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The company has put itself up for sale and hired Goldman Sachs to explore a possible buyout. Washington Mutual has lost $6.3 billion in the last three quarters and was downgraded to junk status by Moody's Investors Service and Standard & Poor's. The bank has projected $19 billion of mortgage losses until 2011.
Last week, Washington Mutual said it expected to set aside $4.5 billion for credit losses in the third quarter, down from the second quarter's $5.9 billion, and that it expected to remain well-capitalized.
Morgan Stanley, whose stock fell 24.2 percent Wednesday, was considering a merger with Wachovia or another bank to help shore up its finances. Goldman's stock fell 13.9 percent Wednesday, and the firm had to rebuff speculation that it was seeking a capital infusion. Both shares were falling steeply Thursday.
Stocks surged late in the afternoon after a report that the administration was considering creating a government entity patterned after the Resolution Trust Corp. created in the 1980s in the aftermath of the savings and loan crisis.
But the official, speaking on condition of anonymity because of the sensitivity of the discussions, said the talks have not narrowed to a single option.
Originally posted by marg6043
I also heard that the FDIC is going to need bail out also as they are running out of money to back people's bank accounts.
The Federal Reserve has been active in encouraging the Chinese to invest in U.S. financial institutions and has even made it clear that it would look favorably upon a Chinese acquisition of a U.S.-based financial institution, sources said.
Such a move, according to its advocates, would allow banks to shovel bad debt off their balance sheets and allow the firms to go back to business as usual. It would also eliminate the need for individual company bailouts.
"This will bring real trust back into the market." Donald Marron, chairman of Lightyear Capital, said on CNBC. "It would free up real, spendable capital in these organizations. They can use that to make loans, to make transactions and to build confidence in the system. This is a confidence crisis."
Originally posted by ACEMANN
"There there - it will be ok..just put your debt here and we will make ALLLLL go away!"
Originally posted by nine-eyed-eel
reply to post by marg6043
I vote no buy-out, no bail-out, WAMU is toast...
Seize your deposits in your teeth and flee, flee, flee...
That's what I think...but I have no inside information, I am merely ignorant and talkative...