Friday, Sep 26, 2008
Whammo WAMU!!
BBC: Regulator shuts Washington Mutual
Washington Mutual (WaMu) has been closed by its regulator, making it the biggest US bank to fail.
Posted by renting2 @ 07:35 AM (417 views) Add Comment
5 Comments
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1. little professor said...
O PWNED! That's major news.
Any idea why JP Morgan stepped in to buy the carcass, especially after doing the same for Bear Stearns earlier this year?
2. jonb said...
As I pointed out about two weeks ago, this is like Halifax or Nationwide going bust here. I didn't expect at the time that Halifax would actually get into trouble two days later.
When a bank is sold by the regulators, it generally means that they got paid slightly less than the value of the deposits to take it on, and other liabilities stay with the liquidator.
3. alan said...
The shut down of WA Mu was to concentrate the minds of those opposing the bail out!
4. Brite2006 said...
This is big news, and one of the banks the Fed were trying to save. WaMu has been in trouble for months, but was only closed after a run on savings, like Northern Rock.
The deal is good for JP Morgan - they get a huge asset base, and the incredibly cheap price WaMu was bought for (effectively $.59 a share) means it's easier to cope with the liabilities because there was relatively little cost in buying them.
All eyes to Wachovia Bank next - they are another huge US bank with even bigger subprime mortgage liabilities.
5. jack c said...
Depositors saved - shareholders wiped out - Bond holders about to be hit