JPMorgan Buys Failed WaMu Assets for $1.9 Billion

reply to post by grimreaper797


LOL a drop of 15% in 1 day of trading after the bailout was killed is only the beginning. But we'll see who is right. And i have a better understanding of how things work right now than you my friend. your stuck in the past using the same models that got us in this mess.

So now what is jpmorgan going to do since they spent what capitol they didn't have to buy parts of WAMU. (they had to sell stock at a discount to raise enough capitol to cover the purchase and write downs) they can't sell the assets right now there is no buyer. The bailout bill failed so no safety net to dump assets off on taxpayers.

There is even less credit available in the market after the purchase of WAMU and their will be even less tomorrow. don't be fooled by the fed dumping 630 Billion into the market. all it did was destabilze it more than it already was. a 777 point dump on the market is no accident. The market has to correct itself, the Government cannot come in and try to set prices it might slow the tide but at the end of the day you and I both now it is only a bandage and the tide will continue until there is a total collapse of the banks.

The system that was in place is dead. your seeing proof of it right now. your just affraid to admit you might be wrong. YOU cannot enforce change from the current system while its still in place. it has to collapse so a new system can be enacted.

BTW you proved my point earlier about JPMorgan having to sale the assets they aquirred from WAMU

Until of course this bill passes and JPmorgan gets to sell these newly acquired assets for a profit. They could also rework out the mortgages. Thats not out of the question. It is the banks choice to either work out the mortgages with the people who have them.

then you flip flop and say they don't have to.

yea you know more than i do. atleast i can see outside the box and can keep my point straight and not change my point after a couple posts.

Choice B of your sig fits you my friend

edit fix quote

[edit on 9/29/2008 by Mercenary2007]

reply to post by Mercenary2007


After reading your post, it really doesn't even warrant a response. You keep going on and on about how JPmorgan doesn't have anyone to sell these assets to, when they didn't even buy said assets to begin with. They bought the banking sector of WaMu.

I merely gave the example of JPmorgan buying the mortgage sector to show you how selling bad assets like a hot potatoe isn't the only option.

You failed to even understand that. JPmorgan doesn't need the government bailout, they are in fine shape. Citigroup and their acquisition of Wachovia can't say the same. They pulled a JPmorgan without the numbers to justify their actions.

reply to post by grimreaper797


DOH! I meant Chase not Morgan ..

Chase and BoA are both trading in respectable levels, of course, not anywhere near their highs, still $40 a share compared to $1.63 (national city) ..



Though, I really don't think Morgan will fail, and if you like cheap stock at fire sale prices in the hopes in a year or so it will be higher value, perhaps it's a high risk gamble.

I cannot say the same for citi. They don't have the numbers to justify the acquisition of Wachovia's banking and I put my bets on Citi going under and causing a huge crisis, should this bailout bill not go through in the next month or two.

I quite agree, though it beats having the FDIC try and insure WAchovias deposits. Citi is trying to sell themselves quietly, but liquid assets are hard to come by and other big banks have taken to much of load.. over whelm them and they fail. So Citi gets stuffed with a $48 hit on the trade..

If the bill passes, they will be fine. If not, they are doomed.
Stock holders see this, Citi stock has dropped double digits today.. of course announcing a $48 billion dollar hit on the day the bill fails wasn't smart.

But..

Citi and Wachovia together are to big to fail .. so it will be sold for pennies (wachovia for 2.2 billion? A steal, minus the debt..) .. Citi and Wachovia together sold for a few billion (essentially a non-voted merger?) could create... a super bank.

reply to post by Mercenary2007


drop of 15%?...

Dow was down aboot 7%, the S&P 500 down 8.8% (better reflection of economy to)

Anyways.. a lot of faith is riding on this bill to have the Gov buy bad debts at above-market-value.. making profits, increasing stock prices.

And of course, unfreeze credit markets which have essentially..... become nonexistent.

I remember a thread a while back where someone took a picture of a swastika (sp?) that was built into the side of a JPMorgan/Chase bank with bricks. Anyone else remember that thread?

There were commercials on the tv today trying to get people to open up WaMu bank accounts. I thought it kind of ironic considering the circumstances.

reply to post by Rockpuck


Won't happen, no bank is going to touch it. They simply can't afford to hold that kind of size assets. JPmorgan won't touch that. Its beyond their means, given their recent purchase of WaMu. BoA won't either, they just bought meryll lynch. Wells Fargo? Morgan Stanley? Nope, not if they want to follow in citigroups footsteps.

Think of these failing financial insitutions as weights. JPmorgan had the strength to hold the weight of WaMu's banking. Citigroup isn't strong enough to hold the weight of wachovia's banking. Is their ANY bank strong enough to buy both citigroup and wachovia's banking? Not a chance.

