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Friday, September 26, 2008

Throw Another Bank on the Barbie
Posted by Jill | 6:31 AM
Does the fun ever start? Now it's Washington Mutual:
Regulators simultaneously brokered an emergency sale of virtually all of Washington Mutual, the nation’s largest savings and loan, to JPMorgan Chase for $1.9 billion, averting another potentially huge taxpayer bill for the rescue of a failing institution.

The move came as lawmakers reached a stalemate over the passage of a $700 billion bailout fund designed to help ailing banks, and removed one of America’s most troubled banks from the financial landscape.

Customers of WaMu, based in Seattle, are unlikely to be affected, although shareholders and some bondholders will be wiped out. WaMu account holders are guaranteed by the Federal Deposit Insurance Corporation up to $100,000, and additional deposits will be backed by JPMorgan Chase.

By taking on all of WaMu’s troubled mortgages and credit card loans, JPMorgan Chase will absorb at least $31 billion in losses that would normally have fallen to the F.D.I.C.

JPMorgan Chase, which acquired Bear Stearns only six months ago in another shotgun deal brokered by the government, is to take control Friday of all of WaMu’s deposits and bank branches, creating a nationwide retail franchise that rivals only Bank of America. But JPMorgan will also take on Washington Mutual’s big portfolio of troubled assets, and plans to shut down at least 10 percent of the combined company’s 5,400 branches in markets like New York and Chicago, where they compete. The bank also plans to raise an additional $8 billion by issuing common stock on Friday to pay for the deal.


At some point, we have to wonder just how much water JPMorgan Chase can take on before it too starts going down at the head, and how long it's going to take before JPMorgan Chase and Bank of America will be the only two banks in the country. You think your credit card interest is high now? Wait until these companies have a duopoly.

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Anonymous Anonymous said...
But at least when OTS and FDIC close a bank they do it "right".
They protect the depositors/customers and wipe out the investors/owners -- who hired the incompetents in the first place -- and the managers.

If only we would do the same thing to "Wall Street". Let them go bust. Protect the invetor accounts and leave the detritus on the street to rot....

So either JPMorgan and BOA weren't greedy [enough!?] or they actually know how to run a bank.... If the latter, I'd happily see them as the only two remaining banks..

But I suspect others would come into the business. Too much money to be made! The crooks will always find a way....
9/26/08, 7:09 AM  
Blogger J said...
Ugh. And the two credit cards I have are B of A and Chase already. Perhaps I should call them and negotiate for a lower rate now, while I perhaps can? (I don't carry much of a balance, but they're good to have for an emergency).

And WaMu was my bank. I liked them a lot.
9/26/08, 9:35 AM  
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