First bank failure coming?
More to come....
But WM could never ever fail. It in the city with lakes, mountains, ponies, etc....
http://www.bloomberg.com/apps/news?pid= ... =worldwide
But WM could never ever fail. It in the city with lakes, mountains, ponies, etc....
http://www.bloomberg.com/apps/news?pid= ... =worldwide
Comments
Which shade do you prefer?
BSC is going under, the only question is what will they look like come Monday? Will they be bought out, dismantled, or just toast? Looks like the Fed is trying its best to prevent the latter, but I wouldn't put any bets on the table either way. There are much better/safer places to short right now.
I've been asking the same question about why in the hell BAC (Bank of America) would want CFC (Countrywide)!
They are a conduit for BSC to access the discount window today (they can't access the discount window because they are not a bank but a broker, same reason CFC was unable to access the discount window). However, the current rumor is that JPM is going to purchase BSC outright come Monday.
The main difference I see between the CFC + BofA transaction is that BofA wants CFC's mortgage servicing arm. They already invested a couple of billion into CFC (when the stock was around 18 bucks) so they were somewhat already "pot committed".
BSC on the other hand is merely a broker. I think this is rumor mongering at its best, first it was JPM buying out WAMU, now supposedly they are going to buy out JPM. I'll believe it when I see it, otherwise I am cashing out my 55 BSC puts at 400 percent profit and calling it a week. I'm taking all my money off the table at this point and watching from the sidelines.
OMFG! They were around 60 bucks a share just 3 days ago!
"Wall Street begins the new week trying to come to terms with just how bad the fallout from the credit crisis is -- so bad that an investment bank worth $20 billion weeks ago has been bought for just $236 million."
Why can't WM fail again? I think I'm going to buy some more puts in the morning.
Here's the real kicker guys- now EVERYBODY knows how much the CDO, etc. garbage is worth if it's on your books, and leveraged even a bit. The leverage, times the default rate, means you're gone. One large financial institution after another will be falling off the cliff as the margin calls and redemptions come in this week. I've read that there are about a dozen large institutions with significant positions in Bear Sterns alone. They will be hammered by this development.
From Yahoo (major holders in Bear Stearns):
BARROW, HANLEY MEWHINNEY & STRAUSS, INC. 11,485,058 9.73 $1,013,556,368 31-Dec-07
MORGAN STANLEY 6,335,729 5.37 $559,128,084 31-Dec-07
Legg Mason Capital Management, Inc. 5,721,010 4.84 $504,879,132 31-Dec-07
PRIVATE CAPITAL MANAGEMENT, INC. 5,541,259 4.69 $489,016,106 31-Dec-07
Barclays Global Investors UK Holdings Ltd 4,245,451 3.60 $374,661,050 31-Dec-07
STATE STREET CORPORATION 3,550,715 3.01 $313,350,598 31-Dec-07
VANGUARD GROUP, INC. (THE) 3,149,691 2.67 $277,960,230 31-Dec-07
JANUS CAPITAL MANAGEMENT, LLC 2,765,699 2.34 $244,072,936 31-Dec-07
FMR LLC 2,359,011 2.00 $208,182,720 31-Dec-07
PUTNAM INVESTMENT MANAGEMENT, LLC 2,242,980 1.90 $197,942,985 31-Dec-07
I should stop Ass-u-me-ing... BUT... I think Scottsman is right that the leverage at Bear was severe (compounded by severe fear) which drives the liquidity of their securities down. As one guy said in a WSJ clip, I can't believe JPM got enough due dilligence done in 3 days. I think the $2 reflects this uncertainty and that shareholders are going to demand more (as reflected in the stock price). At this point with 85% accounted as entropy I might as well ride it out considering how much my trading fees would cost me now.