Items of Interest:
JPMorgan Buys WaMu's Deposits as Thrift Is Seized by Regulators -- JPMorgan Chase & Co., the third- biggest U.S. bank by assets, agreed to acquire the deposits of Washington Mutual Inc. for $1.9 billion as the thrift was seized by regulators in the biggest bank failure in U.S. history....
Edward Harrison / Credit Writedowns:
JP Morgan Chase buys WaMu out -- Obviously, this is a bankruptcy as much as a takeover by JP Morgan...
They are marking down assets on WaMus loan portfolios by $31 BILLION. That's huge. See page 17. Again, there is a huge $31 BLLION writedown on assuming WaMu's liabilities. WOW! ...
- JPMorgan buys WaMu -
- Government Seizes WaMu and Sells Some Assets
- U.S. bailout in chaos, feds seize WaMu - Reuters
President George W. Bush's address to the nation, on September 24, 2008:
"We're in the midst of a serious financial crisis..."
"Our entire economy is in danger..."
"These are not normal circumstances..."
"Major sectors of America's financial system are at risk of shutting down..."
"Safeguard the financial security of American workers..."
"The federal government also continues to enforce laws and regulations protecting your money..."
"Failure jeopardizes the entire financial system..."
"And ultimately, our country could experience a long and painful recession...."
Wall Street Journal:
Headlines at 4 pm:
Agreement Reached on Bailout Ahead of High-Level Meeting
Headlines at 7 pm:
Leaders Wrangle Over Bailout -- Wrangling among the nation's top political leaders threw the Bush administration's $700 billion bailout plan into disarray late Thursday, despite a dramatic day of negotiations on Capitol Hill that seemed to promise a deal...
US Congress to approve a government bailout of banks on/before 30 Sep 2008 --
Talks Implode During Day of Chaos; Fate of Bailout Plan Remains Unresolved -- The day began with an agreement that Washington hoped would end the financial crisis that has gripped the nation. It dissolved into a verbal brawl in the Cabinet Room of the White House ...
Discussion:Joe Gandelman / The Moderate Voice: Contradictory Views On State Of White House Congress Wall Street …Jonathan Garthwaite / Townhall.com: The World According To Harry & NancyRon Beasley / Newshoggers.com: Good for them — It's not often I am thankful for conservative …Marc Ambinder: McCain Sounding Out Support For Alternative Bills?Bill Bradley / Pajamas Media: Palin' ... And More — In his new TV ad, Barack Obama …Julia Hoppock / Political Radar: McCain, Obama ‘Confident’ That Bail Out Deal Will Be Made
Kill the bailout: More ACORN funding?! -- Just heard from several readers that Lindsay Grahamnesty told Fox that the Mother of All Bailouts includes a reported $100 million more in funding for the left-wing housing entitlement thugs and heavily tax-subsidized fraudsters at ACORN...
Discussion:Kenneth Anderson / Newshoggers.com: McCain Creates “Disarray” Over BailoutMcClatchy Washington Bureau: Bailout deal would start with $250 billion, limit executive payBig Tent Democrat / TalkLeft: McCain's Plan To Break The Deal: Less Regulation, Accountability and ProtectionRich Lowry / The Corner: Carl Cameron: Mood on Capitol Hill remarkably sourRed Wind / The Seminal: Moose Lips Sink Ships: Palin's Morning “Availability” …Andrew Leonard / Salon: The conservative bailout solution
- Whatever Is Good For Goldman Sachs... - John Gapper, Financial Times
- Yes, We're in a Crisis. But Is It a Disaster? No - Geoff Colvin, Fortune
- Paulson's Plan: Useful First Step, But Not Enough - Willem Buiter, VoxEU
- Why We Need to Act Now - Anne Krueger, Washington Post
- No Thanky to Paulson and Bernanke - Quin Hillyer, American Spectator
- What We Learned from Resolution Trust - W. Seidman & D. Cooke, WSJ
Discussion:Mark Thoma / Economist's View: Do We Need to Act Now? — Anne Krueger says we need “swift action” on a bailout plan:Prairie Weather: A way out … Stick with this for a minute — it's finance-speak …Dean Baker / TPMCafe: No Bailout: Stop Rewarding Incompetence
The Paulson Plan Will Make Money For Taxpayers
Discussion:Katie Favazza / Right Wing News: Re: There Is No Such Thing As A Fiscal Conservative Who Supports …Barry Ritholtz / The Big Picture: Latest Bailout Plan Spin: Its a Money Maker!Ann Althouse / Althouse: Bush speaks.
The Paulson Plan: Bad News For The Bailout — Lawmakers on Capitol Hill seem determined to work together to pass a bill that will get the credit markets churning again. But will they do it this week, as some had hoped just a few days ago? Don't count on it...
Some of the most basic details, including the $700 billion figure Treasury would use to buy up bad debt, are fuzzy.
