Global Rescue Fund Seeks Participants - WSJ

More banks are coming on board the potential $80 billion investment pool spearheaded by Citigroup, J.P. Morgan and Bank of America (full story), whose goal is to acquire unwanted mortgages and shore up the credit markets, The Wall Street Journal reported Wednesday. People familiar with the matter say that on Tuesday Wachovia said it will chip in to the fund "at an appropriate level," while at the same time downplaying its own need for the pool. Other firms supporting the plan are Fidelity Investments and Federated Investors; both hold SIV debt that could benefit from the fund. Meanwhile Northern Trust CEO Rick Waddell told the Journal he has no interest in joining the pool, particularly since the company has no exposure to the investment vehicles in which it will invest. Waddell described the pool as, "J.P. Morgan and Bank of America helping out Citibank," since Citi is the most severely exposed to SIVs of any bank. A Citigroup spokesman called the characterization "nonsense." Investment banks Goldman, Merill, Lehman and Bear Stearns have all participated in talks, but haven't yet indicated they would sign on, a source said. European banks HSBC, Barclays, Deutsche Bank, UBS and Credit Suisse -- whose participation is considered more crucial than that of Wall Street I-Banks because of their "big balance sheets and track records in structured finance" -- are withholding, sources claim. Citi, J.P. Morgan and BofA will chip in less than half of the fund's principal, meaning that more banks will need to sign on, without which the pool is "unlikely to happen," a source said.

Sources: Wall Street Journal
Commentary: SIV Bailout Plan: Don't Ask, Don't Sell • Investors Welcome a Brave New Global Fund • Out of the Crisis: Is the US Treasury Crossing Into 'Moral Hazard'
Stocks to watch: C, JPM, BAC, NTRS, WB, FII, GS, MER, LEH, BSC, HBC, BCS, DB, UBS, CS

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