Wow...JPM Buys WaMu

[mushmouth]

Wower.

This is insane...late news night.

[Cono Este]

wow. WM trading 38 cents now, down from 1.69.

[mrryde]

well at least they didn't by Wachovia

[mud]

U.S. government seizes Washington Mutual

http://www.iht.com/articles/2008/09/...ess/26wamu.php


"The U.S. government on Thursday made the largest bank seizure in American history, taking over Washington Mutual, the severely troubled savings and loan, and selling pieces of it to JPMorgan Chase in an emergency deal intended to avoid sticking the taxpayer with a bill for another bank, according to people briefed on the plan.

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 had pressed hard for the bank to sell itself. As panic gripped financial markets last week after the collapse of the investment bank Lehman Brothers, U.S. regulators stepped up their efforts, working behind the scenes, and at times going behind WaMu's back to work privately with potential bidders.

Indeed, the seizure and the deal with JPMorgan came as a shock to Washington Mutual's board, which was kept completely in the dark: the company's new chief executive, Alan Fishman, was flying from New York to Seattle at the time the deal was brokered, according to these people.

The shot-gun acquisition marks the second time since the housing crisis began that the government has pushed a troubled bank into the arms of JPMorgan Chase. In March, JPMorgan rescued Bear Stearns as it teetered into bankruptcy protection.

The deal will give JPMorgan branches in California and other markets where it does not have a footprint. But JPMorgan will also inherit a big loan portfolio of troubled mortgages and commercial real estate.

U.S. regulators had been trying to broker a deal for Washington Mutual because a takeover by the Federal Deposit Insurance Corp. would have dealt a crushing blow to the deposit insurance fund. The fund, which stood at $45.2 billion at the end of June, had been severely depleted after suffering a debilitating loss from the sudden collapse of IndyMac Bank. Analysts say that a failure of Washington Mutual would have cost the fund upwards of $20 billion to $30 billion.

"WaMu's impact could be enormous," said Jaret Seiberg, a banking industry analyst at the Stanford Group in Washington. "That is why we believe Washington Mutual is too big to fail in a conventional sense and you would have to see some sort of government stabilization effort."

"They were a deal machine in the late 1990s and spent the early part of this decade concentrating on residential mortgages," said Frederick Cannon, a banking analyst at Keefe Bruyette & Woods "The thrift business model was breaking down, even as they were building it up."

The takeover of Washington Mutual is yet another black-eye for its primary federal regulator, the Office of Thrift Supervision. It also oversaw IndyMac Bank, another big lender that suddenly collapsed in mid-July, and several other deeply troubled savings banks. Washington Mutual was the largest institution under its watch.

Washington Mutual long insisted that it could remain independent, but the giant thrift had quietly hired Goldman Sachs early last week to identify potential bidders. Among the banks that expressed interest were Citigroup, JPMorgan Chase, HSBC, Banco Santander, TD Bancorp and Wells Fargo. Each had different reasons for making an offer, but nobody could make the numbers work. Several deadlines past without anyone submitting bid.

Washington Mutual had struggled to find a partner earlier this year willing to inject fresh funds in its ailing business. This spring, it balked at an offer from JPMorgan to buy the entire company. Instead, TPG, the big private equity firm, led a group of investors that made a $5 billion capital injection in April."

[Cono Este]

That explains the news last weekend of jpm and gs reorganizing.

[Anxious Mo-Fo]

By the end of the month, JPMC will own the entire U.S. banking system. You heard it here first.

[mushmouth]

By the end of the month, JPMC will own the entire U.S. banking system. You heard it here first.

You make that sound like a good thing for JPM

[skibuminwyo]

By the end of the month, JPMC will own the entire U.S. banking system. You heard it here first.

Just what I was thinking.

[liv2ski]

You make that sound like a good thing for JPM

Yep, until everything they bought (bad assets/loans) takes them down too. Wells Fargo is the only firm that looks rather unscathed, so far, in the loan portfolio mess. That really puzzles me too, as them and Countrywide were at the forefront for doing the 100% cltv 2nds with no income documentation. I guess eating a shitload of $150k avg loan balance files is easier than eating the 1st TD that was $350k-$450k on avg.
Also Chase is in big trouble from their portfolio of loans so I am unsure how JP Morgan Chase keeps buying failed institutions up. Seems as though they are just setting themselves up for a epic fail in the next year. I am moving all my money to a T Bill mutual fund, as the bank/brokerage industry is scaring the shit out of me.
You heard it hear 1st.

[Brock Landers]

By the end of the month, JPMC will own the entire U.S. banking system. You heard it here first.

BoA might disagree

[The Suit]

That explains the news last weekend of jpm and gs reorganizing.

I think you are confusing JP Morgan and Morgan Stanley. Last week Morgan Stanley & Goldman Sachs were given permission to become banks. JP Morgan already was one.

[Stone-Free]

Yep, until everything they bought (bad assets/loans) takes them down too. Wells Fargo is the only firm that looks rather unscathed, so far, in the loan portfolio mess. That really puzzles me too, as them and Countrywide were at the forefront for doing the 100% cltv 2nds with no income documentation. I guess eating a shitload of $150k avg loan balance files is easier than eating the 1st TD that was $350k-$450k on avg.Also Chase is in big trouble from their portfolio of loans so I am unsure how JP Morgan Chase keeps buying failed institutions up. Seems as though they are just setting themselves up for a epic fail in the next year. I am moving all my money to a T Bill mutual fund, as the bank/brokerage industry is scaring the shit out of me.
You heard it hear 1st.

I think Countrywide was sending out those stated doc seconds to their best homeowners with good credit and tons of equity in their homes. Some elderly people got very pissed at the wording of offer, as most thought it was a HELOC, and got into a second. I saw a lot of that.

RELS valuation handles all the appraising/underwriting for Wells Fargo and they are a pretty solid outfit and bought most of that paper right. I'd like to think that Wells is the most stable of all of them.

[DJSapp]

[Theodore]

I had no idea NASCAR was paying him that well!

No wonder he left F1!

[Stu Gotz]

This is going to be like a fantasy football fifth round run on tight ends. One goes and everyone else piles on.

National City is in play. Wachovia is going to get taken out. Goldman and Morgan Stanley have got to get in the game or all of the good real estate will be gone. And Wells Fargo is sittting out there waiting to pounce.

Maybe the bailout plan will be a moot point by Monday.

[GordonShumway]

As a current (former?) employee of WaMu I say, this sucks.


Can you give +++++++vibes+++++++ to yourself, or will that make you go blind?

[Brock Landers]

This is going to be like a fantasy football fifth round run on tight ends. One goes and everyone else piles on.

National City is in play. Wachovia is going to get taken out. Goldman and Morgan Stanley have got to get in the game or all of the good real estate will be gone. And Wells Fargo is sittting out there waiting to pounce.

Think BoA is done yet?

[mushmouth]

I think now valuations of are getting marked down to the JPM middle scenario pricing (28%+ home price declines), then the next domino will fall.

Wachovia may be a likely target for GS or WFC, but more than likely GS. When the bailout happens a place like GS with WB assets gets immediately recapitalized even if govt doesn't pay premiums. As long as the crap is off the books, the floor is in and the deposit base is the capitalization.

...maybe.

[CUBUCK]

Think BoA is done yet?

yes,

I think integration of an Ibank is far tougher and more time consuming than a commercial bank. Also, I think BofA is pushing up on deposit limits, someting like 10% of all US deposits.