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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: E_K_S who wrote (31977)	9/12/2008 1:17:48 PM
From: Madharry	Respond to of 78571

I have read the article. thanks for posting it. I have the following comments: It seems to me that of late rating agency downgrades are occurring in response to stock prices rather than the other way around. I dont think that ratings are of much use to anyone anymore except that it determines access to capital markets unfortunately and how much collateral needs to be up under certain condition. in my view banks and other companies made a horrible mistake allowing ratings to determine ratios in various loan documents and other agreements. I'm not sure that the these credit swaps numbers have any meaning as i doubt that anyone is insuring their debt in this manner anyway. My guess is its some trumped up measure that allows shorts to garner headlines and put more pressure on the stock but perhaps i am too cynical. Every thing is negotiable and these tpt guys werent born yesterday. If the choice is bankruptcy or these guys taking some haircut with some opportunity of making good money at a later date im sure they will listen to reason. I still think its possible that WM could be sold to one of the canadian banks looking to expand their presence in North America and it might make a good match, or even to an asian bank for that matter. If that happens it will be home run for prefferred shareholders. Even if that doesnt happen I dont see a 90% liklihood of default within 5 years. My gut feeling tells me that the last thing the government wants to do is to take over the country's largest thrift. It would be a logisitcal nightmare . Then of course like many of my other speculations this year i could be completely wrong and i can use my preferred stock to cover holes in my wall. I am certainly not suggesting anyone purchase this is an investment or even speculation for now.

To: E_K_S who wrote (31977)	9/18/2008 12:57:23 AM
From: Madharry	Respond to of 78571

Ailing bank Washington Mutual Inc. appeared headed toward a sale Wednesday after a major investor removed a potential stumbling block and nervous banking regulators began approaching the most logical buyers. The New York Times, citing unidentified people familiar with the matter, said an auction of the bank was already under way, and The Wall Street Journal reported Wells Fargo & Co. and Citigroup Inc. expressed interest in a takeover. WaMu, Wells Fargo and Citigroup all declined to comment. A concession by investment firm TPG, which injected $7 billion into WaMu five months ago, may have opened the way to a sale — or, failing that, made it easier for the bank to raise another round of capital. TPG could have stymied the process because of protection when it bought its stake in April. A clause in its agreement could have required a buyer or another major investor to pay TPG hundreds of millions, if not billions, of dollars in addition to whatever money was injected into WaMu. But TPG agreed to waive the clause after concluding WaMu needs all the help it can get. "It became clear that it would be in the best interests of Washington Mutual and our investors to waive the ... provisions," Fort Worth, Texas-based TPG said in a statement. "Our goal is to maximize the bank's flexibility in this difficult market environment." The efforts to find a buyer, though, were being complicated by uncertainty about the magnitude of losses still lurking in Washington Mutual's home loan portfolio. "No one knows what's in their books," said a person briefed on the talks between regulators and banks, speaking Wednesday on the condition of anonymity because of the sensitivity of the matter. Citing unidentified sources, the New York Post said the potential buyers include JPMorgan Chase & Co. and HSBC Holdings PLC., as well as Wells Fargo. The banks all declined to comment. Federal regulators would like to sell WaMu to a healthy bank, rather than risk a failure that would drain an already depleted deposit insurance fund. By some estimates, a WaMu failure could cost the Federal Deposit Insurance Corp.'s fund more than $20 billion. At $45.2 billion, the fund is already at a five-year low. After losing $6.3 billion in the past three quarters, Washington Mutual believes it is slowly healing under a new chief executive, Alan Fishman, who will receive an $8 million bonus if he can keep WaMu alive through 2009. "I think people do know what is in our books and we've been pretty transparent," WaMu spokeswoman Olivia Riley said Wednesday, pointing to a financial update the company released late last week. Those figures suggested WaMu's loan problems are becoming less severe compared to recent quarters, giving some analysts hope that the company can still be salvaged. Nonetheless, analysts still expect the company to sustain a loss of about $1.8 billion in the quarter ending Sept. 30. And investors are showing little confidence in WaMu. The company's stock fell 31 cents to $2.01 Wednesday, leaving the stock price with a decline of 85 percent so far this year. The erosion has left WaMu with a market value of about $3.5 billion — down from $43 billion at the end of 2006. "Something needs to happen soon because WaMu is twisting in the wind," said Bert Ely, an Alexandria, Va., banking consultant. "It's a detrimental situation that has become corrosive to the franchise." Assuming that Washington Mutual either can't find a buyer or doesn't want to be sold at the price being offered, the thrift could raise more money to fatten its cushion against the losses that are still expected to come. Like TPG did, any investor would be betting that the slumping real estate market will bounce back, allowing Washington Mutual to regain its financial equilibrium and return to the form that enabled it to pocket profits totaling $13.7 billion from 2003 through 2006. In a Monday research note, Keefe, Bruyette & Woods analyst Frederick Cannon estimated Washington Mutual probably needs to raise at least $5 billion to protect itself from upcoming losses. Cannon thinks Washington Mutual could still be facing as much as $28 billion more in loan losses and other credit-related expenses through 2009. Alternately, Ely thinks WaMu could sell big chunks of its franchise, which includes $143 billion in deposits and more than 2,200 branches in 15 states. Most of WaMu's branches are in the West, overlapping territory where Wells Fargo and Bank of America are the market leaders. WaMu's branches in New York and Illinois also could be appealing to buyers if the company is sold in pieces, Ely said. "When you are dealing with a company this big, there are lots of ways you can slice and dice it," he said. ___