Government Seizes WaMu and Sells Some Assets

danarhea · 09-25-08, 10:04 PM

Washington Mutual Bank has collapsed. The government has seized it, and immediately brokered its assets off to JP Morgan Chase.

All shareholders and most bond holders in the bank have been wiped out. Any assets of customers that total more than $100,000.00 have also been wiped out.

Article is here.

MC.no.spin · 09-25-08, 10:17 PM

Quote:

Originally Posted by danarhea

Washington Mutual Bank has collapsed. The government has seized it, and immediately brokered its assets off to JP Morgan Chase.

All shareholders and most bond holders in the bank have been wiped out. Any assets of customers that total more than $100,000.00 have also been wiped out.

Article is here.

All the bonds and deposits will be honored, even over a hundred thousand dollars. The only losers are stock holders, but the stock had already tanked to a couple bucks a share before today.

This is just one of many banks in trouble. The timing is very interesting to me, as the delay in Washington may have just cost the tax payers more money.

danarhea · 09-25-08, 10:23 PM

Quote:

Originally Posted by MC.no.spin

All the bonds and deposits will be honored, even over a hundred thousand dollars. The only losers are stock holders, but the stock had already tanked to a couple bucks a share before today.

This is just one of many banks in trouble. The timing is very interesting to me, as the delay in Washington may have just cost the tax payers more money.

From the article....

Quote:

Shareholders and some bondholders will be wiped out.

My mistake. I posted that most bond holders would be wiped out, but only some will. How many bond holders lose depends on the amount of assets, and how they are distributed.

The article is also a bit ambiguous on customers. It says that customers will not be affected, but also stresses that they are insured to $100,000.00, so the jury is still out on that one.

Kernel Sanders · 09-25-08, 10:24 PM

Quote:

As panic gripped financial markets last week following the collapse of Lehman Brothers, the government stepped up its efforts, working behind the scenes and at points going behind WaMu’s back to work privately with potential bidders on a deal.

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 C. Fishman, was in midair, flying from New York to Seattle at the time the deal was finally brokered, according to these people.

Does that seem excessively shady to anybody else?

Quote:

Federal regulators had been trying to broker a deal for Washington Mutual because a takeover by the F.D.I.C. would have dealt a crushing blow to the federal government’s deposit insurance fund. The fund, which stood at $45.2 billion at the end of June, has been severely depleted after suffering a debilitating loss from the sudden collapse of IndyMac Bank. Analysts say that a failure of Washington Mutual would cost the fund upward of $20 billion or $30 billion.

So what happens when FDIC runs dry? Do they stop backing banks or does the fund become another bit of dust getting sucked into this financial black hole?

Quote:

Originally Posted by MC.no.spin

All the bonds and deposits will be honored, even over a hundred thousand dollars. The only losers are stock holders, but the stock had already tanked to a couple bucks a share before today.

This is just one of many banks in trouble. The timing is very interesting to me, as the delay in Washington may have just cost the tax payers more money.

If anybody kept more than 100K in WaMu through all the crap of the last few weeks they deserve to lose it. I mean, is anybody surprised that WaMu folded?

RightinNYC · 09-25-08, 10:57 PM

Quote:

Originally Posted by danarhea

From the article....

My mistake. I posted that most bond holders would be wiped out, but only some will. How many bond holders lose depends on the amount of assets, and how they are distributed.

The article is also a bit ambiguous on customers. It says that customers will not be affected, but also stresses that they are insured to $100,000.00, so the jury is still out on that one.

That's because the NYT article was poorly written.

WaMu Is Seized, Sold Off to J.P. Morgan, In Largest Failure in U.S. Banking History - WSJ.com

Quote:

But the deal, as constructed by the Federal Deposit Insurance Corp., could hold some glimmers of hope for the beleaguered financial system because it averts any hit to the bank-insurance fund.

The only people who are losing money are WaMu shareholders and institutional bond holders.

Quote:

"For all depositors and other customers of Washington Mutual Bank, this is simply a combination of two banks," Bair said in a statement. "For bank customers, it will be a seamless transition. There will be no interruption in services and bank customers should expect business as usual come Friday morning."

