The head of the world's largest bond fund said the Fed needs to take additional steps to calm markets and instill confidence.

Bill Gross, managing director and co-chief investment officer at PIMCO, said the Federal Reserve must act as a clearing house for institutional transactions, buy commercial paper and cut the Fed funds rate to 1.00%.

Neel Kashkari, former vice-president at Goldman Sachs and current assistant secretary of international affairs at the U.S. Treasury, is expected to become the interim head of the $700 billion rescue package, according to anonymous sources who spoke to the Washington Post and the Wall Street Journal.

The sources say the 35-year old Kashkari would...

Speaking at the Peterson Institute for International Economics in Washington D.C. on Monday, World Bank President Robert Zoellick said the G7 is "not working" and called for a new multilateral network for the new global economy.

In a sweeping deal that could be worth more than $8.4 billion, Bank of America Corp. has agreed to settle claims brought by state Attorneys General regarding certain risky loans originated by Countrywide Financial Corp.  The move will diffuse some of the legal problems Bank of America inherited with its purchase of Countrywide Financial Corporation last July.

The new program will involve the creation of a proactive home retention solutions expected to affect nearly 400,000 former Countrywide customers.

In New York Appeals Court, Wachovia Corp. has succeeded in over-turning the emergency order by Justice Charles Ramos issued yesterday in New York State Supreme Court which gave Citigroup Inc. the sole legal authority to negotiate with the bank. Citi announced last Monday they'd be buying some of Wachovia's assets. Wachovia said a deal made later with Wells Fargo on Friday to purchase the entirety of their assets is still legitimate.

Mortgage giants Fannie Mae and Freddie Mac could possibly sell some bad assets to the U.S. Treasury, according to a media report. James Lockhart, director of the Federal Housing Finance Agency (FHFA) which now oversees the two companies, gave a television interview to C-SPAN.

After days of deliberation, the House of Representatives voted in favour of the Emergency Economic Stabilization Act of 2008 on Friday in a vote of 263 to 171, allowing the deployment of up to $700 billion to purchase illiquid assets from financial entities.

"Citi has substantial legal rights regarding Wachovia and this transaction `Wachovia's agreement to a transaction with Wells Fargo is in clear breach of an exclusivity agreement between Citi and Wachovia,'" Citigroup officials said in a statement.

In an e-mailed statement to Treasury Secretary Henry Paulson, California Governor Arnold Schwarzenegger said the State of California may have to turn to the Federal Reserve for emergency funding should $700 billion bailout package fail to pass.

"This credit crisis has the power to grind the U.S. economy to a halt," Schwarzenegger wrote in the e-mail to Paulson.

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