Credit Crunch Hits England Ahead Of Big Week In U.S.

The credit squeeze leaped across the Atlantic Ocean on Friday, just two days before the Federal Reserve is widely expected to cut U.S. intereest rates.

England’s fifth-largest mortgage lender, Northern Rock, confirmed Friday that it requested and received an emergency line of credit from the Bank of England. The bailout will allow it to continue to finance its lending, something that has become difficult due to the credit crunch. (See: "Northern Rock Teeters")

The news comes right before what is poised to be a key week on Wall Street. The Federal Reserve meets Tuesday, and widespread speculation is that the central bank will cut its target on federal funds -- the overnight interbank loan rate that usually forms a floor for borrowing costs in the United States -- to 5.0% from the current 5.25%. Throw in the fact that four major investment banks will be reporting earnings Tuesday, Wednesday, and Thursday, and next week could be a challenging one for the U.S. markets.

Investors are looking ahead to learn more about how the big banks are planning to combat the credit crunch and subprime mortgage meltdown. Lehman Brothers (nyse: LEH - news - people ) is first up on Tuesday, followed by Morgan Stanley (nyse: MS - news - people ) Wednesday, and then Goldman Sachs (nyse: GS - news - people ) and Bear Stearns (nyse: BSC - news - people ) Thursday. Shares of the four were mixed at the close on Friday. Lehman Brothers was down slightly at $59.50, an 18-cent, or 0.3%, drop; Morgan Stanley saw a 0.9%, or 58-cent, decline; Bear Stearns showed a solid gain, up 2.1%, or $2.36, to $117.15; and Goldman Sachs was also riding higher, getting a 1.2% lift to $190.65, a $2.18 rise.

The big lenders will also be worth watching next week, as a federal rate cut could provide them some relief. Countrywide Financial (nyse: CFC - news - people ) was up for a second consecutive day Friday. The company saw a double-digit percentage gain Thursday and continued its rally Friday, rising 2.4% on the session, a 46-cent gain, to close at $19.39.

Investors in the Dow Jones industrials were probably sad to see a strong week end. The Dow built on its triple-digit Thursday rally, moving 17.6 points higher, gaining 0.1% Friday.(Forbes Market Briefing)