Markets tanked Thursday - with the Dow falling nearly 700 points during the session - as panicked investors dumped stocks across the board. Bank lending remained tight as nervous institutions continued to hoard cash. Treasury prices fell, raising their corresponding yields. The dollar gained versus the euro and the yen. Oil, gas and gold prices fell. The Dow Jones industrial average lost 679 points, or 7.3%, closing at its lowest point since May 21, 2003. It was the Dow's third biggest one-day point-loss ever. The Standard & Poor's 500 index lost 7.6% and closed at its lowest point since April 28, 2003. The Nasdaq composite lost 5.5% and closed at its lowest point since June 30, 2003. A key measure of investor fear hit an all-time high: The CBOE Volatility index, or the VIX, hit nearly 64. Over the last seven sessions, the Dow has lost 2,271 points, or 20.1%. Since hitting an all-time high of 14,164.53 one year ago today, the Dow has lost 39.4%.

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Treasury Secretary Henry Paulson turned to a familiar source when he picked a director for the government's $700 billion bailout program: his former Wall Street firm, Goldman Sachs. Neel Kashkari, a former Goldman executive who has worked with Paulson at the department since July 2006, was chosen Monday as the interim head of the government's unprecedented effort to unclog the credit markets. Kashkari, who was a vice president in Goldman's San Francisco office before joining the department, is one of four former executives from the firm now working feverishly to resolve the financial crisis. Paulson also leans heavily on former Goldman Sachs executives Dan Jester and Ken Wilson, both financial institutions bankers, and Steve Shafran, who focused on corporate restructuring while at Goldman. Shafran joined the department in February 2008, while Paulson brought Jester and Wilson on board in July and August, respectively, as the credit crisis worsened. All four are members of a domestic finance team at Treasury that has worked nearly nonstop on the crisis for months.

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Citigroup said it's ended negotiations with Wells Fargo in their fight to acquire Wachovia—but Citigroup's effort to grab some assets of Wachovia may not be over just yet. Sources inside Citigroup told CNBC that the bank believes Wells Fargo will have to settle claims of tortious interference of contract that Citigroup has made against it before any merger between Wells Fargo and Wachovia can take place. Such a settlement could include handing over some of Wachovia's deposits, sources said. Citigroup agreed last week to buy Wachovia's banking operations for $2.1 billion in a deal orchestrated by the government. Four days later, Wells Fargo stunned Citigroup by announcing that Wachovia's board had agreed to an $11.7 billion all-stock offer. Originally, the deal was valued at $15.1 billion, but Wells Fargo stock has declined since it was announced. The parties had agreed to a legal standstill, which was set to end Friday, after the battle for the Charlotte, N.C.-based bank moved to court.

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As the biggest market intervention in U.S. history made its way through Congress, Neel Kashkari, the Treasury official named this week to run the program, offered assurances to 800 financial-industry players. Attempts by Congress to make beneficiaries pay for their mistakes, such as placing caps on executive pay, were "quite reasonable" and "a pretty modest hindrance to you," he told them, according to a recording of the Sept. 28 conference call made public on video-sharing Web site YouTube. The exchange is a rare inside look at conversations between government officials and industry representatives who help shape government policy. To win approval for the rescue package, Treasury had to agree to a number of conditions imposed by lawmakers, such as the pay caps and moves to help homeowners. But to succeed, Treasury must also win the support of institutions healthy enough to revive faltering capital markets.

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Federal regulators have made an official determination that Fannie Mae and Freddie Mac are undercapitalized, but have suspended rules that would have required the companies to raise additional money. The Federal Housing Finance Agency, which placed Fannie and Freddie into conservatorship on Sept. 7, said today that Fannie and Freddie have effectively been undercapitalized since June 30. But the Treasury Department's backstop of the companies -- a line of credit and purchase of senior preferred stock -- ensures that "for the very long term both entities will have positive net worth," and will be allowed to continue purchasing and guaranteeing mortgages, FHFA said. Before being placed into conservatorship, Fannie calculated its core capital of $47 billion represented a $9.4 billion surplus above that required by regulators. Freddie Mac said its $37.1 billion in core capital exceeded regulatory requirements by $2.7 billion. The continued market downturn during late July and August "raised significant questions about the sufficiency of capital," FHFA said today.

