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Main Street Bank of Northville, Mich. fails, 14th of year
SAN FRANCISCO (MarketWatch) -- Main Street Bank of Northville, Mich. became the 14th bank failure of the year, according to the Federal Deposit Insurance Corporation late Friday. FDIC said it approved the assumption of all Main Street deposits by Monroe Bank & Trust of Monroe, Mich. Main Street Bank had total assets of $98 million in total assets and $86 million in total deposits as of Oct 7. FDIC estimates the failure will cost its Deposit Insurance Fund between $33 million and $39 million.

G7: We won't let important financial institutions fail
WASHINGTON (MarketWatch) -- The G7 finance ministers and central bank governors pledged Friday to work together to make sure that large important financial institutions do not fail. In a brief "plan of action" released after their meeting, the G7 said that the current market turmoil calls for exceptional action. At the top of the list were unfreezing credit and money markets, ensuring banks can raise capital from the private sector, ensuring that deposit insurance regimes were robust, and repairing secondary mortgage markets where appropriate. The statement was short on specifics. The leaders said that the actions should be taken in ways to protect taxpayers and avoid damaging other countries.

UPDATE: Fannie Mae to allow MBS Servicers to hold P&I
SAN FRANCISCO (MarketWatch) -- Fannie Mae said Friday it will begin to allow all institutions servicing its mortgage-backed securities (MBS) to continue to hold the principal and interest payments from loans in their MBS in their depository institutions and in the process, free up additional liquidity for these institutions. The move comes after the Federal Deposit Insurance Corporation adopted an interim rule, effective immediately, to simplify the deposit insurance rules for accounts held at FDIC-insured institutions by mortgage servicers. (Updates with details on FDIC's interim rule.)

Wachovia to close Wells Fargo deal without shareholders' OK
SAN FRANCISCO (MarketWatch) -- Wachovia Corp. will issue preferred shares as part of its merger agreement with Wells Fargo & Co. without the usual shareholders' approval in a bid to proceed with the merger as soon as possible, the bank said Friday. Wachovia's Audit Committee has decided that the delay to seek approval could seriously jeopardize Wachovia's financial viability. "In reaching this conclusion, the Audit Committee considered various factors, including factors specific to Wachovia, the extraordinary and highly uncertain economic, financial and political environment and the experience of other financial institutions," said the bank in a statement. The New York Stock Exchange has also accepted Wachovia's application for an exception. Wells Fargo's buyout of Wachovia is expected to close by the end of the year.

Moody's may downgrade Wells Fargo's ratings
SAN FRANCISCO (MarketWatch) -- Moody's Investors Service said late Friday it may downgrade the ratings on Wells Fargo & Co. on its deal to acquire Wachovia Corp. . Moody's has an Aa1 rating on Wells Fargo. Moody's said it will examine several factors of the deal including the potential credit costs of Wells Fargo and Wachovia, how these will affect capital, and potential litigation liabilities related to the transaction.

U.S. stocks rebound in worst week ever for Dow and S&P
NEW YORK (MarketWatch) -- U.S. stocks on Friday rallied back from stiff losses to end mostly lower in capping the worst week ever for the Dow Jones Industrial Average and the S&P 500. After trading in a 1,000-point range that had it down nearly 700 points, the Dow Jones Industrial Average fell 128 points, or 1.5%, to 8,451.19, down nearly 1,900 points, or 18.2%, for the week. The The S&P 500 declined 10.6 points, or 1.2%, to finish at 899.32, giving it a weekly loss of 18.2%. The Nasdaq Composite gained 4.39 points, or 0.3%, to end at 1,649.51, down 15.3% from last Friday's close.