The end game for Washington Mutual is nigh. From Reuters:
U.S. federal regulators recently called a number of banks asking if they would consider buying Washington Mutual Inc should it eventually falter, the New York Post said, citing sources.
Federal banking regulators, in recent days, contacted Wells Fargo & Co, JPMorgan Chase & Co, HSBC and several other financial institutions to gauge their interest in a possible acquisition of WaMu, the paper said.
No merger discussions are currently under way between the Seattle-based bank and anyone else, the sources told the paper.
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A takeover will mean a lot of branches to close.
Oh yes we are still looking for that “free market” solution. Maybe WFC will come in with their “strong’ balance sheet to prop up Wamu. We’ll worry about Goldman, Morgan and Wachovia tomorrow…
More than 2600 branches nationwide…
This story should read Wamu we will pay you to take it…
I hope that HSBC don’t buy them, we might need them to buy RBS on our side of the Atlantic.
Barclays purchase of selected pieces from Lehman Brothers sets a very useful precedent. I think, in the case of Washington Mutual this translates to an interested party waiting for bankruptcy and following that pick up the vaunted branch network of the bank.
My friends have taken up a collection for a buy out but only came up with $5.10…sorry money is tight right now. Just change the WaMu signs to ‘US Treasury Savings and Loan Bank’
They better find a buyer, else the FDIC = TILT!
Some not so comic relief:
Henry Paulson’s Frankenstein
http://dealbook.blogs.nytimes.com/2008/09/17/henry-paulsons-frankenstein/
Breaking: Federal Reserve out of money – borrowing more from government.
http://www.ft.com/cms/s/0/271257f2-83f1-11dd-bf00-000077b07658.html
Physical gold and miners.
I think Peter Marinov has it right. BAC’s purchase of Merrill notwithstanding, I see WaMu getting bought out only AFTER it enters bankruptcy. WaMu has a very large and attractive footprint on the west coast, esp. in CA, that would be attractive to a bank looking to expand quickly out west. Given this, I think US Bank will be the eventual buyer since they already have some, but not many, branches in CA.
If WaMu fails, the only way FDIC will sell the bank is if the purchaser will take ~$110 B in assets. Otherwise it will be a conservatorship. The cost of a deposit transfer without an asset sale is prohibitive.
For anyone who wants to predict what FDIC will do, remember FDIC is not on GAAP. So, in a conservatorship such as IndyMac, FDIC doesn’t book a deferred liability for the deposits under its control. When FDIC does a cost test to select the transaction type, it’s an NPV calculation with lots of wiggle room. For example, they can assume that market conditions will be more favorable for asset sales in the future, so that a buyer will eventually take the assets held in conservatorship, thereby reducing the cash cost to the insurance fund.
The Fed and Treasury are pretty smart for saving companies in an ad hoc fashion, both in terms of entities saved and in terms of mechanics. This makes it difficult for people to take leveraged short positions on financial institutions’ stock or debt.
Yes, Paulson’s and the Fed’s bazooka doesn’t have enough shots to kill all the shorts, but the ones they do shoot will die. That threat will keep the shorts from using too much leverage in their short positions. On the other hand, that uncertainty also discourages private investors from recapitalizing the system. This uncertainty cuts both ways.
According to the FT
The US Treasury on Wednesday announced it was creating a supplemental funding programme to ensure that the Federal Reserve has the cash it needs, and that its ability to provide emergency liquidity support for the markets is not constrained by the size of its own balance sheet.
http://www.ft.com/cms/s/0/8058d308-84d3-11dd-b148-0000779fd18c.html?nclick_check=1
“Where to put assets?”
In a suitcase. Preferably one within arm’s reach.
Come on…awake guys…the game is over…escape to Panama or Brazil…there your money will have some value…leave now before the big crash in America.
Does anyone know where JPM and WFC stand w/r/t the 10% deposit cap were they to take on WaMu’s deposits?
TPG waved its dilution clause…just fyi.
n/p
Great now even 3rd world mafia drug dealers don't want dollars:
U.S. Busts Mexican Drug Ring With Appetite for Strong Euro
"The European cocaine market is even more attractive than the American one because of robust demand and a strong euro, said Russell Benson, the regional director of the DEA in Europe and Africa."
http://www.bloomberg.com/apps/news?pid=20601086&sid=ac4NccJve9NQ&refer=latin_america
For example, they can assume that market conditions will be more favorable for asset sales in the future, so that a buyer will eventually take the assets held in conservatorship, thereby reducing the cash cost to the insurance fund.
This shell game will no longer work, because now the FDIC has to actually convince the potential buyers that the conditions will be “mo favorable”. A year ago this could work, but now nobody is that gullible.
Sorry OT
From Bloomberg
"JPMorgan Chase & Co. gave $138 billion this week in Federal Reserve-backed advances to the broker dealer unit of Lehman Brothers Holdings Inc. to settle Lehman trades and keep financial markets stable amid the biggest bankruptcy in history, according to a court filing"
Does this mean that the Fed DID provide a loan for Lehman??
Didn't Paulson say categorically that was not the case?
China appears to be displeased and this was BEFORE AIG.
http://tinyurl.com/goodbyeDollar
I just heard a rumor from a well-connected friend that the following are being bantered about among the principals:
(1) Merger of Wachovia and Morgan Stanley
(2) Citigroup and JP Morgan splitting up the WaMu franchise
Now, where these clowns get the capital to do such proposed deals is another question.
TSLF blowout:
http://www.aleablog.com/tslf-disaster/
Gimmicks don’t work, Ben.
Collateral type 2 for 28-day: most auctions cleared around 25 bp, today’s was 300 bp !
Collateral type 2 for 14-day : 250 bp !
I forgot the bid-to-cover ratio: 4 times recent numbers.
CNBC just said they are going to auction themselves off.
Maybe they’ll do it through ebay.
Of course, i have a feeling they’ll only accept bids if the buyer has a paypal account. Just a hunch.
n/p
Can I buy WaMu on ebay? *S*
Overheard someone in an elevator in Seattle today saying they pulled all of their money our of their WAMU account. I quized him, and he said “I can’t afford to have my money tied for a couple of months at FDIC”.
Last night at a school event for my kids gentlemen were talking about how they “closed all their money market accounts moved to treasuries”.
The run-on-the-bank is underway.
“9/17/08 – Guys, update from my source whose information has been pretty good…
He has not waivered since my original post until today when he says that the FDIC will not take WM down this friday, too much bad has happened this week. They want to find a buyer if they can and need more time.
It has been postponed 1 week for now.”
http://tinyurl.com/4nbhh9
Im sorry but the Government has been taken over by the Federal Reserve and the central banks. They are bailing out these corporations but in actuality they are buying the country and its people. They now own most of the mortgages and with these bail outs we will be forced to pay the bill involuntarily. And the sad part of it all is that we as Americans will let it happen because the average person has been so dumbed down by the education system they can’t understand whats going on. Regular working people can’t afford anything and the ones that are unemployed can’t find a job that pays enough to put the fuel in their vehicle to get there.
We have been screwed, We have been divided in this country by race far too long and that has been the major smoke screen that the Illuminati has used to distract us from the real issues. We are f*cked!!!