"It's not based on any particular data point," a Treasury spokeswoman told Forbes.com Tuesday. "We just wanted to choose a really large number...
Discussion:RELATED:Carol Platt Liebau / Townhall.com: Hillary Weighs In — It's lucky for Republicans that Hillary Clinton …Big Tent Democrat / TalkLeft: Hillary Clinton: The Time For HOLC IS NowArnold Kling / EconLog: The Case Against the Bailout — « Are Credit Markets Locked Up?Pamela Geller / Atlas Shrugs: OBAMA “WHO GOT US INTO THIS MESS”Robert Stacy McCain / The Other McCain: How not to solve the problem — Hillary Rodham Clinton: … Moron.
Dr. Frankenstein's Wall Street
- Paulson Can't Be Given a Blank Check - George Soros, Financial Times
- Why The Paulson Plan Won’t Work - Seeking Alpha
- Another Way The Paulson Plan Is Hurting Main Street - FT Alphaville
- The Bailout Alternative: Virtual Mark to Market - Mark Cuban, Blog Maverick
- A $700 Billion Slap in the Face - Paul Krugman, Conscience of a Liberal
- Crisis Rounddtable: Which World Are We In? - R. Baldwin, Free Exchange
- Government Could Come Out Ahead - Robert Samuelson, Washington Post
- Could Buffett Negotiate a Better Deal? - David Leonhardt, New York Times
- Let's Get the Same Deal Buffett Got - William Greider, The Nation
- For the Rescue to Work, It Must Be Clean - Editorial, Investor's Bus. Daily
- Save the World? Hank Has No Clue - Anatole Kaletsky, Times of London
- Exactly How Serious Is the Crisis? - Terence Corcoran, National Post
- Well, Is This a Crisis, Mr. Secretary? - Editorial, New York Sun
- GS, Morgan Now 'Too Big To Fail' - Amar Bhide, Forbes
- The SEC Wants to Ban Reality - John Tamny, RealClearMarkets
- Questioning King Henry's Bailout Plan - John Avlon, City Journal
Fact or fiction,
fear or jeer,
fair or foul,
cancer or car crash,
bailout or rescue,
hook or crook,
Paulson or else,
pick your poison.
New home sales fall to 17-year low -- Sales pace of new homes lowest since January 1991 as prices hit a four-year low and inventory remains high...
The Census Bureau said that the number of homes for sale on the market is equal to a seasonally adjusted 10.9-month supply, up from a 10.3-month supply in July. By contrast, it took the 404,000 homes on the market just 3.7 months to be sold four years ago....
Doctor Doom: Hedge Funds In The Microwave -- In an op-ed in the Financial Times on Monday, I described the unraveling and demise of the shadow banking system that started with non-bank mortgage lenders, structured investment vehicles (SIVs) and conduits, major independent monoline broker dealers and money market funds. I then argued that the next leg of this unraveling would be hedge funds and private equity firms and their reckless leveraged buyouts (LBOs).
Let me now discuss in more detail this unraveling of parts of the hedge fund industry.
First, note that too much of the shadow banking system was about "Schmalpha" rather than "Alpha" (i.e. the returns that fund managers and asset managers--with their ridiculously high management fees of 2% or more--were getting by parting investors from a good chunk of their assets, rather than by superior absolute returns). In fact, the hedge-fund math of "2/20" was, most of the time, 2% for the fund managers and not 20% (sometimes single digit returns and, this year, actual negative ones) for investors. This scam is now unraveling....
`Race to Bottom' at Moody's, S&P Secured Subprime's Boom, Bust -- In August 2004, Moody's Corp. unveiled a new credit-rating model that Wall Street banks used to sow the seeds of their own demise. The formula allowed securities firms to sell more top-rated, subprime mortgage-backed bonds than ever before.
A week later, Standard & Poor's moved to revise its own methods. An S&P executive urged colleagues to adjust rating requirements for securities backed by commercial properties because of the "threat of losing deals.'' ...
Discussion: The Big Picture
When the Going Gets Tough, The Tough Confiscate Gold -- This was a national emergency. The President said so. And in order to stop the run on banks, and by extension the currency, In one fell swoop, Roosevelt outlawed the ownership of gold and mandated the following penalties which lasted until 1974...
The Dummy's Guide to the US Banking Crisis -- So, for those of you who want the 3-minute version of the present crisis, here it is in 20 short steps:
- In 2001, following a massive stock market and capital spending bubble, Federal Reserve Chairman Alan Greenspan worried that the U.S. faced a severe recession. He began cutting interest rates down to 1% and kept them at that level until 2004, raising them slowly only 0.25% at a time thereafter.
- With interest rates so low, the financial services industry sensed a lot of money could be made and went all in on real estate, seemingly unaware that low interest rates were masking large risks...