CNBC: FDIC to Seize WaMu and Sell Deposits to JPMorgan

[c1ue]

Re: CNBC: FDIC to Seize WaMu and Sell Deposits to JPMorgan

I am sure they took a page from Bush's pre-emptive strike doctrine; they moved on WaMu before the inevitable run started complete with the obligatory pictures [of people lining up on the sidewalks outside the branches] being flashed around the world (a la IndyMac and Northern Rock). If they let that happen at a time like this they end up with bigger, more immediate, problems. And their capacity to deal with problems already on the plate appears limited, non?

Quite true, but it does raise disturbing questions about the reality of American personal and business freedom.

Not to mention the shaft being applied to WaMu employees, stockholders, and preferred stock/bond holders.

As I noted in another post - I'm sure the lawyers are getting warmed up as we speak. WaMu was certainly going down, but going down in 6 months to 2 years as they're choked by their mortgage portfolio is completely different than getting taken down by the government for political posturing purposes.

[GRG55]

Re: CNBC: FDIC to Seize WaMu and Sell Deposits to JPMorgan

According to the FDIC reports, Washington Mutual had $18.8 billion in mortgage-backed securities and $12.65 billion in Collateralized mortgage obligations on the books as of June 30, 2008. $24 billion of which (combined) that was marked as Available for sale (fair market value).

$188 billion of deposits held in domestic offices. i.e. previously the largest savings and loan.



Mr. Headlee should come around and explain that to the customers where I reside. It's a damn good bet that the local branch will be closed and the nearest one is 30 miles away. At $4 a gallon, small businessmen that make deposits every other day won't be driving 30 miles to take care of banking business. I'm going to spread the word around to friends and peers that the most local of our banks doesn't have any apparent crap on it's books.

Someone should ask Ben if the FDIC calculated the $1.9 B as the hold-to-maturity value? :rolleyes:

I wonder if the "P" in JPM stand for "Potter"? Watch that Uncle Billy doesn't get to handle any of the cash...

http://www.youtube.com/watch?v=MJJN9qwhkkE


[Note to Rajiv: Every time I try that imbed feature, copy and paste, this is what happens...Clearly I am doing something incorrectly. I think I'll stick with bunker construction...]

[nathanhulick]

Re: CNBC: FDIC to Seize WaMu and Sell Deposits to JPMorgan

I dont really understand how JPM "bought" WAMU when the stockholders, preferred stockholders, bondholders, etc. all were wiped out 100%.

I see that they paid a couple of billion to the government, but how exactly is this classified as a "purchase" ?

[ASH]

Re: CNBC: FDIC to Seize WaMu and Sell Deposits to JPMorgan

Quite true, but it does raise disturbing questions about the reality of American personal and business freedom.

Not to mention the shaft being applied to WaMu employees, stockholders, and preferred stock/bond holders.

As I noted in another post - I'm sure the lawyers are getting warmed up as we speak. WaMu was certainly going down, but going down in 6 months to 2 years as they're choked by their mortgage portfolio is completely different than getting taken down by the government for political posturing purposes.

I think the problem was that a run on the bank was starting in earnest. It's true that WaMu's bad mortgages weren't going to kill it immediately, but a run on the bank is a different matter. We have seen on iTulip forums at least two anecdotal accounts suggesting a lot of people were moving their money out, plus the statement in the media that 10% of WaMu's deposits were withdrawn on Monday alone.

[ASH]

Re: CNBC: FDIC to Seize WaMu and Sell Deposits to JPMorgan

I dont really understand how JPM "bought" WAMU when the stockholders, preferred stockholders, bondholders, etc. all were wiped out 100%.

I see that they paid a couple of billion to the government, but how exactly is this classified as a "purchase" ?

The way I read it, a run on the bank was developing (10% of deposits pulled on Monday alone). In the case of a bank failure, aren't the depositors first in line, and wouldn't the normal procedure be to liquidate the bank's assets to pay as many depositors as much as possible... reducing the amount covered by the FDIC? That would wipe-out shareholders and bondholders and, in this case, probably force the FDIC to go to the Treasury or Fed for additional funds. I think what happened is that JPM "bought" WaMu's business for the price of backing the WaMu deposits, plus a nominal dollar figure, so that the government would be spared the spectacle of FDIC being tapped out.

[jtabeb]

Re: CNBC: FDIC to Seize WaMu and Sell Deposits to JPMorgan

Ok - the timing is just too sweet. Congress looks haltingly at the bailout and voila' another bank goes under just in time to add punctuation to the hair on fire running about by Paulson.

Goddamn...

Problem-Solution-Reaction, Hmmm? YEP!

[c1ue]

Re: CNBC: FDIC to Seize WaMu and Sell Deposits to JPMorgan

We have seen on iTulip forums at least two anecdotal accounts suggesting a lot of people were moving their money out, plus the statement in the media that 10% of WaMu's deposits were withdrawn on Monday alone.

Well, I've been keeping a close eye on WaMu branches in my area.

No lines, no activity greater than normal.

My esteemed mom - whom I specifically told to move money out of WaMu and Wachovia, didn't move her money until after WaMu announced failure (today).

Anyone seen an actual line? If IndyMac with $32B in assets had lines, how can WaMu with $307B not?

