Sponsored Link:

By Ignoring the Treasury Secretary’s Advice, Did WaMu Make the Worst Possible Deal for Itself?

From Money Morning Staff Reports

U.S. Treasury Secretary Henry M. “Hank” Paulson Jr. warned former Washington Mutual Inc. (OTC: WAMUQ) Chief Executive Officer Kerry Killinger to sell the thrift to JPMorgan Chase & Co. (JPM) two months before WaMu failed, both The Seattle Times and Bloomberg News reported.

According to the published reports, Paulson telephoned Killinger and told him that “you should have sold to JPMorgan Chase in the spring, and you should do so now. Things could get a lot more difficult for you.”
The Times report quoted a WaMu executive who was familiar with the incident, but didn’t disclose the source’s name.

Sign up below…
and we’ll send you a new investment report for free:

“Credit Crisis Report.”

Killinger told colleagues he was stunned by the call from the U.S. treasury secretary because WaMu had raised $7.2 billion in private equity, which top executives thought would be enough to navigate the financial crisis, the published reports state. JP Morgan offered $8 a share for WaMu earlier this year, and on Sept. 25 was able to acquire the Seattle-based thrift’s branch network for $1.9 billion – after WaMu had been seized by banking regulators, Bloomberg said.

That deal transformed JP Morgan Chase into the biggest U.S. bank, Money Morning reported. Subsequent to this deal, U.S. banks have been using government money from the $700 billion bailout fund to finance takeovers – and not to increase their lending, which would help jump-start the ailing U.S. economy, a Money Morning investigative report showed.

News and Related Story Links:

 

November 10th, 2008

Why Gold Will Surpass $2,500

Few investors realize that inflation is the least of the factors driving the bull market in gold. Other factors, like Venezuela's crackdown on gold exports, are likely to push prices higher. Find out how to play each of the "7 Key Drivers" in our Money Morning Publisher's Series report... Go here to get it for free.




This entry was posted on Monday, November 10th, 2008 at 8:26 pm and is filed under Top News. You can follow any responses to this entry through the RSS 2.0 feed. Due to the amount of comments we receive Money Morning will not be able to respond to all questions. If you have not already registered to leave a comment, once doing so you will receive Money Morning's Daily Email.

There Are 4 Responses So Far. »

  1. Pingback by Helpful Info Blog on 10 November 2008:

    [...] admin wrote a fantastic post today on “By Ignoring the Treasury Secretaryâ [...]

  2. Pingback by treasury secretary on 22 November 2008:

    [...] Jr. warned former Washington Mutual Inc. Chief Executive Officer Kerry Killinger to sell the …http://www.moneymorning.com/2008/11/10/washington-mutual/United States – Department of The Treasury – Secretary&aposs CornerAs the treasury Secretary, my [...]

  3. Pingback by Record Job Losses to Continue on 2 March 2009:

    [...] 90% to 5 cents a share and announced cutbacks of 12,000 jobs as it incorporates Washington Mutual into its mix.  Fannie Mae (FNM) reported a $25 billion quarterly loss and has its hands out for another [...]

  4. Pingback by “Shadow Fed” Casts a Shadow Over the Solvency of the U.S. Banking System on 17 March 2009:

    [...] CEO Angelo Mozilo of using like a “personal ATM.” But the winner, so far, has been Washington Mutual Inc., which the FDIC says tripled its FHLB advances to $58.4 billion – or almost 20% of its assets – [...]

Post a Response