Report: E*Trade in Sale Talks

E*Trade Financial(ETFC - Cramer's Take - Stockpickr) shares surged 25% after CNBC reported that the troubled online brokerage firm is talking with at least two competitors in hopes of selling itself.

According to CNBC, E*Trade is discussing a possible deal with TD Ameritrade(AMTD - Cramer's Take - Stockpickr) and Charles Schwab(SCHW - Cramer's Take - Stockpickr), along with several other interested parties.

Speculation about such a deal, rumored since earlier this year, heated up again after the company almost two weeks ago said it would take further writedowns. If E*Trade were to seal the deal with TD Ameritrade, its parent company TD Bank could buy the retail banking and mortgage assets, while the Omaha-based brokerage would likely pick up E*Trade's brokerage assets, CNBC reported.

E*Trade, which provides online banking, brokerage and lending to retail and institutional customers, joined the likes of Countrywide Financial(CFC - Cramer's Take - Stockpickr) and Washington Mutual(WM - Cramer's Take - Stockpickr) and other smaller lenders hit hard by the housing downturn and mortgage deterioration, particularly as the secondary market for mortgages ground to a halt.

Two weeks ago, E*Trade said it will take further writedowns on its collateralized debt obligations, or CDOs, and second-lien securities portfolio.

E*Trade and TD Ameritrade spokeswomen both declined to comment.

TD Ameritrade-E*Trade Combo No Sure Thing

The company is also facing a Securities and Exchange Commission investigation into its loan and securities portfolios.

Shares have lost more than 80% of their value this year -- a large chunk of which came two weeks ago after a Citigroup analyst suggested there could be a run on the company's bank.