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Just Another Massive Bank FailureThe feds seized S&L giant Washington Mutual last night, auctioning off the bank’s assets to über-survivor JP Morgan for nearly $2 billion, safeguarding depositor’s accounts but wiping out stockholders in what is the country’s largest bank failure. Ever. Ho. Hum. Except, you know, WaMu, despite having bled red to the tune of $16 billion over the last three quarters, still had assets of around $300 billion on the books. That means that JP Morgan bought those assets at less than a penny on the dollar, plus whatever’s behind door number 2: Liabilities. Put another way, using the accounting equation: Assets ($300 billion) − Liabilities (?) = Owners equity ($2 billion) Even assuming JP Morgan got a great deal for being the last man standing with money in his pocket, that’s an imputed liability base of $298 billion (less discount) for one bank. Interesting times. Update: Too soon to ask who shot John? Not for some folks. Update 2: Poison pill for the mortgage bill?
This, by the way, is why Paulson kept his initial bill to three pages and demanded disbursals be kept out of the political theater. But there was never any way that Congress could throw that much money on the table and not want to pick winners and losers when it got passed out. Nice try, Hank. 11 comments to Just Another Massive Bank Failure |
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I was just about to send in an order for new checks, but maybe I should wait to see if the name will remain WaMu or switch to JP something or other.
I got a solicitation for a credit card from WaMu in the mail yesterday.
WaMu is building a new branch office in our neighborhood. So far, construction continues…
WaMu customers:
I’ve been a customer of JP Morgan/Chase from when it was Chemical. I have never been done wrong. My advice is not to worry. (I love their internet bill paying plus their internet “heads-up” emails).
Keeping you eyes on the target, however, Mr. Dodd and Mr. Frank need a little hot tar and feathers for helping to bring this mess about. But not all banks fell for the scam. There are lots of small ones doing just fine: http://www.washingtonpost.com/wp-dyn/content/article/2008/09/25/AR2008092504155.html.
Just as trees don’t grow to the sky, economies don’t go to zero. (Well, not yet anyway)
Pixelkiller, Agree… Messrs. Dodd & Frank deserve much worse but will in all likelyhood get away with it…
Re ” there are lots of small ones (banks) doing just fine “… just received a copy of a commitment letter today, from a strong community bank, approving a 3/4 million dollar equipment acquisition loan for a long time client/ski resort operator … it may be chump change on a national level but here in paradise it’s a fine piece of business… Best
Pixelkiller: I was a Texas Commerce bank customer before the were taken over by Chase. I absolutely hated TCB, their service, their arrogance, their disdain for the small depositor. I left TCB and went to some other smaller bank (that was gobbled up twice before it became WAMU) and….ended up leaving WAMU for Capital One for some of the same reasons. (CapitalOne has their own issues, but I have a son who works there. amazing what a little push from an insider can do!) OTOH, I have been a Chase VISA card holder for a number of years and couldn’t be happier with this card. I still have a small business account with WAMU so I hope that Chase can fix some of WAMU’s (local) customer service issues. And some of their (WAMU’s) really crappy online systems.
Of course, as in any opinion on banks, YMMV
If you bought Bank of America a week ago you are now very happy.
It’s a buyer’s market out there. The real estate will all be worth something to somebody sometime. It’s a matter of getting there. Some of the horses are looking pretty good, if’n you’re a betting man.
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Why is ACORN in the bailout? So that the Dems can continue financing ACORN’s work in registering illegal aliens to vote in the next election. They’ve already been convicted of this in several court cases.
Marianne
So I just wandered over to where my wife was working on her computer, and mentioned that she probably ought to hold off ordering new checks, since were weren’t customers of WAMU any more. Sorta. Kinda. “Why not check their home page when you have a minute?”
She wasn’t particularly amused, and I’m not letting her get behind me for just a bit longer.
I’ve had some business dealings with JP Morgan in the past, and never a complaint. With any luck…
Funny. The Fed’s siezed them on the 26th, this morning their offer for a credit card arrived. I guess this is their new plan for financial solvency?
Interest is prime rate plus 5% to 19%, depending upon your credit score. With credit up to $30K.
Why, a guy could make a down payment on a pretty decent house with that kind of credit. And that introductory 0% through January? Bonus!
– Max