A day you’ll always remember? Maybe not, although the folks at Lehman Brothers may. According to a story from the AP, shares of Lehman Brothers are up this morning after a Korean newspaper reported that state-owned Korea Development Bank has made a bid to buy 25% of the “troubled” investment bank. South Korea's largest newspaper reported that KDB said in its proposal that it would buy the stake by forming a consortium with other banks to raise the $5.3 billion required.

Speaking of investment banks, Merrill Lynch appointed JPMorgan Chase’s Michael Nierenberg to head its global-mortgages and securitized-products businesses. Merrill also hired Citigroup’s James De Mare to run its mortgage trading operations.  Nierenberg was in charge of global securitized products at JPMorgan, and had been at Bear Stearns since 1994. De Mare had been with Citigroup for 11 years, and was Citi’s global head of mortgage trading, overseeing the trading of all securitized products in the firm's fixed-income currencies and commodities group.

There is a story out this morning about Fannie & Freddie not needing an injection of capital from the US government, and that they have enough saved to weather the current problems. Wouldn’t that be nice? I imagine that government and finance officials have found out that these companies, and their financing, are so much more complicated than anyone ever imagined. The public and banks own huge numbers of shares, with the banks holding preferred stock. If the preferred stock’s value goes to 0, it would put many of these banks out of business. So news like this morning’s is welcome.

US Bank representatives sent out a note this morning saying, “I regret to inform you that, effective immediately. we are suspending all correspondent lending operations within US Bank Consumer Finance. A lack of volume makes maintaining operations impractical.”

Don’t you love announcements that start with, “Due to current changes in the marketplace…”? Franklin American is implementing several changes to its products. These include, for Conforming Conventional, “In situations where the borrower is converting their principal residence to a second home or investment property, the borrower must provide documentation evidencing minimum reserve requirements.” For conversions to a second home, Franklin is now requiring at least 30% of the equity to be documented in the previous residence. They also made a revision to their non-conforming products: the minimum credit score on second home transactions with an LTV greater than 80% is increased from 700 to 720.

First Horizon said it expects total charge-offs from bad loans to be $100 million above previous estimates for 2008, up from their range of $385 million-$485 million. They also said that they have completed the sale of their mortgage origination and servicing business outside Tennessee to MetLife Bank N.A.

Here is some good news from last week for many originators: Mortgage Applications increased 7.5% for the week ending August 29, putting it at the highest level since mid-July. Purchases were +10.5%, refinancing applications were +2.1%. Apps are still down 27% versus this week in 2007. Rates are about unchanged from yesterday afternoon, after we saw a nice improvement during the day. The 10-yr is at 3.73, moving away from that 4.0% level. Due out later this morning is July Factory Orders (expected +1.0%), the Fed's Beige Book (will it show weakness?) and August Vehicle Sales.

One of my favorite stories:

A New Yorker was vacationing in Mexico where he met a Mexican man fishing on his little boat. In no time at all the Mexican caught quite a few fish and returned to shore. The New Yorker asked the Mexican what he does all day.

"Well," the Mexican replied, "I wake up at about 10:00, go down to my fishing boat and catch enough fish for the day. Then I come home, my wife and I fry up some fish and have a lovely lunch on the beach. After that, we take a little siesta. In late afternoon, I usually go into town with my wife where I sometimes play in a mariachi band and we have dinner, drinks and fun with our friends. Often we stay in town until late at night."

"But you catch so many fish with that one fishing pole," observed the New Yorker. "Why don't you buy some more poles and catch more fish?"

"Why would I do that?" asked the Mexican.

"So you could make money selling the extra fish and buy another fishing boat," replied the New Yorker. 

"Why would I do that?" the Mexican asked. "So you could make even more money and then buy a fleet of boats."

"But why?" wondered the Mexican.

"So then you could have an entire fishing fleet with nets and catch enough fish to build an industry." The Mexican still didn't understand.

The New Yorker said, "Then you could come to New York with me, and we could take your fishing company public!"

"But why?" asked the Mexican. 

"Don't you understand?" said the New Yorker, "You would become very rich and then you could retire to Mexico where you could sleep in, fish, and stay out late at night.”

Rob