♦ The Federal Reserve said on Wednesday that it would provide up to $37.8 billion to AIG. That's on top of the $85 billion lifetime the insurance giant got a few weeks ago. [NYT]
♦ Hank Paulson suggested yesterday the government may invest in banks as part of the next step in trying to resolve the credit crisis. [Bloomberg, NYT]
♦ Talks continue between Wells Fargo and Citigroup, who are both vying for control of Wachovia, although they appear close to a settlement. [WSJ, DB]

♦ 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]

Time to swap your white plastic armor for some eco-friendly aluminum. Two important analysts, RBC Capital’s Mike Abramsky and Morgan Stanley’s Kathryn Huberty, lowered their ratings on Apple's stock this morning. Huberty: “PC unit growth is decelerating and the remaining source of growth is increasingly the sub-$1,000 market where AAPL does not play.” Abramsky: “a worsening consumer spending environment." Apple shares were down from $128 to $108 as of this post.

♦ President Bush turned up outside the White House early this morning to urge lawmakers to pass the $700 billion bailout and a vote is expected later today. Bored today? The full text of the bailout is here. [NYT, WSJ]
♦ Citigroup has agreed to buy Wachovia in a deal brokerered by the FDIC. [Dealbook]
♦ The governments of Belgium, Luxembourg and the Netherlands have teamed up to bail out Fortis, one of Europe's largest banks. [WSJ, Bloomberg]

♦ Morgan Stanley and Goldman Sachs have won approval to become bank holding companies, which will give them greater access to federal funds and also put them under tighter oversight and regulation. [WSJ, NYP]
♦ After suspending talks with Wachovia over the weekend, Morgan Stanley announced this morning that it is selling a 10-20 percent stake to Japan's largest bank, Mitsubishi UFJ. [WSJ, Bloomberg]
♦ The proposed $700 billion bailout package turned into a political football this weekend. [WSJ, NYT]
♦ Nomura will pay $225 million for Lehman's Asian operations. [WSJ]
♦ After last week's wild ride, everyone is bracing for another eventful week on Wall Street. [NYT]

Wall Street has been on a historic roller coaster all week, and there's no doubt it's tiring out some business reporters. It was only Monday morning that Times business writer Andrew Ross Sorkin said on CNBC, where he puts in the extra multimedia shift now common to newspaper reporters, that he was operating on just two hours sleep. So perhaps it should not have been entirely surprising that the Times business desk printed Thursday a sensational quote it has now retracted, because it seems no one ever said it.

♦ The Federal Reserve and Treasury are working with Congress on a sweeping bailout program that would represent the biggest intervention in financial markets since the '30s. Asian and European markets soared on the news. [WSJ, Bloomberg, NYT]
♦ Five banks are now looking at Washington Mutual, including Wells Fargo, JPMorgan Chase and HSBC. [WSJ, Dealbook]
♦ Morgan Stanley's John Mack fought for his life yesterday, lobbying for regulatory changes, twisting arms, and discussing deals with potential partners. China's sovereign wealth fund, China Investment Corp, is now believed in be in discussions to take a 49 percent of Morgan. [WSJ, Marketwatch]

I like to think I'm resistant to neophilia, the fetishistic embrace of new technology endemic to Silicon Valley. And yet I felt a rush when I logged on to Gogo's inflight Wi-Fi service on the American Airlines flight I'm currently taking from San Francisco to New York. The airliner's cabin has long been the last online frontier, a disturbing pocket of disconnectivity. My colleague Jackson West urged me to test the service, to review it for my readers. But I find myself more preoccupied with human needs than speeds and feeds. More than anyone, I worry about the likes of Mary Meeker.I can hear the 20somethings in the audience scratching their heads: "Who's Mary Meeker?" Back in the '90s, investment banks' Internet analysts were superstars, viewed as oracles and rainmakers. In 1999, Meeker, Morgan Stanley's lead Internet analyst, got a profile in the New Yorker. The text is not online, but I distinctly remember how it chronicled Meeker's nonstop activity. The only time she was still was when she boarded an airplane, closed her eyes, and slept through the flight. Could she have stayed awake, had she known she could achieve download speeds of 989 kilobits per second, with a latency of 108 milliseconds, for the low, low price of $12.95 a flight? Inflight connections, currently on a handful of flights, will rapidly go from novelty to necessity. Bosses will expect workers to log on nonstop; why shouldn't they? Even on leisure trips, compulsive connectors will go online out of sheer habit. I recently remarked to a friend, "Planes are for sleeping." That's before I got onto Gogo. Alas, poor Mary; even soaring above the clouds, there will be no rest for the weary.

