From Reuters:

National City Corp (NCC.N: Quote, Profile, Research, Stock Buzz), a U.S. Midwest regional bank battered by mortgage losses, has won stockholder approval to authorize new shares to allow for a $7 billion capital infusion, the bank said on Monday.

The new capital gives National City “the necessary flexibility to address current market challenges,” Chief Executive Peter Raskind said. He added that the bank has no exposure to Lehman Brothers Holdings Inc (LEH.N:Quote, Profile, Research, Stock Buzz), the Wall Street bank that filed for bankruptcy protection, and has routine derivatives contacts with Lehman’s broker-dealer unit.

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More about the AIG restructuring from CNNMoney.com:

American International Group, the nation’s largest insurer, plans to unveil a restructuring plan that will include selling off part of its business to raise cash and boost investors’ confidence, according to a published report.

The company is likely to dispose of its aircraft-leasing arm, International Lease Finance Corp., which has a fleet of more than 900 airplanes valued at more than $50 billion, the Wall Street Journal reported Sunday.

The aircraft unit is the largest single customer of both Boeing Co. (BA, Fortune 500) and European Aeronautic Defence & Space Co.’s Airbus.

The ailing company, which had planned to announce a turnaround strategy on Sept. 25, is being forced to accelerate the announcement after investors fled the stock last week.

Shares fell 31% on Friday after plummeting earlier in the week. The company’s stock is down a total of 79% this year.

Late Friday, credit rating agency Standard & Poor’s warned that it might downgrade AIG’s debt.

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From Yahoo!:

Bank of America Corp (BAC.N) is in advanced talks to acquireMerrill Lynch & Co Inc (MER.N) for at least $38.25 billion in stock, the New York Timessaid on Sunday, citing people briefed on the negotiations.

The deal comes as bankers and regulators met in New York to figure out whether to rescue Lehman Brothers Holdings Inc, and if so, how. Those talks seemed increasingly likely to result in Lehman’s liquidation.

Merrill’s talks with Bank of Americaare “advanced,” according to the New York Times, and a transaction valuing Merrill at $25 to $30 per share could be announced as soon as Sunday night, the newspaper said. Merrill shares closed at $17.05 on Friday.

A Merrill Lynch spokeswoman and a Bank of America spokesman did not immediately comment. The Wall Street Journal also reported the talks.

Merrill has been hit hard by the credit crisis and has written down more than $40 billion over the last year.

The bank has also attempted to sell off much of the toxic debt that has been causing the company to hemorrhage capital. Last month, Thain arranged to sell over $30 billion in repackaged debt securities to Dallas-based private equity firm Lone Star Funds.

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From the New York Times:

Lehman will seek to place its parent company, Lehman Brothers Holdings, into bankruptcy protection, while its subsidiaries will remain solvent while the firm liquidates its holdings, these people said. A consortium of banks will provide a financial backstop to help provide an orderly winding down of the 158-year-old investment bank. And the Federal Reserve has agreed to accept lower-quality assets in return for loans from the government.

But Lehman’s filing is unlikely to resemble those of other companies that seek bankruptcy protection. Because of the harsher treatment that federal bankruptcy law applies to financial-services firm, Lehman cannot hope to reorganize and survive as a going concern. It will instead liquidate its holdings.

It was not clear whether the government would appoint a trustee to supervise Lehman’s liquidation, or how big the financial backstop would be.

Lehman’s broker-deal subsidiaries would not be a part of the bankruptcy filing. Those entities must file under Chapter 7 rules, which are the procedures for liquidation, under the assumption that it is the best way to protect customers. The Securities Investor Protection Corporation would handle the liquidation of such brokerages, and bankruptcy lawyers say that customers are likely to receive their holdings back.

Lehman just wasn’t able to get out of its own way.  After making huge bets on subprime and Alt-A mortgages with the purchase of BNC Mortgage and Aurora Services, they were unable to unwind their exposure before the bottom fell totally out.

You can read more about the Lehman bankruptcy here and here.

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Latest Lehman Brothers News:

• Updated: Lehman to file bankruptcy (blownmortgage.com)
• U.K.’s Barclays balks in Lehman talks (marketwatch.com)
• NY Times: Barclays, Most Likely Lehman Suitor, Walks from Deal (nakedcapitalism.com)
• NY Times: Lehman Appears Headed Towards Liquidation (calculated risk)
• Fed’s options limited if Lehman talks fail (Reuters)
• A Sunday Without a Bailout? How Novel ! (The Big Picture)
• Greenspan: Other big U.S. finance firms may fail (Reuters)

More as it comes…

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Not that it was hard to see this coming, huge quarterly losses, a phony profit stream based off deferred interest from neg-am loans, and the smallest loan loss reserve of any major bank made them easy targets for a swift and stunning demise.  

I imagine it won’t be long before we see the lines out the door at WaMu’s across the country.  Not so much of a “Woo hoo!” moment.

From Bloomberg:

 

 Washington Mutual Inc., facing up to $19 billion in bad home loans and slammed by a 34 percent drop in its stock this week, may sell parts of a nationwide 2,300- branch network to raise capital.

“The only real asset they have that’s worth anything to other banks is the deposit base, because of their branches,” said L. William Seidman, chairman of the Federal Deposit Insurance Corp. from 1985 to 1991. Seattle-based WaMu can probably sell branches in New York and Chicago, said Bert Ely, president of Ely & Co. Inc., a bank consulting firm based in Alexandria, Virginia.

Alan Fishman, WaMu’s new chief executive officer, may have to shed branches that hold $143 billion in deposits. The biggest U.S. savings and loan is headed for its fourth straight quarterly loss. Suitors have walked away because of potential damage to their earnings and WaMu’s chief regulator, the Office of Thrift Supervision, has told it to boost risk management and compliance.

