Dollars and Jens
Friday, September 26, 2008
Washington Mutual falls
Washington Mutual is taken over by the FDIC and its operations sold to J.P. Morgan; equity is wiped out (I think), creditors take a large haircut, but the FDIC walks away whole and the franchise is preserved.
I've mentioned Washington Mutual a few times recently as "the last big financial entity that might deserve to fail but hasn't yet". This isn't to say that no other big financial entity will fail in the next year or two, just that I would regard such an event as almost certainly being due to a self-fulfilling credit run on an endogenously healthy bank.
Update: Actually, it looks very much like what I described earlier in the day, though of course there was no advisory opinion against a fraudulent transfer.
Update 2: I kind of forgot about Wachovia. Wachovia might well be insolvent, too.
Labels: Washington Mutual