The FDIC will have no choice but to insure if this bailout doesn't happen. Nobody is going to try to bring on that kind of weight right now.

reply to post by grimreaper797


sorry my friend you fail to realize that infact JPMorgan did purchase those assets. Maybe you need to see it in black and white so here ya go.

The pair will have to grapple with $176 billion in WaMu mortgages, including adjustable-rate, subprime and home-equity loans. JPMorgan forecasts home prices in the U.S. may fall as much 20 percent in the event of a severe recession.

Source
Yes they also gained 900 billion in deposits that could help them. but the point is they are spending capitol that they should be holding on to. Because they are going to need it. whats going to happen if there is an even bigger run on banks than the 16.7 billion dollar run on WAMU. this bill didn't pass people really don't understand what we are in for but when they start to realize it in the coming weeks no bank will beable to keep up with the run!

Also i didn't figure you would have admitted you were wrong and that you did in fact say that they would need to sell those assets to the government for a profit.
The FDIC doesn't have to funds to cover the kinds of losses that are coming and your crazy if you think they do. they can cover a few small banks but let someone like JPMorgan, BOA or Citi fail and see how fast the FDIC runs out of insurance.
Yeah the Fed can bail out the FDIC by printing more and more money and with each bill they pull out of thin air the higher inflation goes. and the less value that bill carriess. the banks are going to fail the market has made sure of that. its time that people like you that want to revive the old system and keep using the old models need to realize. this isn't the 90's this is 2008 and the market is dictating the old model doesn't work time to start over!

once again you show you don't know anything about whats happening. a 15% drop of stock value in 1 day of trading you'll be crying tomorrow when its another 20% cause then you'll realize i could be right

[edit on 9/29/2008 by Mercenary2007]

[edit on 9/29/2008 by Mercenary2007]

[edit on 9/29/2008 by Mercenary2007]

[edit on 9/29/2008 by Mercenary2007]

reply to post by grimreaper797


I think that it doesn't matter, someone HAS to take it.. no bank has just "disappeared" .. they have all been acquired..

The Gov will finance a take over if need be, more then likely the bail out will keep Citi afloat anyways.

now .. for mercenary........

WaMu certainly did NOT have 900 billion in deposits, actual deposits where around 180 billion...

big chunk, but they also had to acquire a few hundred billion in loans, arms, equity loans etc.

All in all given their status it was a good move for them, in the future it will increase their market power.

Holding Capital does not make money, spending a small amount of capital to acquire a massive bank for pennies on the dollar?

Bankers have wet dreams about such events..

ESpecially if they can get their men in the House to buy their bad assets!

reply to post by Mercenary2007


Ah ok, I realize now you simply have a reading comprehension problem, rather than an ignoring one. If rock wants to argue with you, thats fine, but I have come to the realization that you aren't understanding what I am saying, so good luck with your investing. Later.

reply to post by Rockpuck


they have control of 900 billion in deposits that with what JPMorgan had and WAMU and Bear stearns combined. that makes them the largest bank by deposits. i know they don't have the whole 900 billion on hand. most of their deposits are tied up in loans to other banks. And again their isn't credit right now banks aren't lending any more money even to other banks. why because they are worried they won't get their money back. and they know in the comming weeks there's going to be runs on banks.

However they had to raise the capitol to buy WAMU. they didn't have it on hand they had to discount almost 300 million shares and sell them. Yes their market price increased after the deal. now the stock is worth less than what JPMorgan discounted it to for the sale to raise capitol.

The point is JPMorgan is taking on Assets hoping they can weather this storm and survive. and in the long term if they can survive they will come out like bandits on the deal i have never disagreed with that.

But that long term is 5 years from now. they need to be looking at the short and mid terms. the next 1-3 years. Their is no one to loan them capitol if they go their will be no stopping them. they can have all the assets in the world and it will act like an anchor around their neck dragging them down.

JPMorgan took on 170+ Billion in mortgage assets. More and more of thos assets are going to be defaulted on in the next 1-3 years. there is no market for these assets even to repackage them. and they can't re negotiate a price on the mortgage when there is no market to set a fair market value to those same assets. Lets face it the value of those assets sitting on those books is artificially inflated. the Market has said the prices are wrong and the market is trying to correct it. and that what Grim fails to see.

He was banking on the bailout bill being passed, and JPMorgan would be able to dump those assets for a profit to raise capitol. Now he's to proud to admit he said it and that he is wrong.

IF i'm wrong and JPMorgan survives i'll be the first to say i was wrong and grim was right. And i hope to god i'm wrong. Because if JPMorgan does go then we will be headed to a depression that will make the great depression look like a recession and it will take atleast a decade to dig ourselves out of it. plus if our economy goes so does every economy around this rock we live on.

What got us out of the great depression in the 30's? a world war. you think that won't happen again this time?