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 A lot can happen in a week, and this has certainly been a week to remember as far as rumors and events go in the marketplace. And the Wall Street rumor mill certainly fed some of the uncertainty that tanked the financial markets at the beginning of the week.
Fannie Mae and Freddie Mac: The two mortgage intermediaries touched off the whole meltdown of the financial markets when the Federal Reserve took them over last week. This week, the former CEOs of the two institutions were denied their golden parachutes. Lehman Brothers Holdings Inc.: Immediately after Fannie Mae and Freddie Mac were taken over by the Federal Reserve last week, the rumors escalated about Lehman Brothers, which had been in talks with Korean Development Bank concerning a takeover, and then later with Bank of America Corp. After talks failed with both, the stock plummeted, and the investment bank filed for Chapter 11 bankruptcy protection on Monday. Lehman Brothers had apparently been in discussions with Kohlberg Kravis Roberts & Co., Hellman & Friedman LLC and Bain Capital LLC to sell off its Neuberger Berman LLC unit and minority stakes in several hedge funds at the time it filed for bankruptcy. The collapse of the firm then spurred more rumors about bidders for the companies assets until Wednesday, when British bank Barclays plc agreed to spend $1.75 billion for the North American investment banking operations. Now rumors are circulating that Barclays may also be interested in the European and Asian arms of the investment bank as well. Bidding for the Neuberger Berman unit continues, according to the latest reports. American International Group Inc.: Lehman's collapse brought on a domino effect, and one of the victims was insurance giant American International Group, which the Federal Reserve Board bailed out with an $85 billion loan on Tuesday. Treasury Secretary Henry Paulson insisted that AIG's CEO Robert Willumstad step aside and former Allstate CEO Edward Liddy take his place. As part of AIG's repayment, the insurer will have to shed assets, and rumors circulated concerning the potential bidders, which include Steven Udvar-Hazy for the International Lease Finance unit, billionaire Warren Buffett, AIG co-founder Maurice "Hank" Greenberg as well as rivals Allianz SE, Prudential Financial Inc. and Munich Re. Washington Mutual Inc.: Rumors concerning Washington Mutual's fate multiplied this week as well. The already ailing bank's stock took a dive after Lehman's fall. On Wednesday U.S. federal regulators apparently reached out to a number of banks gauging whether they would consider buying Washington Mutual if it should falter. Reports later into the week speculated that the struggling bank had hired Goldman, Sachs & Co. to put itself up for auction with a series of interested suitors including Citigroup Inc., J.P. Morgan Chase & Co., Banco Santander SA, HSBC Holdings plc and Wells Fargo & Co. J.P Morgan Chase & Co.: The banking giant is rumored to be bidding for Washington Mutual. Additionally, J.P. Morgan apparently stopped trading with Citadel Investment Group LLC because the hedge fund has been snatching the bank's talent since March. Merrill Lynch & Co.: Merrill Lynch was scooped up by Bank of America Corp. for $50 billion after Lehman Brothers went under. It was not the subject of rumors until Friday when Treasury Secretary Henry Paulson announced plans to stabilize the market. The Paulson plan has prompted some to speculate that Merrill shareholders may vote against the merger. Goldman Sachs Group Inc.: The markets gave the remaining independent U.S. investment banks, Goldman Sachs and Morgan Stanley, a beating early in the week. There were rumors that Goldman may acquire some of the assets of Washington Mutual, which it currently is tasked to sell. By Friday, chatter died down, and Morgan Stanley issued an analyst report about Goldman saying "fears are overdone." Morgan Stanley: At the beginning of the week, it was widely speculated that the bank needed to find a well capitalized buyer in order to survive. By Wednesday names began to float from the ether that Morgan Stanley was in talks with J.P. Morgan, Wachovia Corp., HSBC and Wells Fargo. By Thursday, the word was that Morgan was in "advanced talks" with Wachovia -- whatever that meant. By Friday, chatter died down, and Goldman Sachs issued an analyst report saying Morgan's business was "sound." Citigroup Inc.: There are rumors that Citigroup may acquire the assets of distressed thrift Washington Mutual. Bank of America Corp.: Bank of America bought Merrill Lynch for $50 billion and is also rumored to be scoping out Washington Mutual. Wachovia Corp.: Wachovia is said to be in deal talks with Morgan Stanley. Wells Fargo & Co.: Early in the week, the well-capitalized San Francisco bank was rumored to be considering a bid for Morgan Stanley, but later in the week CEO Richard M. Kovacevich denied such speculation. However, he also spurred additional speculation about his intentions when he was quoted as saying "I feel like a kid in a candy store" leading to renewed chatter that Wells Fargo may make a play for Washington Mutual. - Maria Woehr Categories Deal Video
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