• Wall Street retreated this morning after a four-week rally amid concern about the banking sector and after IBM's attempt to buy Sun unraveled. [WSJ, CNN]
• The latest Washington official facing questions about potential conflicts of interest: Larry Summers, who collected $5.2 million in 2008 working one day a week for D.E. Shaw before joining the administration. [NYT]
• Tim Geithner says that the Obama administration is prepared to oust top financial executives if their firms require more public aid. [FT, DB]

• Yesterday the House approved a 90% tax on bonuses paid to execs at certain firms that received government aid. Now some lawmakers are talking about banning all bonus payments at bailed-out firms. [Reuters]
• It's unclear if the 90% tax will hold up in court. It's also possible it will do more harm than good and ultimately "wreck what's left of our economy." [BI]
• Andrew Cuomo says AIG has provided him with a list of employees who earned bonuses, but he won't release the names until the security situation has been sorted out, which is good news since it's getting a little rough out there what with all the death threats and protests. [AP, NYT, Reuters]
• Just who knew about the AIG bonuses—and when they knew it—is being closely scrutinized, although Treasury Secretary Tim Geithner says he is prepared to accept full responsibility. [NYT, CNN]

• Have you heard? Our banks are insolvent. Happy Friday to you, too. [NYT]
• The markets are down this morning as the House and Senate prepare to vote on the $789 billion economic stimulus package. [CNN]
• It's still unclear whether Wall Street got the message that "that high living on the corporate tab is now unacceptable." That's comforting to hear. [Reuters]
• Leon Black's Apollo has tapped Henry Silverman as COO. [WSJ]
• AIG's financial products unit is now under investigation in Britain. [DB]
• Morgan Stanley has suspended its global head of real estate investing. [FT]
• Prosecutors have started interviewing employees of Bernie Madoff. [WSJ]
• Tim Geithner and Fed chairman Ben Bernanke are in Rome today and tomorrow to meet their G-7 counterparts to discuss the stimulus plan. [WSJ]
• Time's list of 25 people to blame for the economic crisis. [Time]

♦ Treasury officials say as many as 1,800 institutions may apply for government investments in the next few weeks. [WSJ]
♦ GM hasn't been so lucky extracting cash: The Treasury has turned down a request by the automaker for $10 billion to help finance a merger with Chrysler. [NYT]
♦ Henry Kravis's KKR is delaying its plan to go public on the NYSE until 2009. [CNNMoney]

♦ AIG is already running out of the $123 billion in cash it was provided by the Federal Reserve, which means the authorities are slowly waking up to idea that something else might be going on. [NYT]
♦ The U.S. economy shrank at a 0.3 percent annualized rate in the third quarter as consumer spending declined at the fastest rate in 28 years. [MW]
♦ The Fed's half-point rate cut yesterday? It won't do much to prop up the economy. [NYP]
♦ Andrew Cuomo has asked banks to provide his office with bonus data. [NYT]
♦ Some hedge funds are still raking in cash from investors. Steve Cohen's SAC is down 5.5 percent in 2008 (and he's moved most of his funds into cash), but he's accepting new funds beginning in January. [Bloomberg]

♦ The world's central banks are joining together to carry out a coordinated (and unprecedented) cut in interest rates, part of a plan to restore confidence in the global economy. [WSJ, NYT]
♦ Speculation that Morgan Stanley's deal with Mitsubishi UFJ had fallen through led to a huge drop in Morgan's stock price; the Japanese bank now says the deal will be done by this weekend. [Bloomberg]

♦ A recap of what happened on Wall Street yesterday, just in case you've been asleep for the last 36 hours. [NYT]
♦ In a statement this morning President Bush said he was disappointed the bailout bill didn't pass and warned that "painful and lasting'' economic damage will follow if a settlement isn't reached. Then, like the rest of Congress, he used Rosh Hashanah as an excuse to skip out for the rest of the day. [CNNMoney, Bloomberg]
♦ Wall Street bonuses could be down as much as 50 percent this year. [DB]
♦ Mitsubishi has completed its deal to invest $9 billion in Morgan Stanley; thanks to yesterday's market it's only down $500 million since the deal was announced last week. [NYT]

• Investors generally reacted positively yesterday to the news of the Fannie Mae and Freddie Mac bailout. [WSJ]

• Lehman slashed 1,500 jobs yesterday. But job cuts are expected at several other banks around town very soon. [NYT]

Eric Zinterhofer seems to have it all, huh? He's a Harvard Business School grad and a partner at Leon Black's famed private equity firm, Apollo Management. More importantly, he's married to Aerin Lauder, the billionaire heiress and daughter of Ron Lauder. But there's one little secret he may not be so quick to share with his friends and co-workers! Behind that sturdy jaw and perfect set of gleaming white teeth lies a man with a criminal past. Okay, so it's actually not all that juicy. Unlike his boss's close associate, Jeffrey Epstein, who is in prison for his dalliances with underage prostitutes, Eric's rap sheet consists of a reckless driving charge in Connecticut. Still, we wouldn't suggest drag racing the speed demon if he pulls up next to you at a red light in East Hampton. He's clearly fearless. Eric's rap sheet after the jump.

• Analysts are steeling themselves for a loss of as much as $1.8 billion when Lehman closes out the third quarter in a few weeks. [WSJ]

• Phil Falcone's Harbinger Capital Partners has taken a 4.9 percent stake in Cablevision. [NYP]

• CVS has agreed to buy Longs Drug Stores for about $2.7 billion. [Bloomberg]

• Ford announced an $8.7 billion loss for the second quarter—its worse ever—and an $8 billion write-down. [NYT]

• Embattled Lehman chief Dick Fuld will forgo his 2008 bonus as a "peace offering" to the investment bank's managing directors. [Dealbook]