Thursday, September 26, 2013

Today in the Financial Crisis, Friday September 26, 2008: Jamie Dimon Picks Up a-third-of-a-Trillion in Assets

It had been 11 days since the Lehman bankruptcy
The Dow Jones Industrial Average notched its second consecutive gain on that Friday, 121.07 points at 11,143.13.
After all the madness on the Street the DJIA was only down 278.86 from where we closed on the 12th, before the Lehman weekend.
Not to worry though, things were about to get really exciting.

From the Los Angeles Times:
Dow rallies after sharp early drop
Washington Mutual shares, which could be made worthless by the government seizure, skidded 91% to 16 cents a share. A year ago, they were trading above $35....
PETA calls on ice cream maker to use breast milk
Downgrades hit financial sector
HSBC Holdings cuts 1,100 jobs
Loan boom paid off for Wall Street execs
Executives of the top five firms were paid $3 billion in the last five years as mortgage securities proliferated.
Swindler gets life for bilking the elderly
Wife of Lehman chief to sell pricey art, dealers say 

What we were posting:
5:23 a.m.
Why Washington Mutual (WM) Does Not Matter
Washington Mutual (WM) failed yesterday and most of its assets where sold to JP Morgan (JPM). The price was $1.8 billion. JPM will have to write down $31 billion in badloans, but, since Jamie Dimon is now the king of the banking world, he should be able to raise the capital to cover that. In the meantime, he has picked up $307 billion in assets. 
 According to The Wall Street Journal, "The deal will vault J.P. Morgan into first place in nationwide deposits and greatly expand its franchise." 
5:28 a.m. 
On banking crises c. 1908
More from the "there are no new problems, only our problems" drawer, the Sept. 23, 1908 NYT reports:
"Europeans believe that the world panic of last Autumn was caused by our banking system; that there is no assurance against a recurrence of the trouble until the banking system is reformed. And I agree with Europeans," remarked Jame B. Forgan, President of the First National Bank, upon his return from a trip abroad today. He continued: 
"Over there in Europe, when a monetary scare occurs and spreads, there is at once a unanimity of action among bankers. Money begins to flow to the country's financial centre. The Bank of England, for instance, raises its discount rate; it gets gold from everywhere; the monetary resources of the country are laid under contribution for the benefit of the big bank or banks. The people are then shown the strong position of the large institution or institutions, and are calmed thereby.
"Here in the United States we are the victims of a process the direct reverse of that obtaining abroad. when apprehension seizes the Nation our one or two big piles of cash are pounced upon by a myriad of little bankers throughout the country, who make hundreds of piles of them, and who, after getting the money, do nothing but stare at it, having really no use for it....MORE
5:32 a.m.
Speculator? Oil Firm? Theories on Crude Spike
6:11 a.m.
Wipeout: Washington Mutual Bondholders

7:43 a.m.  
German DWS issues retail carbon fund with Aquila
I'm not sure that having speculators and financial intermediaries romping about in the carbon markets is a societal good but what the hell, I'm tired of watching politicians and bankers deal with the last mess, on to the next one!

Plus, we can liberate the hausfrau's pin money for higher purposes like reliquifying banker's and broker's balance sheets. Win, win (well, except for the hausfrau)...
9:33 a.m. 
WaMu Bondholders are `Stranded' in Thrift Seizure, Hendler Says
House oks extending renewable energy tax credits
It's not the same bill passed by the Senate so the next step is a conference committee. Not that it will matter to the equities, right now the market's attention seems focused elsewhere....
10:59 a.m. 
Marc Faber: US Needs as Much as $5 Trillion Financial Rescue
12:11 p.m. 
JPMorgan House Price Projections (JPM; WM)
1:41 p.m.
Now for Something Completely Different: Intrade Betting is Suspicious