I’d like to send a shout out to Michael Sincere, author of Understanding Options, who actually read my blog and commented on it. Maybe someday, if I ever land an agent and if that agent ever lands a deal, Michael Sincere will write the foreword to this book. I have time. This experiment is going to be a long time in the making.
Slowly, news is leaking out about the failure of Washington Mutual. A Bloomberg article that hit today finally used the word “bankruptcy”, however the failure still isn’t a top story. Is it just me? Am I the only one who thinks that the biggest bank failure in the short history of our country is at least warranted one full day of sensationalism?
“WaMu had its banking unit seized Sept. 25 by government regulators after customers withdrew $16.7 billion over 10 days. JPMorgan Chase & Co. became the biggest U.S. bank by deposits when it bought WaMu’s branches with a $1.9 billion payment to the Federal Deposit Insurance Corp.
The Chapter 11 bankruptcy petition, filed Sept. 26 in U.S. Bankruptcy Court in Delaware, wasn’t immediately available due to Web site maintenance. The Web site was expected to be operating again on Sept. 27 at noon, Eastern time.
JPMorgan, Citigroup Inc., Wells Fargo & Co., Banco Santander SA and Toronto-Dominion Bank had all expressed interest in buying all or parts of WaMu ahead of the JPMorgan purchase.
WaMu was expected to lose as much as $19 billion on bad mortgages during the next 2 1/2 years. Standard & Poor’s cut the bank’s credit rating twice in nine days, to eight levels below investment grade, as chances decreased that any deal wouldn’t be a buyout of the whole company, leaving creditors of the holding company to face substantial losses.”
Maybe it was the web site maintenance that slowed the news down. Baffling.
Citigroup (C) may acquire Wachovia (WB), but it’s now being reported that Citi may first wait for Wachovia to fail, exactly following JP Morgan’s lead on WaMu. I have no stake in Wachovia, thankfully, and maybe in this case, since I do own a few Citi shares, I’m all for this slimy tactic. Buying low and selling high oils the entire market- from multibillion dollar mergers to a college kid buying a few thousand shares of QMNM hoping for a miracle. This is how growth happens. But when that strategy is applied to the heart of the market- the financials- it has to be expected that “buying low” will take on an entirely new appearance. If one bank can wait two days for another bank to fail before buying it, the merger will cost fractions less.
The $25 billion government loan that Ford and Chrysler applied for this summer to transform their outdated factories into green car producers will come a little early. The bill, which states that the automakers would not have to make payments on the loan for five years, passed the Senate today and is now off to President Bush for final approval.
