Marc's Mortgage Matter's

• • Best Buy Co. agreed to buy Napster (digital downloading of music) for $121 million.
  • Reddy Ice Holdings (the largest US manufacturer of packaged ice) suspended its quarterly cash dividend indefinitely and said it was undertaking a strategic review of its business.
  • 5,000 Carnival Cruise lines passengers, who sailed out of Galveston pre-Ike, now need new cars, as theirs are all totaled! Let’s hope they don’t work for Merrill or Lehman…
  • Giving everyone another reason to fly 1st class or Business Class, United Airlines is doubling the fee to check a second bag on a domestic flight from $25 to $50 one-way.
  • US interest rates are pricing in an almost for-sure .25% cut in overnight Fed Funds by the Federal Reserve by the end of the year, if not at, or before, its meeting tomorrow, due to concerns over the stability of the banking industry.
  • AIG, the huge insurance company, finds itself in trouble, downgraded, and potentially dragged under by the events over the weekend.
  • Lehman Brothers will declare bankruptcy. The US Government decided that they did not want to back up Lehman’s $60 billion of bad real estate investments, nor did Barclay’s, nor did a plan to have all the major Wall Street firms pitch in $60 billion to purchase Lehman's bad real estate assets and create what's knows as a "Bad Bank” work out. (“Bad Bank” was chosen because the names Countrywide, Washington Mutual and IndyMac had already been taken.) Many investment banks worked over the weekend to figure out their exposure to Lehman Brothers, especially to their real estate investment portfolio.
  • Bank of America said it would acquire Merrill Lynch in an all-stock transaction worth about $50 billion. Bank of America has the most deposits of any U.S. bank, and has both theirs and Countrywide’s servicing portfolio, while Merrill Lynch is the world’s largest and most widely recognized brokerage – it certainly will create a monolithic global financial services giant. I don’t know if that is a good thing right now…
  • Rumors of Chase taking over WAMU were either false or haven’t come to fruition yet.