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Reuters Business Summary

Reuters - Tuesday, September 23

Is it time to buy Morgan Stanley and Goldman?

NEW YORK - Goldman Sachs Group Inc <GS.N> and Morgan Stanley <MS.N> are not the companies they used to be. Both became bank holding companies on Sunday evening and both will be able to sell assets into a new $700 billion government fund for distressed debt. Early Monday, Morgan Stanley agreed to sell up to 20 percent of itself to Japan's Mitsubishi UFJ Financial Group Inc <8306.T>.

AIG CEO expects "for sale" list next week

NEW YORK - American International Group Inc <AIG.N> should have a list of assets it wants to sell by next week, its new chief executive said on Monday, as the company prepares to split itself up to repay an emergency bailout loan. The New York-based financial titan, which was once the world's most valuable insurer, needs to raise cash quickly to repay an $85 billion U.S. Federal Reserve loan that allowed it to avoid bankruptcy after taking massive losses on mortgage derivatives.

Bailout uncertainty sinks Wall Street

NEW YORK - Stocks tumbled on Monday as investors worried a $700 billion bailout for the financial sector may not resuscitate a slumping economy, while a record spike in oil prices renewed concern about consumer spending. Banks, home builders and big manufacturers were among the biggest decliners as negotiations over the government's rescue plan to mop up bad mortgage debt on banks' balance sheets heated up in Washington.

Unexpectedly, Las Vegas hit by downturn

LAS VEGAS - Sue Garrett, in Las Vegas for a birthday party earlier this month, went to what she considers extraordinary lengths to hold down the cost of her trip. "We decided to sit through one of those blasted timeshare presentations to get a free hotel room," said Garrett, who lives in Los Angeles. She turned down the timeshare but earned herself and her husband a stay on the Las Vegas Strip for her trouble.

Morgan Stanley to sell Mitsubishi 20 percent stake

NEW YORK - Morgan Stanley <MS.N> agreed to sell an equity stake of as much as $8.5 billion to top Japanese bank Mitsubishi UFJ Financial Group Inc <8306.T>, speeding up its transformation into a commercial bank and improving its survival prospects in turbulent times. The preliminary investment agreement announced on Monday came a day after Morgan Stanley and archrival Goldman Sachs Group Inc <GS.N> were granted approval to become bank holding companies regulated by the U.S. Federal Reserve. The moves effectively ends the investment banking model that dominated Wall Street for more than 20 years.

Lehman units acquired by Barclays reopen

NEW YORK - A series of former Lehman Brothers businesses reopened on Monday, after a U.S. bankruptcy court approved their sale on Saturday to Barclays Plc, but sales and trading businesses are not yet open. Banking and advisory business are operating now. Sales and trading business will open once Lehman's systems can be shifted over to Barclays, said Rich Ricci, chief operating officer of Barclays Investment Banking and Investment Management businesses.

3Com shares surge after strong results

NEW YORK - U.S. network equipment maker 3Com Corp <COMS.O> reported stronger-than-expected fiscal first-quarter results on sales in China and forecast even better sales in the current quarter, sending the shares up 12 percent in after-hours trade on Monday. "Our strong revenue performance in the quarter was largely due to continued growth in our China segment," 3Com Chief Executive Bob Mao told analysts on a conference call, adding that a stronger yuan currency also bolstered sales.

Wachovia, JPMorgan, Wells Fargo tumble

NEW YORK - Shares of several major U.S. banks suffered steep declines Monday as investors speculated that Wachovia Corp <WB.N> won't merge with Morgan Stanley <MS.N>, while JPMorgan Chase & Co <JPM.N> and Wells Fargo & Co <WFC.N> were downgraded. In afternoon trading, Wachovia shares were down $3.90, or 21 percent, at $14.85; JPMorgan fell $6.08, or 13 percent, to $40.96, while Wells Fargo fell $5.26, or 13.2 percent, to $34.54.

BofA's big challenge seen keeping Merrill advisers

NEW YORK - Merrill's "thundering herd" may be stampeding into the sunset. That's Bank of America Corp's <BAC.N> fear as it proceeds with the planned $50 billion purchase of Merrill Lynch & Co Inc <MER.N> and prepares to inherit Merrill's 16,000 financial advisers, part of the retail brokerage that Bank of America Chief Executive Kenneth Lewis has described as the "crown jewel."

Bailout debate mulls making Wall Street pay

NEW YORK - The planned $700 billion bailout to shore up the battered U.S. financial system looked set to drag into next week as Washington lawmakers haggled over how exactly they could make Wall Street pay for its rescue. Stocks and the U.S. dollar tumbled on Monday as emerging details of the plan left many players skeptical that the rescue, which would give powers to the U.S. Treasury Department to buy up toxic mortgage-related debt from financial groups, would work.

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