Hedge Funds To Ask EU For Porshe-VW Resolution · Hedge funds that were short-squeezed by Porsche's surprise disclosure Monday it owns roughly 75% of Volkswagen will petition the European Union to clamp down on a controversial German legal loophole that allowed the automaker to secretly boost its stake.  Some of the funds are facing billions of dollars in losses. (The Times)

Porsche To Settle VW Trades As Hedge Funds Count Losses · Porsche offered Wednesday to settle hedging transactions of up to 5% of Volkswagen ordinary shares after several prominent hedge funds were short-squeezed by its revelation it owned 74% of the German automaker. (FT)

Goldman, Morgan Stanley Hit By VW Exposure Rumors · Morgan Stanley and Goldman Sachs shares fell sharply Tuesday on speculation the Wall Street firms might have been short-squeezed by trades involving German automaker Volkswagen. Societe Generale's shares also fell amid loss rumors, but the banks denied exposure to the automaker. (Reuters)

Deutsche Bank Loses $400M On Derivatives Bets · Deutsche Bank, Germany's largest bank, reportedly lost more than $400 million on equity derivatives trades as dislocations in capital markets diminshed investor demand for securities.  The loss erases nearly half of the firm's second-quarter revenue from equity sales and trading. (Bloomberg)

Sinn: A Decade Of Stagnation [OPINION] · Economist Hans-Werner Sinn of the University of Munich cautions that America is in for a painful decade of stagnation as foreign investors shun U.S. financial assets and American households learn to accumulate wealth by cutting consumption. (Project Syndicate)

Germany Probes KfW Over Lehman Transfer · Management at KfW Group, a German government-owned development bank, is under investigation by prosecutors probing a $411 million automated payment the bank made to Lehman Brothers the day it filed for bankruptcy protection. (Bloomberg)

EU Nations Commit $1.5 Trillion To Backstop Banks · France, Germany, Spain and Austria pledged $1.5 trillion on Monday to take equity stakes in banks and guarantee deposits, less than a day after agreeing to collectively stablize the European banking system. (Bloomberg)

European Leaders Agree To Crisis Plan · European nations agreed late Sunday to take equity stakes in distressed banks and guarantee bank lending for periods of up to five years in a bid to jump-start frozen credit markets.  Officials declined to put a price tag on the plan. (NYT)

Bush Meets G7 Ministers, No New Strategy · President Bush met with financial officials from the wealthy Group of Seven countries and pledged a global response to the credit crisis. (Washington Post) But he offered no new strategies in the foreshortened meeting, lasting only a half-hour.

Paulson Defends G-7 Communique · The Group of Seven issued a communique on the first day of their meetings in Washington, DC.  It promised to take "decisive action and use all available tools" without specifying what they are beyond supporting the Financial Stability Forum's recommendations. (WSJ)

G7 Ministers Huddle In Talks · Finance ministers and central bankers from the Group of Seven leading economies were edging towards common ground for coordinated action to stabilize the global financial system. (FT) The UK and Germany led calls for a strong unified signal, given the week's downward spiral, bringing in China, the G-20, and the White House. (CNNMoney.com, NYT)

Europe Seeks Unified Banking Policies · European Union finance ministers met in Luxembourg to buck up their banking systems. One proposal would quintuple deposit guarantees, from 20,000 euros to 100,000. Germany has eschewed an EU-wide fiscal solution.  (NYT)

Germany Scrambles To Rescue Hypo Real Estate Bank, Again · Germany's second-largest commercial property lender, Hypo Real Estate (HRE), is again seeking a rescue after a consortium of German banks "refused to provide liquidity lines" as part of a $48 billion bailout. The German government is meeting with the central bank and regulators. (BBC)

EU Leaders Plan Financial Summit · Leaders from Britain, France, Germany and Italy will hold a banking summit in Paris to discuss EU response to the financial crisis and debate possible bailouts for some banks. (BBC)

E.U. Officials Feud Over Crisis Plan · As the credit crisis hit Europe, Germany and Great Britain rejected French calls for a pan-European fund to support troubled financial institutions.  Meanwhile, European Union officials criticized Ireland's "go it alone" decision to guarantee its six largest lenders. (FT)