. into conservatorship while the Federal Reserve is in talks about a ``loan package'' as time runs out for the insurer to raise cash, according to three people briefed on negotiations involving U.S. and state officials.

Executives from AIG, bankers and Treasury and Federal Reserve officials were meeting today at the New York Fed, said two of the people, who declined to be named because the talks are private. Treasury spokeswoman Michele Davis declined to comment. David Neustadt, a spokesman for New York State Insurance Superintendent Eric Dinallo, had no immediate comment.

AIG is trying to stave off a collapse after its credit ratings were cut yesterday and shares plunged 79 percent since Sept. 11. Goldman Sachs Group Inc. and JPMorgan Chase & Co., which have led efforts to find a private-sector solution, told the Fed such an effort would be difficult, one person said. The insurer fell another 40 percent in extended trading in New York on concern a government takeover would wipe out shareholders.

Government Officials Said to Consider AIG Conservatorship Plan....

Best Buy to acquire music-sharer Napster

By ASHLEY M. HEHER

CHICAGO (AP) — Napster Inc., the online music community that rose from a dorm room project to became the scourge of the global recording industry, is being purchased by Best Buy Inc. for nearly $127 million as the electronics retailer tries to boost its digital music business.

The $2.65 per share all-cash deal announced Monday is nearly double the music network's Friday closing price but a small sum to pay for Best Buy, which gets access to Napster's 700,000 subscribers who pay a monthly fee to access digital music catalogs.

"It's not a huge investment, but it definitely has brand recognition," said Morningstar analyst Brady Lemos, who said Best Buy also benefits from the acquisition of technical expertise about the digital music industry.

In a statement, Best Buy valued the deal at $121 million, and said the difference was due to unvested employee stock awards at Napster. According to its most recently quarterly filing, Napster had about 47.9 million shares outstanding as of Aug. 8, implying a price of $126.9 million.

Napster, a once-free file-sharing network incorporated in 2000, was a favorite tool among cheap college students earlier in the decade. But as the service gained popularity, the company became the sworn enemy of heavy metal band Metallica and along the way fueled a cultural, legal and political debate about copyrights and intellectual property while at the same time helping popularize digital music.

"We believe Best Buy will be an ideal partner for Napster and are very excited by the benefits that this transaction delivers to our shareholders, partners and employees," Napster Chairman and Chief Executive Chris Gorog said in a statement.

Best Buy to acquire music-sharer Napster....

EA walks away from Take-Two buyout

By BARBARA ORTUTAY

NEW YORK (AP) — Video game publisher Electronic Arts Inc. said Sunday it ended talks to buy smaller rival Take-Two Interactive Software Inc., best known for the "Grand Theft Auto" series of games.

EA, the publisher of games such as "Madden NFL 09" and "Spore," said it decided not to make an offer to buy Take-Two.

Redwood City, Calif.-based EA had signed a non-disclosure agreement with Take-Two in August after letting a deadline for a $2 billion tender offer to buy the company expire.

"EA is tracking toward a record-breaking year," said President and Chief Executive John Riccitiello, in a statement. Spokesman Jeff Brown said Sunday EA is "not at all" disappointed that things didn't work out.

Brown did not say what prompted EA to walk away from the discussions, but he said the company is confident in its own product portfolio. Take-Two, he added, was "never something EA needed."

Since making its offer public in February, EA has maintained that it was offering a "fair and full" price for New York-based Take-Two. And while keeping the total price of the bid at $2 billion, it lowered the original $26-per-share offer to $25.74 to account for restricted shares granted to Take-Two's management.

Take-Two, meanwhile, said the offer undervalued the company, and repeatedly rejected it.

EA walks away from Take-Two buyout....

Bankers say Lehman approaching rivals for lifeline

By JOE BEL BRUNO

NEW YORK (AP) — Its future in jeopardy and options dwindling, Lehman Brothers scoured Wall Street Thursday for a financial lifeline. Top executives contacted banks and rival investment houses about a possible deal to buy the company, bankers and industry executives close to the situation said.

The nation's fourth-largest investment bank, which had tenaciously resisted putting itself up for sale, finally relented after a free-fall in its stock price and growing doubts about whether other financial institutions would continue to do business with it, according to these officials. They asked not to be named because they are not authorized to comment publicly.

