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America's two largest mortgage finance houses need to raise as much as $100bn ($53.8bn) to cover potential losses as a result of the continued decline in the US mortgage market, a banking analyst has claimed. Shares in the two mortgage groups fell to 18-year lows yesterday on increased concerns that the US government will now be forced to lead a bail-out in order to prevent the mortgage market from becoming destabilised.
Fannie Mae and Freddie Mac shares fall on fears of size of potential losses
Executives at Fannie Mae and Freddie Mac, the American financial giants which sit at the core of the country's mortgage market, were desperately fighting yesterday to preserve their independence as a federal government takeover appeared closer than ever.
Freddie Mac battles to remain independent
Lehman Brothers, the beleaguered US investment bank, held secret talks to sell up to 50% of its shares to South Korean or Chinese parties in the first week of August but failed to reach agreement with either. Lehman held parallel talks at its NY headquarters with the government-owned Korea Development Bank and Chinas Citic Securities. The South Koreans and Chinese concluded Lehman was asking too high a price, said people familiar with the discussions.
Lehman held talks to sell 50% stake
Wall Street is bracing itself for surging losses and another $3 billion (1.6 billion) worth of writedowns at Lehman Brothers when the American investment bank publishes its third-quarter figures next month. Analysts in New York believe that the bank will reveal much bigger losses than had been expected.
Analysts expect further $3bn Lehman Brothers writedown
Faced with the prospect of inflation rising to 5% in the coming months and economic growth coming to a standstill, seven members of the MPC voted to leave borrowing costs on hold, rejecting calls from Tim Besley for a quarter-point increase in interest rates and from David Blanchflower for a cut of a similar size.
Stagflation stalks the nation and leaves the Bank of England split three ways over rates
Wages are increasing at the weakest rate in five years as the economic downturn takes its toll on families' incomes, official figures have shown. The Office for National Statistics said average weekly earnings in June were only 2.9pc higher than the previous year, the slowest growth since 2003.
Relief for Bank of England as wage rises slide to five-year low
Hopes that industry can take up some of the slack in Britain's faltering economy were undercut yesterday as the CBI reported that manufacturers' expectations of their future output fell to a seven-year low this month. The growing gloom among manufacturing groups came as order books declined for a second month in a row and by more than they had expected.
Manufacturers' output hopes slump to seven-year low as orders wilt
Council chiefs have called for extra powers to allow them to offer competitive mortgages in an attempt to rescue the housing market. In a letter published in today's Times, they argue that the public sector should be able to help first-time buyers and those unable to secure a home loan. Critics believe that the move could lead to higher council tax if borrowers defaulted.
Councils want power to offer competitive mortgages
China's industrial heartland is facing crippling power shortages, with more than a dozen provinces already rationing electricity. The country is suffering from its biggest power crisis since 2004, when a 40-gigawatt shortfall left three quarters of China in the dark.
Olympics add to China's power crisis
HBOS has frozen the accounts of Andy Hornby, its chief executive, after a thief stole his identification details and withdrew thousands of pounds in cash. The thief is believed to have obtained one of Mr Hornby's bank statements and used it to pose as the 41-year-old chief, stealing up to 7,000 in one day.
Fraudster raids bank accounts of HBOS chief executive
After bringing you the shares that could make you millionaires, Times Money takes a look at some stocks that did the exact opposite. These are the companies that destroyed wealth at a fantastic rate: the heroes that went to zero.
Ten shares that went from hero to zero