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From the AP:

For investors, the strategy seemed long on hope, short on details and raised questions about timing and execution, analysts said. Investors had hoped to see a solid plan in place to offset almost $6.5 billion of losses during the past two quarters.

“Management did not successfully put to rest the issues that had been pressuring the stock,” Goldman Sachs analyst William Tanona wrote in a research report.

More from naked capitalism:

I heard this rumor from two sources, that Lehman is in its final day or two and Goldman is willing to buy the firm, and the second source, who volunteered the information, is sufficiently well plugged in that I trust the reading. This came from a former senior employee:

A couple friends of mine from LEH trading desk called me this a.m. to say that mgmt has taken employees aside to let them know that the end should come in next 24-48 hours. Ratings agencies apparently told them that the steps were not sufficient to prevent a d/g, and LEH mgmt asked them to hold off for a day or so to give them a chance to resolve situation (with sale of company).

Apparently GS is willing buyer, but is buyer of last resort from LEH’s perspective, b/c they would keep very few LEH employees.

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While it may sound stupid for a company to be on Twitter, it can actually work.  Comcast cable has scored huge PR and customer appreciation wins through their maintenance of their @comcastcares Twitter account.  My colleague gave up on the Comcast dial-in customer service line after 10 minutes but got a response almost instantly through Twitter.  

It begets the question though. Will they Twitter the moment they’re seized by the FDIC and put in to receivership?  Will the FDIC support the Twitter customer service function??  I kid, I kid! Kind of.  You can see if they do or not by following them here.  If they don’t you’ll hear it from me, here.

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—————

If you haven’t heard the news yet because you’re tired of hearing all the daily mortgage woes, Fannie and Freddie have joined close to 300 other mortgage companies that have imploded.

While the news wasn’t that big of a shock, media outlets around the world did have their say. Here’s a quick round-up of – some and not all – of what some of the main news outlets had to say and what we can expect in the weeks and most likely, months to come.

Bloomberg News reported: “The U.S. Treasury’s takeover of Fannie Mae and Freddie Mac is aimed at keeping the companies going into 2009, while leaving the next president and Congress to decide their long-term structure.

“Treasury Secretary Henry Paulson and Federal Housing Finance Agency Director James Lockhart yesterday placed the two firms in a government-operated conservatorship, ousting their chief executives and eliminating their dividends. The Treasury may purchase up to $200 billion of stock in the firms to keep them solvent…” Read more at the site.

Ml-implode.com: “The government has taken over the reins and purse strings of both mortgage giants. The American taxpayer is now on the hook for losses yet to be seen, in what many media outlets are calling “the chickens have come home to roost.”

Others like Fox writer , Ken Sweet, added that, “The U.S. government seized control of the mortgage giants Fannie Mae (FNM: 0.73, -6.31, -89.63%) and Freddie Mac (FRE: 0.88, -4.22, -82.74%) on Sunday, placing the liabilities of more than $5 trillion of mortgages onto the backs of the U.S. taxpayer …” Read the rest on the site.

Even President Bush was in high spirits and was quoted as saying: “Americans should be confident that the actions taken today will strengthen our ability to weather the housing correction and are critical to returning the economy to stronger sustained growth,” in a statement released by the White House,

Perhaps one of the best and most readable and understandable report about Freddie and Fannie came from NPR … “The U.S. government stepped in with an ambitious plan on Sunday to help rescue mortgage finance giants Fannie Mae and Freddie Mac. The Bush administration placed the two companies into a conservatorship, replaced their CEOs and boards of directors, and announced a plan to infuse billions of dollars to prop them up as a means for reinvigorating the U.S. housing market…”

It goes on to answer typical questions for us folks who aren’t mortgage experts … but then again, if they had been experts, maybe we wouldn’t be in such a mortgage meltdown, right?

Undoubtedly, the saga will continue.

The writer, Debbie L. Sklar is a 20+year journalism veteran residing in Southern California, where she is a writer, columnist and editor for many local, regional and national publications. She will be a regular contributor to Blown Mortgage and may be reached via e-mail at DebbieSklar@cox.net.

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Lehman has been on death watch. As one of the biggest players in the subprime mortgage arena they have been one of the slowest banks to restructure and sell off debt. Now as their stock price has plummeted the company looks more and more like Bear Stearns. Unfortunately for Lehman there haven’t been the strong intonations from the government to save it.

The body count in this crisis is epic now. We’ve lost our two government-sponsored mortgage giants Fannie and Freddie to what amounts to a bankruptcy restructuring, we’ve lost one major Wall Street bank and are on the verge of another, we’ve lost at least ten banks to FDIC conservatorship and have a huge S&L on the ropes in Washington Mutual. Wow - just saying that feels scary.

From CNN.com

Lehman Brothers suffered one of its worst quarterly losses in the company’s history, reporting a loss of nearly $4 billion Wednesday, and announced a series of drastic steps aimed at reviving the beleaguered firm.

The firm said it would spin-off part of its commercial real estate assets, sell a majority stake of its investment management division and slash its annual dividend.

The company’s stock has plunged nearly 88% so far this year due to concerns about its ability to raise much needed capital.

A keystone of Lehman’s restructuring plan included a drastic reduction in both its commercial and residential real estate holdings. Lehman said it would spin off the majority of the company’s commercial real estate assets into a new separate public company dubbed Real Estate Investments Global.

The company trimmed its residential real estate holdings by nearly a half. Part of that included the planned sale of about $4 billion worth of U.K. residential real estate. Lehman said it was working with asset manager BlackRock (BLK, Fortune 500) on the sale and expected it to be completed in the coming weeks.

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