Category Archives: Banking industry

TPG Makes Concession to Facilitate WaMu Raising Capital

The Wall Street Journal reports that TPG, which invested over $7 billion in the nation’s largest thrift, Washington Mutual, late last year. gave a waiver which would facilitate an investment or sale. WaMu earlier was reported to be considering selling branches and deposits, but how viable the remaining business (credit cards, plus the mortgage assets) […]

Search on for WaMu Buyer

The end game for Washington Mutual is nigh. From Reuters: U.S. federal regulators recently called a number of banks asking if they would consider buying Washington Mutual Inc should it eventually falter, the New York Post said, citing sources. Federal banking regulators, in recent days, contacted Wells Fargo & Co, JPMorgan Chase & Co, HSBC […]

Fed Considering Lending to AIG (Update: Or Treasury Conservatorship)

I guess someone at the Fed figured that letting the financial system blow up on its watch was not such a hot idea. But as far as the Fed’s purview is concerned, lending to AIG is just about as far afield as lending to General Motors. What is surprising (at least based on this report) […]

$138 Billion Post-Bankruptcy JP Morgan Advance to Lehman; At Least $87 B Repaid by Fed

Twp readers, Steve and Julian e-mailed us about the Bloomberg story below, that the Fed repaid JP Morgan for an advance made to Lehman after its bankruptcy filing: Lehman Brothers Holdings Inc., the securities firm that filed the biggest bankruptcy in history yesterday, was advanced $138 billion this week by JPMorgan Chase & Co. to […]

WaMu Downgraded to Junk by S&P

Boy, the adverse developments are flying so fast and furious that it’s hard to keep on top of the stories. From Bloomberg (hat tip reader Sunnny): Washington Mutual Inc., the biggest U.S. savings and loan, had its credit rating cut to junk by Standard & Poor’s because of the deteriorating housing market. S&P reduced its […]

Treasury: "Honey, I Just Shot the Banks"

Readers may recall that we were gobsmacked that the conservatorship of Fannie and Freddie involved wiping out dividends on their existing preferred stock. That was stunningly shortsighted move, guaranteed to be commemorated as a a major mistake when histories of this period are written. Fannie and Freddie preferred were held by banks, so any losses […]

Fed Makes Biggest Reserve Addition Since 9/11

The Fed made a $70 billion reserve injection today in two operations in response to a sharp increase in the Fed funds rate, indicating bank reluctance to lend to each other. One reader informed us the rate was 3.75% mid-morning after the first, $20 billion addition (versus the 2% target level) and according to Bloomberg […]

Banks Can Now Use Deposits to Fund Investment Banking Operations?

Reader Michael M called our attention to this statement in a Financial Times article: The Fed also suspended rules that prohibit banks from using deposits to fund their investment banking subsidiaries. Was this the quid pro quo for Band of America buying Merrill? If so, the repercussions extend beyond BofA. This is a time when […]

WaMu Failure Could Trigger Extension of Deposit Guarantees

The alert have taken note that the failure of Washington Mutual, which looks increasingly likely, would consume the FDICs reserves and, as in the savings and loan crisis, force the agency to go hat in hand to Congress for more money. But this is comparatively early in our burgeoning banking crisis for the bulwark of […]

Bank of America Buys Merrill For $29 a Share

Talk about a shotgun wedding. From the Wall Street Journal (hat tip reader Saboor): In a rushed bid to ride out the storm sweeping American finance, 94-year-old Merrill Lynch & Co. agreed late Sunday to sell itself to Bank of America Corp. for roughly $44 billion. The deal, which was being worked out in 48 […]

NY Times: Lehman Filing For Bankruptcy (Update: Gross Sees "Tsunami")

Hat tip readers dd and viv on this update from the New York Times’ Dealbook: Lehman will seek to place its parent company, Lehman Brothers Holdings, into bankruptcy protection, while its subsidiaries will remain solvent while the firm liquidates its holdings, these people said. A consortium of banks will provide a financial backstop to help […]

Bank of America, Merrill in Merger Talks (Updated)

The initial report from the Wall Street Journal is skeletal (hat tip reader Randy(: Bank of America and Merrill Lynch & Co. Inc. are in merger discussions, according to people familiar with the matter. The talks come amid a Wall Street scramble to sort out a potential liquidation of Lehman Brothers Holdings Inc. Bank of […]

Lehman Bankruptcy Looms; Emergency Lehman Swaps Session Today (Slightly Revised and Updated)

Reader Steve A , Scott and Saboor also pointed to the Bloomberg story reporting that the International Swaps Dealers Association had announced an emergency Sunday session to net Lehman-related position in anticipation of a possible bankruptcy filing, From Bloomberg: Wall Street prepared for a potential Lehman Brothers Holdings Inc. bankruptcy after Barclays Plc said it […]

NY Times: Barclays, Most Likely Lehman Suitor, Walks from Deal

The noose is tightening, with the powers that be facing the unattractive choices of a politically unpopular bailout (and egg on their face) versus an unwind of Lehman with potentially disastrous consequences. Will Paulson blink? So far, the word is no. From the New York Times (Hat tip reader DaddyMac): Unable to find a savior, […]

WSJ: Private Sector Resolution Looking Less Likely; Pressure Continues for Bailout (Updated)

The Wall Street provided an update on the Lehman rescue efforts which were consistent with its earlier coverage, which discussed considerable impediments to a “good bank/bad bank” solution with Wall Street firms providing the capital to support the bad bank. Note this contradicts the more optimistic report from CNBC on this approach (which we viewed […]