One of Wall Street's most storied investment banks, Morgan Stanley, is in discussions to sell half the securities firm to the Chinese state. Here's a forward-looking image of America's financial center. Original photo of the New York Stock Exchange by David Galbraith, Photoshop by Steven Dressler.

The Dow soared 410 points today, which is good news and why WSJ.com now has a picture of a trader with a big smile on his face. And Attorney General Andrew Cuomo is now promising to punish the evildoers who are impinging on the ability of 25-year-old Wall Street analysts to pay for $800 bottles of vodka. That's good news, too. The bad: Morgan Stanley may very well still end up in Chinese hands and no one trusts anybody anymore. Even worse: companies are installing treadmills in the office so employees can walk while they work, which may be the scariest thing we've seen all day.

The Times reported on the front page of the paper today that Morgan Stanley CEO John Mack approached Citi chief Vikram Pandit on Tuesday night about combining the two banks. "We need a merger partner or we're not going to make it," Mack allegedly told Pandit. True? Probably not! Remember when Times said that Zoe Cruz would succeed Mack as Morgan's CEO and then she was fired 19 days later? Exactly. Well, the Times has since backpedaled: "The Times's two sources have since clarified their comments, saying that because they were not present during the discussions, they could not confirm that Mr. Mack had in fact made the statement. The Times should have asked Morgan Stanley for comment and should not have used the quotation without doing more to verify the sources' version of events." Maybe the Times also should try and spell names correctly when issuing corrections? [NYT]

Things at Morgan Stanley are getting uglier by the minute. Shares are down another 25 percent thus far today and hedge funds have been directing their business elsewhere. John Mack is now reportedly stepping up merger discussions with Wachovia. There's also talk of splitting the bank in two, a "good bank" and a "bad bank." Because that idea worked out really nicely for Lehman, didn't it? [Dealbook]

♦ The world's major central banks teamed together to flood the markets with dollars as part of an effort to contain the unfolding financial crisis. [WSJ, NYT]
♦ Morgan Stanley has been in talks with Wachovia, Wells Fargo and the Chinese bank Citic; Morgan's CEO, John Mack, blames short sellers and rumors for yesterday's big drop. [NYP, CNBC, Dealbook, WSJ]
♦ Washington Mutual's bankers at Goldman Sachs are "frantically looking for a buyer or a capital infusion in the next several days." [NYP]
♦ Rules introduced by the SEC today will make it harder for traders to drive down prices and will require them to share more info about their trades. [WSJ]

Stock prices over the last year of Morgan Stanley, Lehman Brothers, AIG, Merrill Lynch and Goldman Sachs.

♦ Fearing another massive corporate bankruptcy, the Federal Reserve agreed to an $85 billion bailout of the troubled insurance giant AIG. [NYT, WSJ, Fortune, NYP]
♦ AIG's CEO, Robert Willumstad, will be replaced by Edward Liddy, the former CEO of Allstate. [Marketwatch]
♦ AIG's ex-CEO Hank Greenberg is dismayed he wasn't involved in the bailout effort. Considering he's tangled up in about half a dozen lawsuits with his former company, that wasn't so surprising. [WSJ]
♦ Concern now seems to be focused on Washington Mutual: Federal officials have contacted Wells Fargo, JPMorgan, and HSBC to gauge their interest in a possible acquisition of WaMu. [NYP]
♦ John Thain and two of his deputies stand to make $200 million for the year they've spent at Merrill. [Bloomberg]

• Yesterday's 504-point drop was the worst day for the Dow since 2001. [NYT, WSJ]

• U.S. inflation soared to a 17-year-high annual rate in July. [WSJ]

• Morgan Stanley has offered to buy back about $4.5 billion in auction-rate securities from clients, following a similar offer by Merrill Lynch last week. The move came after Attorney General Andrew Cuomo's office sent out another round of letters to banks, including Morgan Stanley, JPMorgan Chase, and Wachovia. [Bloomberg, WSJ]

• The bill for the auction-rate securities mess is now adding up by the hour. Merrill Lynch, Citigroup, UBS, and Morgan Stanley have all contributed to to the tally. [Dealbook]