WaMu Shares Rise as Chase Buyout Disputed

September 16, 2008 No Comments »

Shares of Washington Mutual jumped Tuesday morning as speculation grew regarding a possible Chase bid.

The Daily Mail, more renowned for its coverage of stars without makeup than financials, ran a story claiming JP Morgan Chase CEO Jamie Dimon and new WaMu chief Alan Fishman were in direct talks.

Of course, it’s unclear if this is something new, or if they were just late to the party in picking up the American Banker story published last week.

Hours later, Thomson Financial reported the two companies were not in active talks, according to a familiar source.

Regardless, you must assume something has got to give in the next few days, considering all the other bankruptcy and merger activity happening at the moment.

Yesterday, WaMu saw its rating cut to “junk” status by Standard & Poor’s, though the Seattle-based thrift and mortgage lender was quick to point out that the negative rating action was attributable to worsening market conditions, not any material change to WaMu’s financial status.

The ailing thrift said it doesn’t expect the action to have any material effect on borrowings, collateral, or margin requirements.

WaMu also took the time to ease investor worries by noting that capital levels continue to be well above requirements for “well capitalized” institutions, and said it does not believe shaky market conditions will result in any additional losses.

The company said it has minimal exposure to bankrupt Lehman, no trading exposure to AIG, and maximum exposure of $40 million to any single institution.

Shares of Washington Mutual were up 28 cents, or 14.00%, to $2.28 in early afternoon trading on Wall Street.

They climbed as high as $2.70 today, but still remain 31.82 percent lower than where they stood a week ago.

(photo: abhi)

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