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Locally based Kennedy Wilson has formed a joint venture with Los Angeles-based LandCap Partners that is starting with a commitment of $100 million to acquire foreclosed properties as well as completed condominiums and homes held by developers. The two firms say that the initial equity commitment of $100 million will go to purchase completed homes and condominiums which homebuilders and financial institutions are holding in inventory or which have been foreclosed upon by lenders. The business plan for the joint venture calls for acquiring portfolios of properties and reselling them over time, generally at auction through an affiliate of Kennedy Wilson. Industry analysts estimate that builders and lenders are holding in excess of 1.5 million completed condominiums and homes, some of which would be available for purchase through this new joint venture.

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How can state leaders shrink Florida's state-backed home insurer which has become a behemoth? That's the question the Citizens Property Insurance Corp. Mission Review Task Force will start exploring at its first meeting today in Tampa. State legislators created the task force this year as a first step to return Citizens to its original purpose of being an insurer of last resort for Florida property owners. The group is expected to report its findings and recommendations to Gov. Charlie Crist and House and Senate leaders by Jan. 31. The task force — comprised of insurance industry executives, consumer advocates and state leaders appointed by Crist and other state officials — will identify things that triggered Citizens' ballooning to the state's largest property insurer with nearly 1.2 million policies and come up with ways to revamp the state insurer.

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As the rest of America stuffs Sertas and Sealys with cash, the Palm Beach real estate market remains about as cushy as ever, as evident from the sale of two vacant waterfront properties on South Ocean Boulevard recorded last week. The first property, the 22,500-square-foot 516 S. Ocean Blvd., sold for $10.4 million and set a new record for "price per front foot" for land across the street from the ocean, said Dana Koch of The Corcoran Group, who represented buyer Robert M. and Amy Feldman of Pennsylvania. According to the warranty deed from Oct. 1, 516 South Ocean Holdings Inc. sold the property. The company's principal is cable television and telecommunications entrepreneur John Scarpa. Scarpa's wife, Jana of Barclays International Realty, listed the property. Scarpa's company bought No. 516 in 2005 for about $8 million, according to property records. The lot once housed the 7,157-square-foot winter home of the Mario Perillo family.

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A massive $200 million mixed-use project, stocked with glass-enclosed elevators and giant outdoor LED billboards, could revitalize a long-blighted area of Panorama City under a proposal by two controversial developers. The Panorama Place project would replace the long-shuttered Montgomery Ward building with a three-story, 452,000-square-foot mall and 500 condos on an 8.7-acre lot next to the Panorama Mall. The project's lead developer is Mark Siffin, a 58-year-old businessman from Indiana whose record includes a failure to finish a previous big project in the Los Angeles area and a conviction for drug dealing in his 20s. And he's employed consultant James Acevedo, a Northeast Valley power broker whose own track record includes failing to complete several publicly funded housing projects. Some residents and business owners are excited to see a proposed development of this size in their neighborhood:

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Single-family home sales in Las Vegas tripled in September from the same month a year ago and inventory remained stable, but median prices dropped 31.8 percent, the Greater Las Vegas Association of Realtors reported Wednesday. Home sales have increased in all but one month this year as prices continue to fall, indicating that the housing market is still declining. "These two statistics are obviously related," association President Patty Kelley said. "As home prices keep getting lower, sales keep going up. This month's statistics show the greatest increase in year-over-year sales that we've seen in many years." Kelley has been saying for months that the unprecedented number of foreclosures on the market continues to drive down prices. Roughly two out of three home sales in Las Vegas over the past few months have been bank-owned properties, she said. Realtors sold 2,783 single-family homes in September, compared with 2,545 sales in August and 990 in the same month a year ago. Sales of condos and townhomes increased 81.2 percent from a year ago to 386 in September.

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As the global markets tumble, nearly 4,500 coastal residential properties in Miami-Dade, Broward, and Palm Beach counties have fallen by a combined value of -$1.05 billion, or an average of -33 percent, off of their historical highs, according to a new Vultures Database™ report from Condo Vultures® LLC. The average asking price in the Vultures Database™ was down by -$234,547 per property on Sept. 30 compared to a discount of -$227,330, or -32 percent, per property a month earlier on Aug. 31.