Friday's Headlines: Germany, France seek agreement on how to bolster EU banks

France and Germany still don't agree on how to bolster the faltering European banking system, ahead of an important EU leaders summit taking place next week, Reuters reports.

French President Nicolas Sarkozy and German Chancellor Angela Merkel will meet this Sunday to try to find a compromise.

"Under strong U.S. and market pressure, Chancellor Angela Merkel and President Nicolas Sarkozy will try to bridge sharp differences on how to use the euro zone's financial firepower to counter a sovereign debt crisis that threatens the global economic recovery," Reuters writes.

France wants to use the euro zone's 440 billion rescue fund to recapitalize its own banks which have the biggest exposure to weak southern European debt, while Berlin wants the fund only to be used as a last resort.

"Merkel said struggling banks should look first to the markets, then their national government, and only in the last instance the EFSF, and with reforms as a strict condition," Reuters reports.

Other News:

U.S. regulator CFTC enforcement cases at new record as it tackles financial crisis mess. [DealBook]

U.S. government doesn't want to manage how banks make profit, Geithner clarifies. [Wall Street Journal]

Morgan Stanley fires banker accused of leaking information to Galleon's Rajaratnam. [Financial Times]

Moody's cuts rating for nine Portuguese banks on worries about funding, loans, sovereign exposure. [Bloomberg]

Moody's cuts ratings of 12 UK banks on concerns that government may not bail them out. [Dow Jones Newswires]

ECB liquidity injections allows banks to survive while governments discuss recapitalization. [Bloomberg]

Goldman Sachs sued by Lehman affiliate for backing out of real estate deal. [Reuters]

UK government worried it may have to bail out Royal Bank of Scotland again. [Financial Times]

Royal Bank of Scotland says it's one of most "strongly capitalized" banks in Europe. [Bloomberg]