[nathanhulick]

Re: CNBC: FDIC to Seize WaMu and Sell Deposits to JPMorgan

The way I read it, a run on the bank was developing (10% of deposits pulled on Monday alone). In the case of a bank failure, aren't the depositors first in line, and wouldn't the normal procedure be to liquidate the bank's assets to pay as many depositors as much as possible... reducing the amount covered by the FDIC? That would wipe-out shareholders and bondholders and, in this case, probably force the FDIC to go to the Treasury or Fed for additional funds. I think what happened is that JPM "bought" WaMu's business for the price of backing the WaMu deposits, plus a nominal dollar figure, so that the government would be spared the spectacle of FDIC being tapped out.

OK, that makes sense, but if WAMU is insolvent (which I think probably are), what benefit is there to JP Morgan to "buy" them, even if the price is right around zero? Is JPM buying them, figuring they will unload the assets later on to the TARP for a profit? Thats the only way I can see it, but maybe I am missing something.

[zoog]

Re: CNBC: FDIC to Seize WaMu and Sell Deposits to JPMorgan

Well, I've been keeping a close eye on WaMu branches in my area.

No lines, no activity greater than normal.

My esteemed mom - whom I specifically told to move money out of WaMu and Wachovia, didn't move her money until after WaMu announced failure (today).

Anyone seen an actual line? If IndyMac with $32B in assets had lines, how can WaMu with $307B not?

Friend of mine is in Manhattan and has WaMu. He went there today and pulled out some cash, but didn't close his account. Asked the teller how things were going, she said pretty much business as usual, no big lines.

I've had one call from a coworker friend wondering what they should do about their WaMu accounts. I certainly don't feel qualified to tell people "such and such bank should be safe", but I tried to assure my coworker they shouldn't panic and they have time to transfer their money out if that makes them more comfortable.

[ASH]

Re: CNBC: FDIC to Seize WaMu and Sell Deposits to JPMorgan

OK, that makes sense, but if WAMU is insolvent (which I think probably are), what benefit is there to JP Morgan to "buy" them, even if the price is right around zero? Is JPM buying them, figuring they will unload the assets later on to the TARP for a profit? Thats the only way I can see it, but maybe I am missing something.

JPM gets the physical infrastructure of WaMu's branches. That expands its coverage and market share for retail banking operations. Perhaps they see a lot of value attached to that. I dunno.

[D-Mack]

Re: CNBC: FDIC to Seize WaMu and Sell Deposits to JPMorgan

JPM gets the physical infrastructure of WaMu's branches. That expands its coverage and market share for retail banking operations. Perhaps they see a lot of value attached to that. I dunno.

I heard one commentator say it wouldn't be possible to get there under normal circumstances.

Competition is a sin.

John D. Rockefeller

http://en.wikiquote.org/wiki/John_D._Rockefeller

[Slimprofits]

Re: CNBC: FDIC to Seize WaMu and Sell Deposits to JPMorgan

Anyone seen an actual line? If IndyMac with $32B in assets had lines, how can WaMu with $307B not?

I'm dumfounded by this...

It is not as if WaMu is not receiving media coverage. The Indymac run was attributed to the publicity given to Senator Schumer's letter. What are we missing?

[photoncounter]

Re: CNBC: FDIC to Seize WaMu and Sell Deposits to JPMorgan

Well, I've been keeping a close eye on WaMu branches in my area.

No lines, no activity greater than normal.

My esteemed mom - whom I specifically told to move money out of WaMu and Wachovia, didn't move her money until after WaMu announced failure (today).

Anyone seen an actual line? If IndyMac with $32B in assets had lines, how can WaMu with $307B not?

Unless someone is uncomfortable, now that WaMu has been bought and the deposits are safe, why move/withdraw money ? Am I missing something here ?

I was actually thinking about depositing the cash I had kept at home.

[marvenger]

Re: CNBC: FDIC to Seize WaMu and Sell Deposits to JPMorgan

I think the two points below are pretty insightful too

• I would rather earn 1% off a 100 people's efforts than 100% of my own efforts.

• I believe it is my duty to make money and still more money and to use the money I make for the good of my fellow man according to the dictates of my conscience.

He makes it seem like he's making 1% off others efforts because that seems like areasonable margin on a loan, but when everyones loans are a few times their times their income it's actually a lot more than 1%, and the secon point shows that he wants to be making 1% off the the labour of the people that he choses the direction of. I reckon he's done a damn fine job!

[Slimprofits]

Re: CNBC: FDIC to Seize WaMu and Sell Deposits to JPMorgan

This article in the Contra Costa Times seems to imply that lines were longer than usual at WaMu branches in Oakland and perhaps other parts of the East Bay.

And I'm sure that everyone has heard by now that the OTS is calling it a bank run.

An outflow of deposits began on Sept. 15 and eventually totaled $16.7 billion. That eroded WaMu's liquidity and left the bank in an "unsafe and unsound condition to transact business," the Office of Thrift Supervision said in a prepared release.

Many of the customers who closed accounts were in California. Numerous patrons had accounts with balances of more than the $100,000, a level that is insured by the Federal Deposit Insurance Corp.

"The deposit loss was concentrated in unsecured retail assets," said William Ruberry, an Office of Thrift Supervision spokesman. "There was a heavy concentration of the bank run in California, and in amounts above the FDIC covered limit."

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