E*Trade On The Blocks? Probably.

CNBC’s David Faber reports that E*Trade (ETFC) is talking to both Charles Schwab (SCHW) and AmeriTrade (AMTD) about a possible sale. On a post-Thanksgiving Friday, that’s enough to send E*Trade shares up 25%; it has the added merit of quite possibly being true. E*Trade CEO Mitch Caplan has ruled out bankruptcy, so short of cash infusion, the company is going to need a white knight very soon. CNBC’s summary of the story after the jump.

ETRADE, THE BELEAGUERED ON-LINE BROKER, IS IN TALKS TO SELL ITSELF, ACCORDING TO PEOPLE FAMILIAR WITH THE SITUATION.

THE COMPANY IS SPEAKING TO A NUMBER OF RIVAL FIRMS ABOUT A SALE OF THE ENTIRE COMPANY OR OF ITS BROKERAGE OPERATIONS AND WHILE BANKERS TELL ME THERE IS PLENTY OF INTEREST AND SOME MOMENTUM BEHIND THE TALKS, IT IS FAR FROM CLEAR ANYTHING WILL GET DONE.

THE KEY ISSUE, OF COURSE, IS WHAT TO DO WITH ETRADE’S BANK, WHOSE FORAY INTO THE MORTGAGE MARKET HAS BROUGHT DISASTROUS LOSSES FOR THE COMPANY AS IT HAS BEEN FORCED TO WRITE DOWN ITS PORTFOLIO OF MORTGAGES.

WHILE THE PRESENCE OF THOSE MORTGAGES ON ETRADES BALANCE SHEET PRESENTS PROBLEMS FOR WOULD BE ACQUIRERS, BANKERS TELL ME THAT AMONG THE FIRMS LOOKING AT ETRADE THERE ARE THOSE WHO KNOW HOW TO DEAL WITH TROUBLED FINANCIAL ASSETS.

AMERITRADE AND CHARLES SCHWAB ARE AMONG THE FIRMS BELIEVED TO BE TALKING WITH ETRADE.

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