Armegeddon Arives: Bailout fails and WaMu seized

[grapejelly]

http://biz.yahoo.com/rb/080925/busin...biz.html?.v=17

WASHINGTON (Reuters) - A rescue for the U.S. financial system unraveled on Thursday amid accusations Republican presidential candidate John McCain scuppered the deal, and Washington Mutual was closed by U.S. authorities and its assets sold in America's biggest ever bank failure.

As negotiations over an unprecedented $700 billion bailout to restore credit markets degenerated into chaos, the largest U.S. savings and loan bank was taken over by authorities and its deposits auctioned off. U.S. stock futures fell by more than 1 percent.The third-largest U.S. bank JPMorgan Chase & Co (NYSE:JPM - News) said it bought the deposits of Washington Mutual Inc (NYSE:WM - News), which has seen its stock price virtually wiped out because of massive amounts of bad mortgages. The government said there would be no impact on WaMu's depositors and customers. JPMorgan said it would be business as usual on Friday morning. Had a bailout deal been reached in Congress, it may have helped the savings and loan, founded in Seattle in 1889. Efforts to find a suitor to buy WaMu faltered in recent days over concerns about whether the government would reach a deal to buy its toxic mortgages. Earlier on Thursday, U.S. lawmakers had appeared close to a final agreement on the bailout, lifting world stock markets and sending the dollar higher. But things spun off course during an emergency White House meeting between Congressional leaders with U.S. President George W. Bush. In advance of that meeting, which included the two men battling to succeed him, Democrat Barack Obama and McCain, a compromise bipartisan deal seemed imminent. After the session, Congressional leaders said an agreement could take until the weekend or longer.

[grapejelly]

Re: Armegeddon Arives: Bailout fails and WaMu seized

Commentary:

After the session, Congressional leaders said an agreement could take until the weekend or longer.

A weekend or longer? How can we hold out!!!

[FRED]

Re: Armegeddon Arives: Bailout fails and WaMu seized

Commentary:

After the session, Congressional leaders said an agreement could take until the weekend or longer.

A weekend or longer? How can we hold out!!!

"Next comes financial chaos where even the appearance of control is lost. The sheer speed and randomness of events will catch many by surprise, like a financial tornado."

re "were literally maybe days away from a complete meltdown of our financial system"

[godraz]

Re: Armegeddon Arives: Bailout fails and WaMu seized

In astrology, a retrograde Mercury (meaning the planet appears to be going backwards against the celestial sky) is not a good time to make or conclude vital communication decisions. Lo and behold, Mercury went retrograde yesterday and won't be direct again until October 15th.

Contracts and decisions signed during this time period are prone to fail too.

We are so screwed.

[doharra]

Re: Armegeddon Arives: Bailout fails and WaMu seized

Financial commentary by Yeats:

Things fall apart; the centre cannot hold;
Mere anarchy is loosed upon the world,
The blood-dimmed tide is loosed, and everywhere
The ceremony of innocence is drowned;
The best lack all conviction, while the worst
Are full of passionate intensity.

http://www.potw.org/archive/potw351.html

[ASH]

Re: Armegeddon Arives: Bailout fails and WaMu seized

"Next comes financial chaos where even the appearance of control is lost. The sheer speed and randomness of events will catch many by surprise, like a financial tornado."

re "were literally maybe days away from a complete meltdown of our financial system"

I think it would be more nerve-wracking if the FDIC had to pay out on the insured deposits, and therefore had to supplement its fund by going to the Treasury or Fed. Since JP Morgan Chase bought the deposits, we aren't faced with headlines about the FDIC being "out of money".

On the other hand, the fact that this was announced on a Thursday evening rather than a Friday evening (commented on elsewhere by someone else) is curious. On the other thread, GRG suggests this was a move to pre-empt the spectacle of lines forming. That smacks of things starting to fly out of control. Alternatively, perhaps someone at OTS felt the need to "goose" Congress toward working something out with the big bailout.

[Chris]

Re: Armegeddon Arives: Bailout fails and WaMu seized

hmm...the FT were reporting this morning in the print edition that $350bil had been agreed on with a further $100bil next week. The remaining $300bil was to be voted on sometime next week. Have I missed something here?

[Supercilious]

Re: Armegeddon Arives: Bailout fails and WaMu seized

Commentary:

After the session, Congressional leaders said an agreement could take until the weekend or longer.

A weekend or longer? How can we hold out!!!

Hmmm... market depleted by liquidity with all shortselling prohibited (except for big market makers in collusion with friendly hedgies who can short sell any time they want from internal pools).... Uncertainty about achieving a deal before another shock.... During this weekend masses in hysteria will demand the Congress to save us all by approving the bailout ... or else...

Ben will do the right thing and dump more treasuries on the market ... and he wil be back next week for another big bailout to ..."save us" form another "imminent collapse"

Problem-Reaction-Solution

[c1ue]

Re: Armegeddon Arives: Bailout fails and WaMu seized

The JPM purchase of WaMu's deposits may be disputed by all those shareholders, bondholders, and whatnot who are getting the shaft.

