WaMu Auction: Zero Bids

September 18, 2008 No Comments »


Whoo noo!

So Washington Mutual is reportedly on the block, but has failed to grab any bids as of yet, according to a piece in the Financial Times.

The publication noted that Goldman Sachs is conducting the auction, but hasn’t managed to garner any major interest from the top players, including Citi, JPMorgan Chase, and Wells Fargo.

Chase had been the frontrunner because of interest in expanding their west coast presence, but apparently not at the expense of taking on a huge portfolio of non-performing option arms.

Supposedly a potential suitor would have to take a $37 billion hit if it took on the Seattle-based mortgage lender‘s home loan portfolio.

Citi has too many problems of its own, so is generally not a strong candidate, and Wells Fargo is likely too conservative to make a bid, considering they avoided the high-risk stuff years before it became apparent that it was all falling apart.

So now private equity firm TPG may have to consider other options for the struggling thrift, including the sale of assets to raise additional capital.

Regardless, shares of WaMu still ended the day up 98 cents, or 48.76%, to $2.99, well off their 52-week low of $1.50, but far from their high of $39.25.

And now there’s word Wachovia may be mulling a merger with Morgan Stanley, though the investment bank is also reportedly in advanced discussions with China Investment Corp. to up its stake in the firm.

(photo: gaetanlee)

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