MAJOR PAPERS:

• The Wall Street Journal reported that a federal judge said that the government had "sufficient evidence" for a jury to conclude that a conspiracy to fraudulently boost the financials of American International Group Inc (NYSE: AIG) began with former CEO Maurice R. "Hank" Greenberg. That led to a transaction that artificially inflated AIG's loss reserves.
• Citigroup Incorporated's (NYSE: C) Falcon Strategies fixed income hedge fund is down 75%, the Wall Street Journal reported, bad news for the three U.S. banks that invested in it to help increase returns on employee life insurance. One of the banks, Fifth Third Bancorp (NASDAQ: FITB), is suing Transamerica Life and Smith Barney, both of whom helped to arrange the investment, and some are now questioning whether Citigroup will be forced to give back some of the investments as they have with individual investors.
• After it stopped offering some mortgages last month because it was swamped by volumes of new applications, the Financial Times reported that First Direct, a unit of HSBC Holdings Plc (NYSE: HBC), has resumed lending to new customers. The bank said it has continued to receive "significant interest" in its mortgages from existing customers.

• In an effort to raise capital from shareholders, the Telegraph reported that Barclays Plc (NYSE: BCS) is considering a takeover bid for a rival in the U.S. or UK. Sources believe Barclays may attempt to acquire an investment bank, a struggling bank or a deal in a fast-moving economy. Potential names mentioned include UBS AG (NYSE: UBS) and Lehman Brothers Holdings Inc (NYSE: LEH).

John Christy, editor of The Forbes International Investment Report, has long held Barclays (NYSE: BCS) in his model portfolio, and in recent months has been anticipating a merger deal. He now notes, "Rumors of a deal between Barclay's and Dutch bank ABN-Amro (NYSE: ABN) appear to be turning into reality."

This deal, in his view, will be an "interesting strategic combination" – in part because ABN's businesses in Europe, Asia and Latin America, for example, will help Barclays expand its global reach. Further, he notes that Barclays is a "pretty good" value, trading at 10 times earnings and paying nearly 4% dividend.

Despite its positive operating outlook, the advisor is choosing to sell the stock, noting, "Interesting strategic combinations aren't always the best stock picks."