Washington Mutual Seized, Sold Off to J.P. Morgan in Largest Failure in U.S. Banking History
J.P. Morgan Chase & Co. has, with the government’s help, essentially saved the banking system from collapse. I know that sounds like an overly dramatic claim, but the mood on the floor of the NYSE this morning was approaching panic. If the two parties had not moved when they did, there might have been a widespread sell off in the market this morning. The financial stocks were off sharply in pre-market quotes and if the depositors of WaMu got a whiff of panic coming from the Street, any resulting run on WaMu could have set off something we haven’t seen in this country since 1932. A full fledged run on the banks and a resulting “bank holiday” where the banks are closed while the government attempts to restore liquidity to the system.
As it stands at 9 AM CT, the Dow is off a bit, but much more importantly, the FDIC did not have to take the hit on WaMu’s collapse. J.P. Morgan Chase’s rescue prevented that.
~~John Cronin~~
http://online.wsj.com/article/SB122238415586576687.html
In what is by far the largest bank failure in U.S. history, federal regulators seized Washington Mutual Inc. and struck a deal to sell the bulk of its operations to J.P. Morgan Chase & Co.
The collapse of the Seattle thrift, which was triggered by a wave of deposit withdrawals, marks a new low point in the country’s financial crisis. But the deal, as constructed by the Federal Deposit Insurance Corp., could hold some glimmers of hope for the beleaguered banking system because it averts any hit to the bank-insurance fund.
Instead, J.P. Morgan agreed to pay $1.9 billion to the government for WaMu’s banking operations and will assume the loan portfolio of the thrift, which has $307 billion in assets. The full cost to J.P. Morgan will be much higher, because it plans to write down about $31 billion of the bad loans and raise $8 billion in new capital. All WaMu depositors will have access to their cash, but holders of more than $30 billion in debt and preferred stock will likely see little if any recovery.
The deal will vault J.P. Morgan into first place in nationwide deposits and greatly expand its franchise.
September 26th, 2008 at 8:49 am
What has been rumored for several weeks has now come to pass. An American financial institution that was founded in 1889 is gone – kaput! This changing financial landscape is sobering. Which bank is next? Here is a website to help you determine the strength of your bank:
http://www.moneyandmarkets.com/newsletter/103/StrongestandWeakestBanksandThrifts.pdf
September 26th, 2008 at 8:50 am
http://news.yahoo.com/s/ap/20080926/ap_on_bi_ge/washington_mutual_future
“One positive is that the sale of WaMu’s assets to JPMorgan Chase prevents the thrift’s collapse from depleting the FDIC’s insurance fund. But that detail is likely to give only marginal solace to Americans facing tighter lending and watching their stock portfolios plunge in the wake of the nation’s most momentous financial crisis since the Great Depression.”
September 26th, 2008 at 9:31 am
Whew!!! MCCAIN WILL BE AT DEBATE TONIGHT. CHAT WOW BEGINS @ 8:00 PM EDT!
Fox reporting that last night President Bush whispered to someone that if the money isn’t loosened up, this sucker could go down. Also reporting that at the end of the night Secretary Paulson in a semi-joking manner went down on one knee before Pelosi and pled “Don’t blow it up, don’t blow it up.”
Harry Reid just on TV stating that the insertion presidential politics (in the bail-out bill) has not been helpful - then proceeds to make political statements. Said he: “When I called on McCain a few days ago to ask him where he stands, I got nothing. All he has done is stand in front of the cameras.”
Talks Falter on Bailout Deal
White House Summit Fails to Yield Accord as House GOP Floats New Plan
http://www.washingtonpost.com/wp-dyn/content/article/2008/09/25/AR2008092500268.html?wpisrc=newsletter
September 26th, 2008 at 10:00 am
Thanks for the update 2thePoint!
Anyone have any thoughts on who wins the debate tonight?
Conventional wisdom says McCain should run circles around Obama on foreign policy. However, I think Obama is going to pull a GWB in the 2000 election, he’ll be prepared, not make any mistakes, and appear competent enough on the subject matter. McCain has to try to trip up or challenge Barack to win this tonight without seeming like the villian. I believe that will be harder to do based off the primaries.
September 26th, 2008 at 10:19 am
National Review has a couple of articles today asking for Sarah Palin to get off McCains presidential ticket. She appears to be style and no substance.
http://article.nationalreview.com/?q=MDZiMDhjYTU1NmI5Y2MwZjg2MWNiMWMyYTUxZDkwNTE=
September 26th, 2008 at 10:25 am
Here is another article from National Review stating that perhaps Mitt Romney should be a replacement for Sarah Palin.
http://article.nationalreview.com/?q=OTUzNTM3MDk0MmI3ZWM1N2ZkZDAwZTFmMjA5Nzk3MWM=
September 26th, 2008 at 11:14 am
I am not alone here in the hot wilderness anymore. Kathleen Parker’s Town Hall artilce. Of course, there’s a bunch of hucktype fans on it calling Parker names. She called it as she saw it. Not ready for prime time, and she needs to find a gracefull way OUT.
http://townhall.com/columnists/Column2.aspx?UrlTitle=the_palin_problem&ns=KathleenParker&dt=09/26/2008&page=full&comments=true&submitted=true&submitted=true
Have fun! Cee ya all tonight at the debates!