JPMorgan Chase buys WaMu assets after FDIC seizure: Financial News - Yahoo! Finance

This sounds just fine to me. Doesn't cost the FDIC a penny and the only people losing money are shareholders. That's a good old fashioned way for a business to collapse.

RightinNYC · 09-25-08, 10:58 PM

Quote:

Originally Posted by Kernel Sanders

So what happens when FDIC runs dry? Do they stop backing banks or does the fund become another bit of dust getting sucked into this financial black hole?

It starts coming out of general revenues, if at all.

Kandahar · 09-25-08, 10:59 PM

Kudos to the government for NOT bailing them out. They should be allowed to fail. Things aren't going to improve until the financial services industry consolidates some of its businesses.

MC.no.spin · 09-25-08, 11:00 PM

Quote:

Originally Posted by RightinNYC

That's because the NYT article was poorly written.

WaMu Is Seized, Sold Off to J.P. Morgan, In Largest Failure in U.S. Banking History - WSJ.com

The only people who are losing money are WaMu shareholders and institutional bond holders.

JPMorgan Chase buys WaMu assets after FDIC seizure: Financial News - Yahoo! Finance

This sounds just fine to me. Doesn't cost the FDIC a penny and the only people losing money are shareholders. That's a good old fashioned way for a business to collapse.

Thanks for the clarification - CNN indicated only stock holders would be affected. It makes sense the institution's bond holders would lose out, as that is the risk they took by trying to get a high yield.

DAR · 09-26-08, 03:43 AM

Quote:

Originally Posted by danarhea

Washington Mutual Bank has collapsed. The government has seized it, and immediately brokered its assets off to JP Morgan Chase.

All shareholders and most bond holders in the bank have been wiped out. Any assets of customers that total more than $100,000.00 have also been wiped out.

I've been watching WM stock prices decline steadily ever since I became a customer.

I have four accounts with WaMu, including an online savings account. Their interest rates for online savings are the best out there... and regardless of their financial troubles and the JPMC takeover, the APY on their online savings accounts went from 3.75% to 4.00% within the past few days.

Regards,
DAR

chevydriver1123 · 09-26-08, 06:37 AM

As soon as Bear Sterns went FUBAR I immediately started to follow the stock price of Bank of American (for my checking) and Wachovia (401k through job). So far so good.

09-25-08, 10:04 PM	#1
danarhea Slayer of the DP Newsbot Dungeon Master Join Date: Aug 2005 Last Seen: Today 09:29 PM Location: Houston, TX Posts: 18,249 Thanks: 3,336 Thanked 7,039 Times in 3,397 Posts Lean: Conservative Gender: Total Awards: 1	Government Seizes WaMu and Sells Some Assets Washington Mutual Bank has collapsed. The government has seized it, and immediately brokered its assets off to JP Morgan Chase. All shareholders and most bond holders in the bank have been wiped out. Any assets of customers that total more than $100,000.00 have also been wiped out. Article is here.
	__________________ Jack Kevorkian for President's Physician: 2012 http://danarhea.blogspot.com

09-25-08, 10:59 PM	#7
Kandahar Enemy Combatant Join Date: Jul 2005 Last Seen: 03-11-10 12:13 AM Location: Washington, DC Posts: 14,762 Thanks: 1,384 Thanked 3,874 Times in 2,212 Posts Lean: Liberal Gender:	Re: Government Seizes WaMu and Sells Some Assets Kudos to the government for NOT bailing them out. They should be allowed to fail. Things aren't going to improve until the financial services industry consolidates some of its businesses.
	__________________ Are you coming to bed? I can't. This is important. What? Someone is WRONG on the internet! -XKCD

09-26-08, 06:37 AM	#10
chevydriver1123 Free Market Terrorist Join Date: May 2007 Last Seen: Today 09:19 PM Location: Newburgh, New York Posts: 5,933 Thanks: 1,258 Thanked 1,432 Times in 880 Posts Lean: Libertarian Gender:	Re: Government Seizes WaMu and Sells Some Assets As soon as Bear Sterns went FUBAR I immediately started to follow the stock price of Bank of American (for my checking) and Wachovia (401k through job). So far so good.
	__________________ Blog: http://libertarianblue.blogspot.com/ Death to Socialist Liberals and Authoritarian Conservatives

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