Thread: WaMu fails; rescue plan stalls

It was reported on Lou Dobbs last night by one of his guest that wall street would be manipulated to show big losses today so it would freak congress out and force them to act.

WaMu fails; rescue plan stalls
Regulators seize the thrift and JPMorgan buys its assets. Republicans and Democrats can't agree on a plan to rescue the financial markets. RIM gives a weak forecast.

Wall Street and Main Street alike have a lot to worry about this morning, as any optimism that drifted into the markets Thursday has vanished overnight.

Washington Mutual (WM, news, msgs) was taken over by regulators late Thursday, and then JPMorgan Chase (JPM, news, msgs) swooped in to buy the thrift's assets from the government for $1.9 billion.

It was the biggest bank failure in U.S. history. Shares of WaMu fell $1.55, or 91.7%, to 14 cents on the news. JPMorgan shares fell $2.68, or 6.2%, to $40.78.

Adding fuel to a fire still threatening to get out of control, Republicans and Democrats have hit a roadblock in their discussions to adopt a plan to rescue the financial markets.

Signs of business-as-usual in Washington pushed stock futures lower this morning.


Democrats claimed that Presidential candidate John McCain had torpedoed a consensus approach. McCain's camp claimed he tried to help by opposing a plan that didn't have the votes for passage.

Stocks rallied Thursday when Congressional leaders said they had reached an agreement on principles for the government's financial rescue plan. The Dow Jones Industrial Average rose 197 points, or 1.8%, to close at 11,022. The Nasdaq Composite Index gained 31 points, or 1.4%, to close at 2,187, and the Standard & Poor's 500 Index closed up 23 points, or 2%, at 1,209.

Light, sweet crude oil fell $2.62 to $105.40 this morning.

Biggest failure ever
The failure of WaMu came as a jolt to a financial system already struggling with doubts about the stability of large institutions.

"With insufficient liquidity to meet its obligations, WaMu was in an unsafe and unsound condition to transact business," the Office of Thrift Supervision said on its Web site.

The purchase of WaMu's assets gives JPMorgan its 5,400 branches in 23 states.

"We're in favor of what the government is doing (with the rescue plan), but we're not relying on what the government is doing. We would've done it anyway," JPMorgan Chief Executive Jamie Dimon said in a conference call Thursday.

Washington Mutual has been slammed by losses related to the mortgage-market crisis over the past year, and was forced to put itself up for sale on Sept. 15. Although JPMorgan had expressed interest, along with Citigroup (C, news, msgs), Spain's Banco Santander, Wells Fargo (WFC, news, msgs) and several private-equity firms, no buyers had come forward, and the bank's customers had pulled $16.7 billion in deposits since it went on the block 10 days ago.

In December, the bank closed its subprime lending business, cut its dividend and announced layoffs. In an ironic twist, Washington Mutual rejected an $8-per-share offer from JPMorgan in March. WaMu continued to struggle, and the stock spiraled lower. The thrift finally ousted its CEO, Kerry Killinger, on Sept. 8.

Washington Mutual's failure is the biggest in U.S. history and the 13th so far this year. WaMu had $307 billion in assets. WaMu's failure dwarfs the second-biggest failure in history. That was Illinois National Bank, with $40 billion in assets, in 1984. The government seized IndyMac in July, which had $32 billion in assets.

JPMorgan said it expects to take $1.5 billion in pretax costs because of the deal, but it also expects the acquisition to add 50 cents per share in 2009 earnings.

Washington Mutual's Web site already has a "welcome to JPMorgan Chase" message up.

In separate news, JPMorgan announced plans to raise $8 billion by selling common shares of its stock.

Rescue hits a roadblock
In Washington, discussion of a massive bank bailout program seemed to come unhinged when the Presdential candidates flew in to help.

Sniping over the Treasury Department's $700 billion rescue plan turned nasty last night, and the chances of an agreement between Republicans and Democrats suddenly seemed slim. Compromise and swift action had looked like a done deal Thursday afternoon, with a vote in prospect for the weekend.

The deal fell apart when McCain waffled and Republicans deserted the plan that President Bush's administration introduced a week ago.

http://articles.moneycentral.msn.com/In ... ?GT1=33002

NO BAILOUT...NO WAY....NO HOW!!!!

Congress certainly wasn't interested in bailing out American citizens when the foreclosure situation arose so why in the world would they want to bailout corportations? They say jobs...but in truth more jobs will be lost in the long run when these corporations that can't handle money are given more....

Definition of insanity-doing the same thing over and over expecting a different result.

How many times will Americans and congress buy into the fearmongering to facilitate the NAU agenda? It's way past time to stand up for what is right and demand that no bailout is legislated!

Originally Posted by avenger

NO BAILOUT...NO WAY....NO HOW!!!!

Congress certainly wasn't interested in bailing out American citizens when the foreclosure situation arose so why in the world would they want to bailout corportations? They say jobs...but in truth more jobs will be lost in the long run when these corporations that can't handle money are given more....

Definition of insanity-doing the same thing over and over expecting a different result.

How many times will Americans and congress buy into the fearmongering to facilitate the NAU agenda? It's way past time to stand up for what is right and demand that no bailout is legislated!

MAN THE PHONES PATRIOTS AND SHOUT HELL NO WE ARE YOUR FOOLS NO MORE!!!

ANOTHER DAY TO MAKE a DIFFERENCE PATRIOTS!!!!

CALL PHONE AND FAX ABOUT THE BAIL OUT AND E VERIFY!!!

WE CAN DO THIS!!!

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