Key Developments Driving The Financial World Today (10/22/2011) Google Buy Yahoo, T-Mobile In Trouble, Kodak Battle To Survive

The Obama Administration will release a plan on Monday to help people with underwater mortgages and good credit to get new refinanced home loans at present rates which are the lowest in decades. This could change the housing market as much as anything since values began to collapse in 2006 because it could take millions of underwater mortgages and cut the payments on them substantially.The program would include aid from Fannie Mae and Freddie Mac.

Negotiations between France and Germany about a massive bailout fund for the EU’s financially weak nations continue to be unstable. The lack of an agreement this week is likely to sharply increase the chances of a Greek default. Germany wants the region’s banks to take larger write-offs on Greek debt than was planned in July. Banks, led by Deutsche Bank, have balked.

Google (NASDAQ: GOOG) is in talks with private equity interests about a purchase of Yahoo! (NASDAQ: YHOO) Google has the financial reserves to make a premium bid that would probably push out other PE firms and probably an offer from Alibaba, the Chinese e-commerce operation. Yahoo! owns 40% of Alibaba. An offer by Google would leave Microsoft as the only company with the capital to make a counter-offer.

T-Mobile has began an aggressive campaign to get low income customers through no-contract cellphone wireless plans. The action may be the carrier’s action to prepare for the failure of a buyout by AT&T (NYSE: T) which has been blocked by federal regulators. T-Mobile is the No.4 carrier in the US with about 35 million subscribers. Many of these customers have probably already considered migration to Verizon Wireless and Sprint-Nextel (NYSE: S). That will leave T-Mobile orphaned

A pitched battle between Eastman Kodak (NYSE: EK) and its creditors has begun. Wall St. is concerned that Kodak will have to declare Chapter 11 before it can sell of license its patent portfolio.

Douglas A. McIntyre