A Spork in the Drawer

Down Goes Another One

Citigroup buys Wachovia

Questions: What happens when we run out of banks that can buy other banks? And what happens when those banks start to teeter?

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Do You Want To Know How We Got To This Point?

Meet Alan H. Fishman:

But the seizure and the deal with JPMorgan came as a shock to Washington Mutual’s board, which was kept completely in the dark: the company’s new chief executive, Alan H. Fishman, was in midair, flying from New York to Seattle at the time the deal was finally brokered, according to people briefed on the situation. Mr. Fishman, who has been on the job for less than three weeks, is eligible for $11.6 million in cash severance and will get to keep his $7.5 million signing bonus, according to an analysis by James F. Reda and Associates. WaMu was not immediately available for comment.

Three weeks

$19,100,000

Collapsed bank

Now, Mr. Fishman doesn't share much if any blame for the collapse of WaMu; we've all known that was coming for quite a while now. But that he is likely to receive $19,100,000 for his three weeks on the job is beyond appalling. Way beyond.

It's exactly this sort of thing - untrammeled greed and me-firstism - that leads to economic collapse.

Mr. Fishman may be blameless (or mostly blameless) but, under the circumstances, he should be told, "Sorry the job didn't work out, old bean. Here's a nice gift basket for you."

What has me punching the walls these days is the knowledge that the people most responsible to this mess - both in government and out - will walk away with a few scratches at most. And while they might have to fly first class rather than on their Gulfstreams they'll still be able to look down on the homeless and destitute they created.

Perhaps they will feel a twinge of shame as they're handed a glass of champagne by the flight attendant. But I doubt it.

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Thud

Fun!

Washington Mutual, the giant lender that came to symbolize the excesses of the mortgage boom, was seized by federal regulators on Thursday night, in what is by far the largest bank failure in American history.

Oh, and it's crystal clear now that the Congressional Republicans, the White House, and Sen. "Honest" John McCain are only playing games to try and make the Democrats look bad. By way of Krugman we find:

At the White House, in fact, House Minority Leader John Boehner had bluntly warned about the lack of Republican support for the massive government intervention: “I can’t invent votes,” Boehner said. But House Financial Services Committee Chairman Barney Frank (D-Mass.) angrily accused the minority of trying to undercut Paulson by crafting a late-breaking alternative proposal—with the tacit support, Frank said, of Republican presidential candidate John McCain.

Both McCain and his Democrat rival, Sen. Barack Obama, would leave the White House without comment, and the meeting was described as among the wildest in memory. A beleaguered President Bush had to struggle to maintain order and reassert himself. And when Democrats left to caucus in the Roosevelt Room, Paulson pursued them, begging that they not “blow up” the legislation.

The former Goldman Sachs CEO even went down on one knee as if genuflecting, to which Speaker Nancy Pelosi (D-Cal.) is said to have joked, “I didn’t know you were Catholic.”

It was McCain who had urged Bush to call the White House meeting but Democrats made sure Obama had a prominent part. And much as they complained later of being blindsided, the whole event turned out to be something of an ambush on their part—aimed at McCain and House Republicans.

It's time for the Democrats to walk away and make it clear what's really going on here.

But they won't.

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More Eggs, Fewer Baskets

Dandy:

The Fed also took steps to ease rules separating banks and investment banks, a move intended to make it easier for healthy companies on Wall Street, like Goldman Sachs, to buy up troubled institutions.

Again, the neo-liberal economics of Bill Clinton found common cause with the supply-side hoodoo of Phil "Nation of Whiners" Gramm and the result was the repeal of Glass-Steagall.

Thanks, guys.

The invisible hand of the market is giving it to us good and hard.

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Bush Boom

More whiners:

US regulators took over two banks on Friday and sold them to Mutual of Omaha Bank, the sixth and seventh bank failures this year as financial institutions struggle with a housing bust and credit crunch.

[...]

Top banking regulators have warned of additional insolvencies this year and next, but for now do not expect failures the size of IndyMac, which had $32bn in assets and $19bn in total deposits at the end of March.

It's the "for now" that's worrisome.

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Everything Old Is New Again

Brother, can you spare a dime?

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KA-BOOOOOM!

You can't head into a depression without a good bank failure.

And a note to federal "regulators": I very much doubt that a skeptical senator has the power to cause a bank to collapse. Correlation doesn't necessarily equal causation.

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Wheeeeee!

Remember to keep your money in a shoebox because:

"Regulators are bracing for 100-200 bank failures over the next 12-24 months," says Jaret Seiberg, an analyst with the financial services firm, the Stanford Group.

[...]

The problem areas will be concentrated in the Rust Belt, in places like Ohio and Michigan and other states like California, Florida and Georgia.

Let's party like it's 1930!

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