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Reports: Washington Mutual has four possible bidders

New York - Shares in Washington Mutual Inc, the savings and loan firm seen as next on the precipice of the US financial crisis, rallied Friday as the US government moved toward a massive bail-out of nationwide mortgage debt and cracked down on stock ...
Posted : Fri, 19 Sep 2008 21:08:33 GMT
By : DPA
Category : US (Business)
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New York - Shares in Washington Mutual Inc, the savings and loan firm seen as next on the precipice of the US financial crisis, rallied Friday as the US government moved toward a massive bail-out of nationwide mortgage debt and cracked down on stock trading. Three companies - JP Morgan Chase & Co, Citigroup Inc and Wells Fargo & Co - may be interested in bidding for the savings and loan firm, Bloomberg financial news service reported. A fourth company, Banco Santander SA, was also interested, the London Financial Times reported.

After a week of extremely volatile trading, New York stock indices were rallying again Friday as financial stocks lifted.

Surging financial stocks make Washington Mutual's sale more likely, Michael Kao, a money manager in Woodland Hills, California, told Bloomberg.

Bank stocks rose worldwide after US Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben S Bernanke proposed removing troubled assets from the balance sheets of financial companies.

The US government plans to hunker down over the weekend to come up with a comprehensive plan to rescue the economy from collapse and unblock the credit freeze, US President George W Bush and federal finance officials said.

This week alone, Lehman Brothers Holdings Inc declared a 600- billion-dollar bankruptcy, Merrill Lynch & Co was swallowed up in a 50-billion dollar buyout by Bank of America and the insurance giant American International Group Inc was bailed out in an 85-billion- dollar government takeover.

Friday also saw a world-wide move to curb a stock-trading practice called short-selling to help put a brake on the down-slide of world stock markets.

In some forms of short-selling, traders sell shares they don't actually own in the hope of buying them later at a cheaper price.

Market oversight officials in the US, Britain and Australia limited the practice out of concern that some individuals were spreading false and misleading information about listed companies to provoke fire sales of securities at low prices.

Critics charge the technique has helped fuel a furious sell-off of financial stocks on Wall Street this week.

New York officials also launched an investigation into the practice. Short-selling itself is legal, but not if linked with spreading rumours that can help an investor's cause.

Copyright DPA

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