WaMu is NoMore!
Let's get some statistics for everyone to review - 43,000+ employees, 2,300 branches, $300 billion in Assets Under Management. The company was worth somewhere in the neighborhood of about $61 billion right about a year ago. What a difference a year can make! Sixty-one billion dollars of shareholders equity simply wiped away. Oh yes, this doesn't have any impact on the depositors of the bank. Seriously! Further, even though they are protected by the FDIC insurance, this demise will not cost anything to the fund. The good old friends at the House of Morgan come to this rescue. JP Morgan Chase will take ownership of the deposits and the operations at WaMu. The depositors will not miss a heartbeat.
While the news people are busy reporting and analyzing the onslaught of news, I can only imagine what the folks at some of the regulatory agencies are going through these days. Hats off to Chairman Sheila C. Bair and her team at the FDIC for being relentless in bringing some sense of order while facilitating transactions among banks and minimizing absolutely any costs to the Deposit Insurance Fund.
Hats off to Chairman Sheila C. Bair and her team at the FDIC for being relentless in bringing some sense of order while facilitating transactions among banks and minimizing absolutely any costs to the Deposit Insurance Fund.
As the folks at the FDIC were busy keeping an eye on what the week brings, Bloomberg News ran a story titled "FDIC May Need $150 Billion Bailout as Local Bank Failures Mount." The FDIC's Public Relations office was quick to provide a rebuttal to this story with a compelling explanation of why this Bloomberg story does disservice to the community.
So, the folks at the FDIC are not only busy facilitating mega-transactions, as the one between WaMu and JP Morgan Chase, they are also busy keeping an eye on anything that can bring consumer confidence in the financial sector to its knees. To put things in perspective, I saw a posting from a banker on BankInfoSecurity. He was describing that a customer from his bank withdrew everything she had in her accounts, mind you - in cash, 100 dollar bills. The reason being - she heard it in the community that the FDIC was running out of money. She was not too concerned about the financial wellness of her bank. She knew the bank had been around for over 100 years in the community and she personally knew the CEO and the President of the bank. But if the FDIC is running out of money, that's a whole different story.
This rebuttal from the FDIC I mentioned above was sent in the form of an Open Letter providing details on why the FDIC officials think this story from Bloomberg News does disservice to the community. In this age of 'fragile' consumer confidence, where every rumor can spark a fire and bring even the largest institutions to a halt, it is in every institution's interest to provide timely, accurate and precise information to its customer. If you don't, someone will - It could be your competitors or the rumor mills. Both are bad for business.
I will get back to monitoring some more newswires and try to make sense of everything passing my desk. Hopefully, the week will be over shortly!