Government officials who asked for anonymity because of the sensitivity of the ongoing discussions said that a number of options were being explored and that no decisions had been reached on how any deal involving Lehman would be structured.

Bankers say Lehman approaching rivals for lifeline....

Lehman tries to soothe Wall Street with asset sale

By JOE BEL BRUNO

NEW YORK (AP) — Lehman Brothers put itself on the block Wednesday as part of a last-ditch effort to rescue the investment bank from bad bets on real estate-related holdings that have already laid low other storied Wall Street firms.

The 158-year-old company's chief executive Dick Fuld, known as "the gorilla" for his bloody-minded approach to investment banking, outlined a plan to sell off Lehman's well-respected investment management unit and spin off its commercial real estate assets after it reported an almost $4 billion third-quarter loss.

Fuld, 62, the longest serving CEO on Wall Street, also said the firm would examine all other options — including a sale of the company he joined right out of college. Finding a buyer might pre-empt any hostile takeovers now that Lehman's stock has plunged from $67.73 a year ago to $7.25 Wednesday, giving it a shrunken market capitalization of $7.6 billion.

"If anybody came with an attractive proposition that was compelling for shareholder value, it would be brought to the board, discussed with the board, and evaluated," Fuld said on a conference call. "We remain committed to examining all strategic alternatives to maximize shareholder value."

Lehman tries to soothe Wall Street with asset sale....

US rescue of Fannie, Freddie poses taxpayer risks

By TOM RAUM

WASHINGTON (AP) — President Bush's "ownership society" was never supposed to come to this.

With the government takeover of Fannie Mae and Freddie Mac, U.S. taxpayers now essentially own the bulk of the nation's mortgage market.

This ownership could even lead to a big increase in the national debt — to $15 trillion, up from just under $10 trillion now — if things don't work out as planned.

The government's forced rescue of the mortgage finance giants over the weekend could have many unintended consequences, even though those in both parties — including the presidential nominees, Republican John McCain and Democrat Barack Obama — have greeted it as a necessary evil toward easing the nation's housing and credit woes.

If all goes as planned, it should help make home loans cheaper and more readily available. It also may slow the rate of foreclosures and possibly halt house price depreciation. But that's a big maybe.

US rescue of Fannie, Freddie poses taxpayer risks....

NBC Universal and Google Form Strategic Advertising Partnership

NEW YORK & MOUNTAIN VIEW, Calif., Sep 08, 2008 (BUSINESS WIRE) -- As part of its continuing effort to offer innovative advertising solutions to its clients, NBC Universal (NBCU) will join forces with Google (GOOG)to form a strategic multi-year advertising, research and technology partnership. The two companies will work together to develop more effective advertising metrics, attract non-traditional advertising partners to NBCU and incorporate self-service buying opportunities through the Google TV Ads(TM) advertising platform.

The announcement was made today by Mike Pilot, President, NBC Universal Sales and Marketing and Tim Armstrong, Google's President of Advertising and Commerce, North America.

NBC Universal and Google Form Strategic Advertising Partnership....

99 Cents Only Stores Raises Top Price to 99.99 Cents

By Beth Jinks and Heather Burke

Sept. 8 (Bloomberg) -- 99 Cents Only Stores will raise its top price for the first time in 26 years to 99.99 cents as rising fuel and commodity prices drive costs higher.

The 0.99 cent increase will take place at its 277 stores later this month, the City of Commerce, California-based retailer said today in a statement distributed by Business Wire.

The boost of less than 1 cent is ``in response to dramatically rising costs and inflation,'' Chief Executive Officer Eric Schiffer said in the statement. ``Just as Motel 6 was eventually forced to raise its price above $6, after 26 years we are forced to raise our price by just about one cent.''

Cash-strapped U.S. consumers, faced with rising unemployment, soaring food and fuel costs and falling home values, are bargain-hunting. The U.S. consumer price index jumped by the most in 17 years in the 12 months ended July.