September 26th, 2008 at 11:50 am
Article on Mitt:
http://voices.washingtonpost.com/postpartisan/2008/09/romney_a_shadow_veep.html
September 26th, 2008 at 12:36 pm
Here’s an article by a conservative columnist for the Dallas Morning News expressing doubts about Palin.
http://www.blog.beliefnet.com/crunchycon/2008/09/palin-debacle-on-cbs-evening-n.html
September 26th, 2008 at 12:41 pm
Chris - you are not alone. I also cannot vote for this ticket. Here is Palin’s latest interview. I think the more she talks, the more people are going to realize she is not qualified.
http://www.cnn.com/video/#/video/politics/2008/09/26/palin.israel.comments.cnn
September 26th, 2008 at 1:07 pm
As luck would have it, my family banks at WaMu. I love this country! Only in America would my bank fail one day and still be open for business the next. Thanks, FDIC. God Bless America.
September 26th, 2008 at 2:19 pm
Lest we think the nation’s super-size financial tornado has whipped any sense into the Al-Qaeda-Evangelicals, here’s an article on Texan Baptist Pastor, Rev. Robert Jeffress, who sounds like he could be best buddies with Bin Laden. Jeffress, along with others like him, should be exposed – just like Jeremiah Wright - for what they are. Clips of their hate-filled sermons need to be aired on the media - over and over again - so fair-minded, Constitution-loving Americans can resoundingly denounce them.
I hope LDS officials get their hands on a transcript of Jeffress’ remarks and issue a strong statement against this bigotry. By taking intense hatred from evangelical bigots, Mitt Romney has blazed a courageous trail for religious freedom in this country and shouldn’t be left dangling in the wind. Catholics and members of the LDS faith should unite to actively pursue eliminating religious persecution in America.
Evangelical bigots robbed the United States of America of the most qualified man to run the country at this very precarious time in history. Shame! Shame! Shame on them!
Texas pastor says Romney’s LDS faith makes him a ‘cult’ member
http://www.sltrib.com/news/ci_10566940?source=rss
“It was one of the more spirited lunch discussions we’ve ever had at RNA,” said RNA president Kevin Eckstrom, who noted that the journalist organization did not organize the event. “A lot of people were uncomfortable with what Dr. Jeffress said about Mormons, but what we were hoping for was something provocative that would get people talking, and certainly this did it.”
Many reporters said they had never heard the word “cult,” which Jeffress repeatedly called the LDS Church, used so “freely and recklessly,” said Eckstrom, editor of Religion News Service in Washington, D.C. But Jeffress used the same word to describe “Catholics, Hindus, Buddhists and virtually everyone else.”
It was useful for reporters to be aware of such strident views, Eckstrom said, because they are “completely mainstream in a lot of evangelical quarters.”
First Baptist of Dallas “is not a backwater pulpit somewhere. It is a major church in Texas and in Southern Baptist circles,” Eckstrom said. “It’s a huge institution and a lot of followers. He’s not just spouting these opinions for himself but proud of the fact that he was going back to his congregation and declare every other religion was wrong, and at least 10,000 people hear this position every week.”
The Church of Jesus Christ of Latter-day Saints insists that it is a Christian faith, though not a traditional brand of Christianity. LDS officials today declined to comment on Jeffress’ statements until they see a transcript of the remarks, spokeswoman Kim Farah said.
September 26th, 2008 at 2:48 pm
F.Y.I. More of what’s floating out there today:
Orlando Sentinel – The Mike Thomas Blog
Sept. 26, 2008
McCain’s blunder: Sarah over Mitt.
http://blogs.orlandosentinel.com/news_columnist_mikethomas/2008/09/mccains-blunder.html
See Palin implode as Romney vanishes.
ohn McCain’s biggest weakness is the economy. Polls show that’s becoming the 500-pound gorilla in this election, and that by a wide margin, voters have more faith in Obama than McCain in fixing it.
The candidate who would have given McCain the most credibility was Mitt Romney.
Look what we have now: Sarah Palin melts down in interviews, babbling to Katie Couric about Putin flying into Alaskan air space as proof of her international experience. Look at her face. She was panicked, simply blurting out anything she could to avoid painful silence. Compare that to the possibility of Mitt Romney bouncing around the cable news shows, discussing solutions to the economic crisis, more than capable of holding his own with any news anchor.
This election will be decided by independents, which polls show are the most pessimistic about the economy. Romney could have delivered a lot more of them than Palin. And now there is that video or a Nigerian witch hunter praying with her. Yikes!
