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NEWS AT A GLANCE

Paulson details Fannie and Freddie takeover

Treasury Secretary Henry Paulson said the U.S. is taking conservatorship of Fannie Mae and Freddie Mac, in perhaps the largest government bailout in U.S. history. Fannie and Freddie's CEOs were forced out, shareholders lost most of their investment, bondholders will be fully compensated, and the firms will be barred from lobbying Congress. Each firm may get up to $100 billion in government capital. (The New York Times) Most of the restructuring decisions will be made by the next administration. (Bloomberg) China and Japan, the No. 1 and No. 2 holders of Fannie and Freddie debt, lauded the plan. U.S. investors were more skeptical. "We find it difficult to see how it is bullish that the heavy hand of government is needed to such an extent," said Merrill Lynch economist David Rosenberg. (Reuters)

Washington Mutual ousts CEO

Washington Mutual's board of directors ousted CEO Kerry Killenger, after the nation's largest thrift lost as much as $19 billion in mortgage-related assets and saw its stock price fall 85 percent over the past year. Alan Fishman, the chairman of commercial mortgage broker Meridian Capital Group, has been tapped as Killenger's replacement. Killenger has been CEO since 1990. (The Wall Street Journal) But with all the recent bad results, "we've been surprised that it hasn't come sooner," said Patrick Becker Jr. at Becker Capital Management in Portland, Ore. (Bloomberg) Lehman Brothers also shook up its management, replacing the global head of its fixed income division and CEOs for Europe and the Middle East. (Reuters)

Global markets jump on U.S. bailout

Asian markets closed sharply higher today after news of the U.S. takeover of mortgage giants Fannie Mae and Freddie Mac bolstered investor confidence. Japan's benchmark Nikkei 225 index closed up 3.4 percent, the Hong Kong Hang Sang index rose 4.3 percent, and Seoul's Kipsi jumped 5.2 percent. European markets were also up sharply in early trading. (AP in Yahoo! Finance) The London Stock Exchange, however, suffered a computer failure that halted trading in the middle of a broad rally that had the FTSE-100 index up 3.8 percent. "Today's meltdown from the LSE couldn't have come at a worse time," said London-based trader Sejal Patel at CMC Markets. (Bloomberg)

Outside world, 1; Hollywood, 0

In the slowest weekend at the U.S. box office in five years, the Nicholas Cage movie "Bangkok Dangerous" took top honors with a relatively paltry $7.8 million. The weekend after Labor Day is usually slow, said Paul Dergarabedian of Media by Numbers, "but this year was really significantly slow -- people were distracted by [political] conventions, the weather, and the fall television season." (Los Angeles Times)

BEST COLUMNS OF THE DAY

GSEs: One nationalization, under Paulson

In nationalizing Fannie Mae and Freddie Mac, says The New York Sun in an editorial, Treasury Secretary Paulson and the Bush administration decided that the government's "interest in low mortgage rates as an artificial boost to housing prices was more important than the property rights" of Fannie and Freddie shareholders, who didn't even get a vote on the decision. And why nationalize? Fannie and Freddie weren't lacking in the legally mandated level of capital, and if "sizable losses" is the criteria, why not seize Merrill Lynch instead? This seizure of two companies, without shareholder approval, may be a good deal for homeowners, "but it is a bad deal for America," and a bad precedent for property rights.

The Fannie and Freddie bailouts actually "stop just short of full nationalization," says Floyd Norris in The New York Times, but since the two firms are now "virtually the only sources" of significant U.S. home loans, no other bailouts have "seemed more crucial." At some point, however, the next administration is going to have to figure out which of Fannie and Freddie's "at least two masters" the mortgage giants are supposed to serve -- the government or the private investors who put up the capital. So far, "they failed to serve either one very well."

That's why "the Fannie-Freddie bailout is one of the great political scandals of our age," says The Wall Street Journal in an edtiorial. This bailout was predictable and preventable, and Paulson is missing an opportunity here to finally bury these two unwieldy "financial zombies." There are good things about this rescue operation, but since Paulson merely propped up these "undead monsters," their "corpses could still return to haunt us again."

GOOD DAY FOR: Hitting reverse, after Tata Motors has reportedly agreed to restart construction on a plant to make its $2,500 Nano car in India's West Bengal state, after state officials reached a land-compensation deal with protesting farmers. Tata has said it was abandoning the $350 million factory last week. (MarketWatch)

BAD DAY FOR: Grandfather clauses, after Taiwan shut down the country's last legal brothel following the death of its 87-year-old pimp. Prostitution has been illegal in Taiwan since 1997, and the island nation stopped licensing new bordellos in 1974. Police revoked the license of this 48-year-old brothel after it as determined that the title to the business could not be transferred. (Reuters)

NOTED: The Federal Deposit Insurance Corp. shut down Nevada's Silver State Bank over the weekend, in the 11th FDIC-insured bank failure so far this year. Silver State had $2 billion in assets and $1.7 billion in deposits at the end of June, and the FDIC said the this intervention could drain its deposit fund of $450 million to $550 million. Silver State's branches should open today under the new ownership of  Nevada State Bank of Las Vegas. (AP in CNNMoney.com)

This column was written by Peter Weber and edited by Harold Maass of TheWeekDaily.com.