99 Cents Only Stores Raises Top Price to 99.99 Cents....

Liberty Media to spin off satellite, TV assets

By MarketWatch

WASHINGTON (MarketWatch) -- Liberty Media Corp. on Wednesday said it would spin off a part of its business that includes DirecTV and the Starz television channels into a separately traded company.

Those businesses now fall under the umbrella of a unit called Liberty Entertainment (LMDIA:27.53, +0.41, +1.5%) , which trades as a so-called tracking stock. Liberty Entertainment shares were up 1% to $27.34.
Liberty Media trades under three tracking stocks: Liberty Entertainment, Liberty Capital (LCAPA:16.00, +0.07, +0.4%) and Liberty Interactive (LINTA:13.95, +0.32,+2.4%) .

Tracking stocks, which have fallen out of favor in recent years, allow investors to obtain a financial stake in different parts of a business and "track" its performance. Yet the parent company retains full ownership of all the assets. For this reason, the stocks often trade at a discount to actual equities.

Under the parent company's proposal, Liberty Entertainment will be transformed into a separately traded business. Shares of the tracking stock will converted into shares of the new subsidiary in a tax-free spinoff to investors.

Liberty Media to spin off satellite, TV assets....

GM, Ford Drag U.S. Car Sales to 10th Straight Decline

By Mike Ramsey and Alan Ohnsman

Sept. 3 (Bloomberg) -- General Motors Corp. and Ford Motor Co., the biggest U.S. automakers, dragged the domestic industry to its 10th straight monthly sales decline in August as consumers continued to snub trucks because of gasoline prices.

GM dropped 20 percent and Ford was down 27 percent. Each further pared production plans for the rest of the year. Deliveries at their main Japanese rivals, Toyota Motor Corp. and Honda Motor Co., fell less than 10 percent.

A weak U.S. economy, falling home values and gasoline prices near $4 a gallon combined to drop industrywide sales 16 percent, and analysts said they saw little prospect for relief. Hardest hit have been the pickups and sport-utility vehicles that account for most of the volume at money-losing GM, Ford and Chrysler LLC.

``I don't think we've seen the worst,'' said John Casesa, managing partner of Casesa Shapiro Group in New York, in a Bloomberg television interview. ``This has been a long, dismal story, and macro conditions are as bad as they get for the auto industry.''

GM, Ford Drag U.S. Car Sales to 10th Straight Decline....

Oil plunges to near 5-month low

By Catherine Clifford, CNNMoney.com staff writer

NEW YORK (CNNMoney.com) -- Oil futures on Tuesday tumbled to levels not seen since early April on a strengthening dollar and concerns that an economic slowdown has crippled demand for energy.

U.S. crude futures for October delivery dropped $5.75 a barrel to settle $109.71. It was the lowest oil has settled since April 8, according to the U.S. Energy Information Administration.

Oil prices hit their lows for the day early Tuesday. Prices tumbled nearly $10 from Friday's settlement of $115.46 a barrel, according to NYMEX, as traders bet that damage to Gulf oil infrastructure from Hurricane Gustav was less than had been anticipated.

However, damage reports from the government and companies operating in the Gulf have not been released. "We're still in assessment mode, but so far, things are looking good," said Cathy Landry, a spokeswoman for the American Petroleum Institute.

Oil plunges to near 5-month low....

Google unveils browser, acknowledges debt to Apple

By Eric Auchard

MOUNTAIN VIEW, Calif., Sept 2 (Reuters) - Google Inc's (GOOG.O: Quote, Profile, Research, Stock Buzz) new browser software is designed to work "invisibly" and will run any application that runs on Apple Inc's (AAPL.O: Quote, Profile, Research, Stock Buzz) Safari Web browser, company officials said on Tuesday.

The company said the new Web browser, dubbed Google Chrome -- a long-anticipated move to compete with Microsoft Corp, Mozilla Firefox and other browsers -- is now available for download at www.google.com/chrome/.

The public trial of the Google browser will be available in 43 languages in 100 countries, Sundar Pichai, Google's vice president of product management said at a news conference at the company's Mountain View, California headquarters.

"You actually spend more time in your browser than you do in your car," Brian Rakowski, group product manager for the browser project, said of the significance of offering a faster browser and forcing greater competition in the market.

Google unveils browser, acknowledges debt to Apple....