Financial Market Update: After the Closing Bell-Monday, Oct. 6

Yo-yoing has become the norm on Wall Street as the Dow Jones Industrial Average stampeded down about 800 points and then sprang back up again toward the end of the trading day Monday, finishing down 369 points for the day. The Dow also ended below the 10,000 point mark for the first time in four years. Investors seem to have been reacting more to sharp declines on European markets earlier in the day than any specific bit of domestic bad news In fact, much of the bad news is coming from the European Union these days–if union is the right term. Various E.U. governments have been struggling individually to deal with the Panic of 2008, up to and including Germany’s move this weekend to guarantee all the private bank deposits in the country. Which seems to have caught the British, French, Spanish and others by surprise. A number of emergency meetings among E.U. member governments have been held, or planned, including today’s meeting of the E.U.’s 27 finance ministers in Luxembourg. It’s one thing to cobble together a supranational quasi-federation of diverse cultures, languages and economies when times are good, but what happens when hard times hit? Richard Fuld, the CEO who piloted Lehman into the rocks of bankruptcy, appeared before the House of Representatives Oversight Committee today, and his questioners weren’t in a sympathetic mood. “I feel horrible,” the banker said. He did not say, “I feel poor,” and various Congressmen were particularly keen to grill Fuld about the $500 million or so they said he’s made since 2000. Fuld pointed out that it was more like $250 million.It’s a little like a fistfight aboard the Titanic. Citigroup Inc. is suing Wells Fargo & Co. and Wachovia Corp. for $60 billion over the dispute about who’s going to take over Wachovia. Citi wants $20 billion in compensatory damages and $40 billion in punitive damages. “The Citi/Wachovia transaction would have been signed and announced on Friday, October 3rd if it had not been subverted by the unlawful conduct of Wachovia, Wells Fargo, and their officers and directors and outside advisers,” noted Citigroup in a statement this morning. Wachovia hasn’t commented about the suit, but has let it be known that it considers Wells Fargo’s offer to be the better of the two, partly because it doesn’t rely on government assistance. Never heard of Neel Kashkari? He will be well known starting today. As Treasury Department assistant secretary for international economics and development, Kashkari has been tapped as interim head of the department’s $700 billion bailout program. A former aerospace engineer–it’s some comfort to know that a rocket scientist is on the job–and Goldman Sachs banker, Kashkari joined the department only in July, just in time to help Sec. Paulson put together the bailout plan. He’s expected to start soliciting bids from asset managers as soon as this week, but actual asset buying probably won’t start for another month. The rumble of the financial crisis is being clearly heard in the generally staid and uninteresting world of commercial paper, the financial vehicle by which corporations borrow money in the short term to finance day-to-day operations. For the week ended Oct. 1, commercial paper outstanding dropped $94.9 billion, or 5.6 percent, to a three-year low of $1.6 trillion, according to the Federal Reserve. Over the weekend, yields on overnight U.S. commercial paper spiked 94 basis points to 3.68 percent, according to Bloomberg.