September 2008

Bank Failure - Friday Night Surprise

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By now we are used to some bombshell news being released on Friday Evening, so we might as well preempt the surprise so we all can enjoy the night. So today we're going to guess at the surprise and I'll just update the predictions if they come true.

Calculated Risk is showing the stocks of Wachovia and National City plummet after the WaMu failure (ssssh! it's a buy out, really!).

Now Citigroup and Wachovia are in some sort of negotiations (like WaMu?). Oops, they are not....ooops, now there are a handful of suitors for a buy out..

oops, someone is resigning to spend more time with their family....ooops...

where have we seen these sound bytes before?

Magic secret decoder ring? Sounds like Wachovia is going down.

Bank Implode - O Meter is a failure watch blog.

Jim Cramer leaks a bank in Ohio will fail soon. National City is in Ohio.

Bail Out Football - Past the Political Pre-Game

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It's Friday and now we're all going to watch debates supposedly on foreign policy. The posturing, political football season is upon us.    Democrats are now claiming:

Without Republican cooperation, we cannot pass this bill

Chickens playing Political FootballI guess this latest sound byte is working on the assumption that Americans cannot add up the number of Democrats in the House and Senate.

Like a bad High School fumbling, the Political Football is bouncing around the field. Few are bothering to analyze what will work and what will not. Real solutions seem to be off the table.

 

WaMu failure cost to FDIC: $0

Via Calculated Risk:

JPMorgan Chase acquired the banking operations of Washington Mutual Bank in a transaction facilitated by the Federal Deposit Insurance Corporation. All depositors are fully protected and there will be no cost to the Deposit Insurance Fund.
....

"WaMu's balance sheet and the payment paid by JPMorgan Chase allowed a transaction in which neither the uninsured depositors nor the insurance fund absorbed any losses," Bair said

According to those who thought the FDIC was insolvent, the failure of WaMu was supposed to be the cause of death. Instead, the FDIC incurred exactly $0 in costs to its insurance fund from the failure.

Germany to U.S. - Your Financial SuperPower Status is History

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Tell us something we don't know Germany. US ‘will lose financial superpower status’:

The US will lose its status as the superpower of the world financial system. This world will become multi­polar” with the emergence of stronger, better capitalised centres in Asia and Europe, Mr Steinbrück told the German parliament. “The world will never be the same again.

FDIC May Need More Funds

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The hits just keep on coming. This is like watching a train wreck. Now FDIC May Need $150 Billion Bailout as More Banks Fail.

By the end of 2009, about 100 U.S. banks with collective assets of more than $800 billion will fail, predicts Christopher Whalen, managing director of Institutional Risk Analytics, a Torrance, California-based firm that sells its analysis of FDIC data to investors

NEWSFLASH: FDIC siezes Washington Mutual deposits and transfers to JP Morgan

CNBC is reporting

that the FDIC forced a sale of Washington Mutuals deposit accounts to JP Morgan Chase. No further detail has been released yet. Recently, Wamu's debt fell into junk status. Wamu had been looking for partners or acquirers for the entire operation, yet no one wanted to bite. The bank was one of those who was hardest hit by the mortgage meltdowns, resulting in the resignation of some of it's management.

Senator Shelby - Sanity Coming from a Conservative?

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Senator Shelby (R-AL), has come out and said this entire bail out deal is fatally flawed. He claims to have over 300 Economists agreeing with him.

Richard Shelby is the ranking GOP member of the banking committee and what is more interesting is he used to be a Democrat and switched parties in 1994.

Shelby:

We ought to look at alternatives

and further said:

CNBC: McCain says this deal is dead to him

CNBC's Charlie Gasparino is now reporting that McCain is saying the deal is "dead" in it's current form.  This marks another flipflop from the senator, who just the other day says some sort of bailout was needed.  This also comes in light of the Democrats in both houses coming to an agreement as to what they want.  Indeed, even 40 out of 49 Republicans said they would go along. McCain had met with Republican leaders.  He or his handlers have been in constant contact with the White House, particularly Paulson.  So I'll tell you, if this is true, it's a shocker.

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