The FDIC generally seizes banks after close of business on Friday. That they couldn’t wait one more day speaks volumes. WaMu debt was downgraded to junk a day or so ago, the final nail in their coffin.
Politics in the Zeros
"A republic, if you can keep it." Defeat MAGA
Politics in the Zeros
"A republic, if you can keep it." Defeat MAGA
I was expecting the using FDICF this week for WM too, but I’m beginning to suspect JPM may have approached the FDIC pre-emptively, offering the FDIC an opportunity to insure no FDIC funds are required in the WM liquidation. Certainly everyone in the world (with the exception of the poor shareholders who lost 90% this morning) knew WM was going to fail if not this week, then the next or the one after. Some did estimate that WM could cost up to half of the FDIC’s $45B.
And I believe JPM may have been looking to purchase WM anyways, so they just waited for the moment before liquidation to get the bargaining power as well as getting a jump over any rivals that were interested in WM’s deposit base. It seems to me like JPM exercised the best possible method of acquiring WM.
If the TARP comes to pass, this could be a tremendous coup for JPM if they can unload much of the $300B of WM assets to the TARP (furthermore, after saving the FDIC from having to take a hit to their depleting fund, JPM might be favoured in future dealings with Federal authorities). Even with the reasonable writedown estimates going up to $55B or so without further benefits from a super bailout, I’d say JPM is in a good position.
Just a thought with little to no evidence. But it makes sense to me. Jamie Dimon is no fool.