Palin created a huge, euphoric buzz in the base. McCain went for that rather than take a strategic, long-term approach. It may well backfire on him, particularly if she has a similar meltdown during the VP debates. Romney understands this and is distancing himself from McCain, preparing for 2012.
September 26th, 2008 at 5:28 pm
BTW,
Did anyone hear about the EARMARKS in the bailout bill? Even when the country is at grave risk, these b******s will sneak some pork in.
As a special investigative project, could someone research this to find out who did this. Then, if you’ll post your findings in a comment, I’ll put up a post and spread it around the net to the extent I am able. Oh, just had another thought, if it was a Republican(s) who put the pork in the bill, I will give the RNC my two cents worth as well!
September 26th, 2008 at 5:33 pm
Breaking News here in Massachusetts: Edward Kennedy was rushed to the hospital this evening.
Even though we disagree ideologically let’s pray for the Kennedy family.
September 26th, 2008 at 6:06 pm
Sorry about Kennedy. Brain Cancer is awful. I know, as I watched my cousin suffer, then die from it. She was 45.
Palin is imploding. McCain now rushing off, because his stunt about not debating backfired. He’s gotta be there, as Obama will otherwise be debating an empty chair.
September 27th, 2008 at 6:35 am
Morning All,
Here is a nice article I pulled from politico this morning regarding concerns about Palin and her up coming debate.
GOP concerned about Palin
By Alexander Burns & David Paul Kuhn | 9/26/08 @ 5:12 PM EST
A growing number of Republicans are expressing concern about Sarah Palin’s uneven — and sometimes downright awkward — performances in her limited media appearances.
Conservative columnist Kathleen Parker, a former Palin supporter, says the vice presidential nominee should step aside. Kathryn Jean Lopez, writing for the conservative National Review, says “that’s not a crazy suggestion” and that “something’s gotta change.”
Tony Fabrizio, a GOP strategist, says Palin’s recent CBS appearance isn’t disqualifying but is certainly alarming. “You can’t continue to have interviews like that and not take on water.”
“I have not been blown away by the interviews from her, but at the same time, I haven’t come away from them thinking she doesn’t know s—t,” said Chris Lacivita, a GOP strategist. “But she ain’t Dick Cheney, nor Joe Biden and definitely not Hillary Clinton.”
There is no doubt that Palin retains a tremendous amount of support among rank-and-file Republicans. She draws huge crowds, continues to raise a lot of money for the McCain campaign, and state parties report she has sparked an uptick in the number of volunteers.
Asked about Palin’s performance in the CBS interview, a McCain official briefing reporters on condition of anonymity said: “She did fine. She’s a tremendous asset and a fantastic candidate.”
But there is also no doubt many Republican insiders are worried she could blow next week’s debate, based on her unexpectedly weak and unsteady media appearances, and hurt the Republican ticket if she does.
What follows is a viewer’s guide to some of Palin’s toughest moments on camera so far.
Speaking this week with CBS’s Katie Couric, Palin seemed caught off-guard by a very predictable question about the status of McCain adviser Rick Davis’ relationship with mortgage lender Freddie Mac. Davis was accused by several news outlets of retaining ties — and profiting from — the companies despite his denials.
Where a more experienced politician might have been able to brush off Couric’s follow-up question, Palin seemed genuinely stumped, repeating the same answer twice and resorting to boilerplate language about the “undue influence of lobbyists.”
These missteps could be attributed to inadequate preparation and don’t necessarily reflect more deeply on Palin’s ability to perform as vice president. But when reporters have tried to probe Palin’s thinking on subjects such as foreign policy, she’s been similarly opaque.
In an interview with ABC’s Charlie Gibson, Palin gave a muddled answer to a question about her opinion of the Bush Doctrine.
And given the chance to describe her foreign policy credentials more fully, Palin recited familiar talking points, telling Gibson that her experience with energy policy was sufficient preparation for dealing with national security issues.
In the same interview, Palin let Gibson lead her into saying it might be necessary to wage war on Russia — a suggestion that most candidates would have avoided making explicitly and that signaled her discomfort in discussing global affairs.
Then, asked this week by Couric to discuss her knowledge of foreign relations — in particular, her assertion that Alaska’s proximity to Russia gave her international experience — Palin tripped herself up explaining her interactions with Alaska’s neighbor to the west.
Watch CBS Videos Online
On the economy, too, Palin has avoided taking clear stances. In a largely friendly interview with Fox News Channel’s Sean Hannity, Palin spoke in tangled generalities in response to a question about a possible Wall Street bailout — and even preempted her campaign by coming out against it.
On Thursday, Palin finally took questions from her traveling press — but shut things down quickly after Politico’s Kenneth P. Vogel asked her whether she would support Alaska Sen. Ted Stevens, who has been indicted for corruption, and Rep. Don Young, who is under federal investigation, for reelection.
Unlike her other interviews, at least this time Palin had the option to walk away.