Effectively JPM is getting all of the good stuff and leaving the bad stuff behind; I guarantee lawyers are going to get involved.

The funny thing is that I've been predicting a major depository bank collapse since the beginning of the year, and have been circling like a vulture around WM and WB since May or June.

Now that WM is down, look for WB next. Although I will expect regionals to start dropping fast first.

As for the deal - I am happy to see that the House Republicans are actually behaving Goldwater-style and not giving in without a fight.

The supposedly 'for the common man' Demos have rolled over by and large.

I am actually interested to see what Obama and McCain are doing in this; it appears McCain is non-committal on the bailout but unsurprisingly Obama is following his big donors' needs.

[don]

Re: Armegeddon Arives: Bailout fails and WaMu seized

"Well, here's another nice mess you've gotten me into."

Laurel & Hardy

[GRG55]

Re: Armegeddon Arives: Bailout fails and WaMu seized

The JPM purchase of WaMu's deposits may be disputed by all those shareholders, bondholders, and whatnot who are getting the shaft.

Effectively JPM is getting all of the good stuff and leaving the bad stuff behind; I guarantee lawyers are going to get involved...

I often wonder what in America the lawyers are not involved in...:rolleyes:

The funny thing is that I've been predicting a major depository bank collapse since the beginning of the year, and have been circling like a vulture around WM and WB since May or June.

Now that WM is down, look for WB next. Although I will expect regionals to start dropping fast first.

As for the deal - I am happy to see that the House Republicans are actually behaving Goldwater-style and not giving in without a fight.

The supposedly 'for the common man' Demos have rolled over by and large.

I am actually interested to see what Obama and McCain are doing in this; it appears McCain is non-committal on the bailout but unsurprisingly Obama is following his big donors' needs.

At the risk of treading into the dangerous waters of US politics, it looks to this outsider that McCain has correctly gauged the voter discontent over the bailout, and the inability of the Administration, including the President, to alter it no matter how many "you citizens should be scared shztless" boogyman speeches they give. The US voter is now well beyond being frightened by their politicians [unlike the aftermath years following 9/11], and perhaps McCain and the House Republicans understand this better than the Dems and the White House?

Can jtabeb's pitchforks be far behind? Or does it stop at discontent and nothing more, as metalman predicts? Gonna be an interesting run to the ballot box!

[jimmygu3]

Re: Armegeddon Arives: Bailout fails and WaMu seized

In astrology, a retrograde Mercury (meaning the planet appears to be going backwards against the celestial sky) is not a good time to make or conclude vital communication decisions. Lo and behold, Mercury went retrograde yesterday and won't be direct again until October 15th.

Contracts and decisions signed during this time period are prone to fail too.

We are so screwed.

It's gonna be OK. I wore my lucky underwear today.

[GRG55]

Re: Armegeddon Arives: Bailout fails and WaMu seized

http://biz.yahoo.com/rb/080925/busin...biz.html?.v=17

There's a story out that the WaMu CEO will get $20 million severance. For about 3 weeks of work?

Doncha just loooooove capitalism?

Edit added: There will be losses for WaMu. Does anybody know who is going to pay for these? Surely JPM won't pay for all of them. Is this now on the Fed's balance sheet? Treasury? Have they done a back room deal to buy the junk at "hold-to-maturity" value, pending the passing of the Bailout Bill?

Thanks for the fix FRED!

[marvenger]

Re: Armegeddon Arives: Bailout fails and WaMu seized

The JPM purchase of WaMu's deposits may be disputed by all those shareholders, bondholders, and whatnot who are getting the shaft.

Effectively JPM is getting all of the good stuff and leaving the bad stuff behind; I guarantee lawyers are going to get involved.

how can you just buy deposits? Deposits are liabilities for the banks that they have bought assets with, very bad assets.....buying assets makes sense, buying liabilities doesn't

[jtabeb]

Re: Armegeddon Arives: Bailout fails and WaMu seized

I often wonder what in America the lawyers are not involved in...:rolleyes:



At the risk of treading into the dangerous waters of US politics, it looks to this outsider that McCain has correctly gauged the voter discontent over the bailout, and the inability of the Administration, including the President, to alter it no matter how many "you citizens should be scared shztless" boogyman speeches they give. The US voter is now well beyond being frightened by their politicians [unlike the aftermath years following 9/11], and perhaps McCain and the House Republicans understand this better than the Dems and the White House?

Can jtabeb's pitchforks be far behind? Or does it stop at discontent and nothing more, as metalman predicts? Gonna be an interesting run to the ballot box!

Jtabeb just pulled all of his cash out of his bank this morning, bought another thousand rounds of ammo, filled up both cars full of gas and is headed to the grocery store next. Me thinks this will be a bumpy ride.