Financial crisis intensifying

Whoever gets elected, he’s going to inherit a disaster of an economy. Lehman Brothers is imminently going to go the way of Bear Stearns, leaving only three independent investment banks left (Merrill Lynch, Morgan Stanley, and Goldman Sachs). Washington Mutual, the biggest savings and loan in the country, is teetering on the verge of collapse. AIG, the world’s biggest insurance company, is looking increasingly like it might not survive.

I’m trying to decide whether I need to make a run on Wamu today.

I’m also trying to decide where I should open my next account.

Unless you have more than $100,000 there, you’ll be fully protected by the government, so I wouldn’t worry too much about it.

Geez, I hope those companies can at least put together ten or twenty million each to give to their CEO’s on their way out.

I’m not worried about losing the money per se. It’s a question of what do I do if I don’t have access to it for a while.

Credit unions are stable. Put it there until the crisis is over (might be awhile).

Not to quibble, but the company for which I work, AXA, is 15th largest, and AIG is 18th largest.

As far as I can tell, we’re billing for new business at record rates.

Interesting times.

It’s very unlikely that WaMu will collapse or reach the point where funds deposited there are unavailable. More likely is that it will be absorbed by a larger bank. For all its negatives because of the mortgage crisis, WaMu still has considerable value for its large number of consumer accounts.

JPMorgan Chase has been trying to acquire WaMu for months. If it happens, it will probably be by way of the Government.

Sorry, you’re right, measured by assets, AXA is slightly bigger than AIG (both have a bit more than $1 trillion in assets). AIG is by far the biggest U.S. based insurance company on that basis. ING and Allianz, also in Europe, are bigger than AXA and AIG, but AXA and AIG are both top five.

Markets can go to extreme, so take this for what it’s worth, but the credit markets are predicting a high probability that WaMu will default. If you want to insure $10 million in WaMu bonds against default for five years in the credit default swaps market, you have to pay $4.2 million upfront and then $500,000 a year, which are terms Bloomberg quotes some JPMorgan analysts saying implies about an 80% chance of default.

Someone at Lehman seems to be having some gallows humor fun with Craigs list:

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Reply to: [email protected] [?]
Date: 2008-09-11, 8:55AM EDT

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You might want to avoid Bank of America.

I’m not arguing about WaMu’s bad position, I just don’t think the small account holders (like Andrew, or myself) need to be concerned. Also, WaMu shares rebounded significantly today, so something positive is probably up.

At least so far, for banks that have failed, access to funds for customers under the insured limit has been uninterrupted. I would not expect that to change barring some sort of really cataclysmic catastrophe.

Well (and I guess in an odd case of irony), WAMU wouldn’t immedietly clear IndyMac’s checks after they got taken over.

Bankrate had meter to guage the risk banks took. The Institutional Risk Analytics site has a good tool, but it’s not free.

I don’t use commercial banks for my personal accounts.

I guess I’ll move some money into a California Credit Union.

If Bank of America goes under, will my credit card bill go away? If so, I’m going to start paying the minimum for a while and take my chances!

If Bank of America goes under, will my credit card bill go away? If so, I’m going to start paying the minimum for a while and take my chances!

As you owe it money, isn’t it more likely that the Administrator/Liquidator will attempt to get you to pony up the entire debt in full, right now please thank you very much?

Actually that’s a legimate question. If the bank does go under are they more likely to try and get loan and CC holders to repay the loan or simply try and treat that debt as an “assett” and sell it on before divying up what’s left to the Savings account and share holders?