8/25T8:32 News

Uncertainty over Fannie and Freddie - NY Times
NY Times reports anxiously awaiting a move by the Treasury Department and spurned by large investment cos, Freddie Mac (FRE) and Fannie Mae (FNM) find themselves unable to raise capital and with little ability to maneuver. Treasury officials have reviewed multiple plans for intervention, according to people who have spoken to top Treasury officials. But they have not identified a set of triggers that will compel a government bailout. Nor have they indicated to Freddie Mac or Fannie Mae executives when a bailout may occur or what form it may take. As a result, investors are telling Freddie Mac and Fannie Mae that they remain unwilling to purchase new shares in the cos. "We're in a Catch 22," said an executive with one of the mortgage cos who was not authorized to speak to the media. "As long as there is uncertainty over Treasury's plan, we can't raise money, and as long as we can't raise money, there's going to be more and more speculation about Treasury's plan." In recent days, Freddie Mac has met with potential investors at the law offices of Davis, Polk & Wardwell. But the co has been told by several private equity giants that those investors are unwilling to purchase any type of new stock in the company until it is clear what steps the Treasury Department may take to assist the ailing co. "You would have to be insane to invest in these companies right now, and we've basically told them that," said an investment professional with one co that was approached by Freddie Mac, but who is not authorized to speak to the media. "When Treasury comes in, they are guaranteed to get a better deal than us, which would push down the value of our investment. So why would we ever invest before we know what Treasury is going to do?"

Stock futures suggest a slightly lower start to the trading day, but have recovered from early lows. Crude oil prices are trading up 0.5% to $115.17 per barrel following Friday's 5.4% plunge. South Korean regulators told the Korea Development Bank to take a cautious approach before making an acquisition of an overseas bank after the company expressed interest in Lehman Brothers (LEH), according to the Financial Times. In deal news, Precision Drilling Trust (PDS) is buying Grey Wolf (GW) for $2 billion in cash and stock.


Small Kansas bank is 9th failure this year - Reuters.com
Reuters.com reports bank regulators closed Columbian Bank and Trust Company on Friday, the ninth U.S. bank to fail this year as the weakening economy and falling home prices take their toll on financial institutions. Customers can access their money over the weekend by check, teller machine or debit card, the FDIC said. Citizens Bank and Trust has agreed to assume the failed bank's insured deposits. Columbian Bank and Trust's branches will reopen on Monday as branches of Citizens Bank and Trust, which is based in Chillicothe, Missouri. The FDIC said Columbian Bank and Trust of Topeka, Kansas, had $752 million in assets, $622 million in deposits, and nine branches. The failure is expected to cost the FDIC deposit insurance fund an estimated $60 million.


LEH Lehman Brothers: KDB warned against buying Lehman - FT (14.41 )
FT reports South Korea's top financial regulator on Monday warned that Korea Development Bank should take a "cautious" approach to buying an overseas bank, following the state-run group's expression of interest in Lehman Brothers . Jun Kwang-woo, chairman of the Financial Services Commission, said he was "aware" that KDB was considering the possibility of buying a global investment bank, but he stressed that such a deal should be led by private lenders. "In principle, taking over a global investment bank can become an opportunity to raise the capability of the [Korean] investment banking business," Mr Jun said. "But at the same time, as the risks are also big, KDB should take a cautious approach." "We welcome any efforts led by the private sector to go global, but it may not be proper for state-owned financial institutions to lead the role and take on excessive burdens," he added.