Friday’s stock market rally capped another up week for the S&P 500, with stocks now 6% above the July low. The driver of investor optimism was a sign that the lingering uncertainty surrounding troubled financial firms Lehman Brothers, Fannie Mae, and Freddie Mac was nearing a resolution. The state-owned Korean Development indicated it was reviewing options that may include buying Lehman Brothers in some form. Lehman Brothers might find the capital it may need to remain solvent, but how close are Fannie and Freddie? Last week Freddie Mac fell 52% to $2.81 and Fannie Mae dropped 37% to $5, and their preferred shares traded as low as 19 cents on the dollar.

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