And Another One Bites the Dust.

From the NYT:

Washington Mutual, the giant lender that came to symbolize the excesses of the mortgage boom, was seized by federal regulators on Thursday night in the largest bank failure in American history.

Regulators simultaneously brokered an emergency sale of virtually all of Washington Mutual to JPMorgan Chase. The remainder of WaMu, the nation’s largest savings and loan, will be operated by the government. Shareholders and some bondholders will be wiped out. WaMu deposits are guaranteed by the Federal Deposit Insurance Corporation up to the $100,000 limit for each account. WaMu customers are unlikely to be affected.

JPMorgan Chase is to take control on Friday of all of WaMu’s 2,300 branches, which stretch from New York to California, and will oversee its big portfolio of mortgage and credit card loans. It will also acquire all of WaMu’s deposits with the sale.

For weeks, the Federal Reserve and the Treasury Department had been nervous about the fate of WaMu, among the worst-hit by the housing crisis, and pressed hard for the bank to sell itself. As panic gripped financial markets last week following the collapse of Lehman Brothers, the government stepped up its efforts, working behind the scenes and at points going behind WaMu’s back to work privately with potential bidders on a deal.

Okay. So now the government is surreptitiously taking action to save banks?

18 thoughts on “And Another One Bites the Dust.

  1. Bourgie, Esq. September 25, 2008 at 9:30 pm Reply

    Ok, this is getting out of hand.
    I must admit, though, it’s all the more confusing and scary for a person like me. While I consider myself smart and pretty knowledgeable on current events, I do not “get” this so-called economic crisis.
    I need the good folks @ Postbourgie to do a “Bailout for Dummies” post or at least point me toward a good one.
    As it is right now, I dunno if I should start keeping money in my mattress or move to France.

  2. shani-o September 25, 2008 at 9:46 pm Reply

    I know I shouldn’t take this personally, because big banks are evil and horrible and whatnot… but WaMu is *my* bank, and this makes me kinda sad.

  3. Lemu September 25, 2008 at 9:50 pm Reply

    this is bad, but not half as bad as if china or japan decides to selloff the american debt they own.

    This entire bailout plan scares me because there is no plan b. We have a choice to take the bail out to hopefully make people believe the government can stablize things, or not take it, weather the storm, and possibly get fucked.

    Secretly, this crisis excites me. Its the worst case scenarios we argued about in micro econ, but never thought would ever happen.

    ok. continue on.

  4. Big Word September 26, 2008 at 12:06 am Reply

    The folks at MSN called this one 2 months ago. I wish I had a link, but there was a list populated with about 90 banks and financial institutions that were about to go belly up.

    The conspiracy theorist in me believes this is just a controlled demolition of the whole finance business. Too many bad loans on overpriced houses.

  5. scott September 26, 2008 at 10:51 am Reply

    shani-o

    Why are banks “evil and horrible”?

  6. shani-o September 26, 2008 at 10:55 am Reply

    Scott- Well, I was being facetious. But the goals of large banks are often directly at odds with the needs of consumers.

  7. G.D. September 26, 2008 at 11:42 am Reply

    Bourgie, Esq: We’re working on it right now. It should be up soon.

  8. scott September 26, 2008 at 11:46 am Reply

    shani-o:

    Like any business, their goal is to make a profit for shareholders. You can argue with their methods but I don’t think large banks are inherently evil.

  9. Grump September 26, 2008 at 12:00 pm Reply

    Anybody else have a WaMU across the street from the local Chase branch in their neighborhood?

  10. shani-o September 26, 2008 at 12:30 pm Reply

    Scott: like I said, I was being facetious.

  11. Shawn L. September 26, 2008 at 12:58 pm Reply

    Customers withdrew nearly $17 billion from WaMU in a 10-day period following the bankruptcy of Lehman brothers. WaMU no longer had the liquidity to meet their obligations so the government had to step in and broker a deal.

    That’s why the bailout is so important — to calm the markets and give struggling banks time to clean up their balance sheets. Otherwise we’ll see more runs on banks that made bad bets, stressing FDIC insurance to its breaking point.

  12. ladyfresshh September 26, 2008 at 2:09 pm Reply

    *looks at bank account*

    …HAVE FUN WITH MY $5.29 GUYS!

  13. mtvhillscontest1 September 26, 2008 at 2:20 pm Reply

    Shawn – The goal of the bailout is to calm the fears of investors, and make them believe the market will stabilize. Fear is what is driving a lot of these runs on banks, and the question to be asked next is, what if the bailout doesn’t dilute those fears?

    If traders could still be short selling, believe me they would. But ban on short selling doesn’t reduce the fear behind this crisis, but temporarily says you can’t make money off of it.

    In a few months if this bailout doesn’t bring enough confidence to the markets, then don’t be shocked when china and japan start selling off their american debt holdings. Sending our economy into a tailspin it will not recover from.

  14. Lemu September 26, 2008 at 2:21 pm Reply

    oops.
    MTV hills contest is me.

  15. shani-o September 26, 2008 at 2:45 pm Reply

    LF, are you sure you’re not looking at MY bank acct? lol

  16. Shawn L. September 26, 2008 at 2:58 pm Reply

    “The goal of the bailout is to calm the fears of investors, and make them believe the market will stabilize.”

    The investors ARE the market.

  17. Lemu September 26, 2008 at 4:05 pm Reply

    that is what intrigues me the most. the market is a bunch collective ideas and predictions, and isn’t palpable in any way.

  18. Shawn L. September 29, 2008 at 5:14 pm Reply

    I guess it was some disembodied ideas, not alarmed investors, that tanked the Dow today.

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