Wednesday, September 17, 2008

And Yet More Shit Hits the Fan

From the NY Times:

Washington Mutual, the struggling savings and loan, has been working on several efforts to save itself, including a potential sale, people briefed on the matter said Wednesday.

Goldman Sachs, which Washington Mutual has hired, started the process several days ago, these people said. Among the potential bidders that Goldman has talked to are Wells Fargo, JPMorgan Chase and HSBC. But no buyers may materialize. That could force the government to place Washington Mutual into conservatorship, like IndyMac, or find a bridge-bank solution, which was extended to thrifts in the new housing regulations.

Citigroup is also considering an offer, but would likely be able to buy Washington Mutual only if it emerged from a receivership, according to a person close to the situation. JPMorgan is maintaining its posture that it will not bid unless it receives government support, according to another person briefed on the matter.

And that's not all:

Morgan Stanley, one of the two last major American investment banks, is considering a merger with the Wachovia Corporation or another bank, according to people briefed on the discussions.

The Morgan Stanley chief executive, John J. Mack, received a telephone call on Wednesday from Wachovia expressing interest in the Wall Street bank. Morgan Stanley is considering other options as well. Other banks have also expressed interest in Morgan Stanley.

The talks are preliminary and no deal may emerge.

Wachovia declined to comment.

Shares of Wachovia fell 20.76 percent, or $2.39, to $9.12; Morgan Stanley declined 24.22 percent, or $6.95, to $21.75.

I have to admit that at this point I am breathless. It feels like the dam has burst and all the bad news is flooding into the streets. The struggling financial players -- which is practically everybody -- are all desperately trying to find the chair to sit in now that the music has stopped. However, the person who will eventually wind up paying for all of this is the US taxpayer.