Morgan Stanley, WaMu Edge Closer to Deals

WaMu readies for sale while Morgan mulls merger options

By Rob Quinn, Newser Staff

Posted Sep 19, 2008 3:07 AM CDT

(Newser) – Two of the biggest financial institutions in the midst of the market turmoil are moving closer to hammering out deals. Washington Mutual's suitors are believed to include Citibank, JP Morgan and Bank of America, insiders tell Bloomberg, while Morgan Stanley and Wachovia have stepped up merger talks, reports the New York Times. Morgan is also in separate talks with the China Investment Corporation.

Washington Mutual and Wachovia's huge exposure to toxic debt is likely to prove a stumbling block for any deals. Morgan Stanley is considering splitting Wachovia into a "good bank" and a "bad bank" and merging with the good one. Those eyeing WaMu's 2,300 branches and $143 billion in deposits are turned off by mortgage investments likely to lose almost $20 billion in the next couple of years.

[Images (2)]

[Quotes (1)]

A man makes a cell phone call while crossing the street in front of Morgan Stanley headquarters this week in New York. (AP Photo/Mark Lennihan)

Pedestrians walk past a Washington Mutual Inc. branch in downtown Seattle. (AP Photo/Ted S. Warren)

« Prev« Prev | Next »Next » Slideshow

If you have issues, you are being encouraged to find a partner. - Greg Donaldson, director of portfolio strategy at Donaldson Capital Management

« Prev« Prev | Next »Next » Slideshow

To report an error on this story, notify our editors.

More Newser Stories

Moody's Slaps Wall Street's Big Banks With Review

Along with most of Europe's banks

(NEWSER) - Moody's isn't feeling great about the health of the financial industry right now. The rating agency put a host of banks under review for possible downgrade today, including US giants Bank of America, Citigroup, Goldman Sachs, JPMorgan, and Morgan Stanley, the Wall Street Journal reports. It said the banks now faced "more fragile funding conditions, wider credit spreads, increased regulatory burdens" and "opacity of risk." Moody's already downgraded the banks last year to reflect its doubt that the government would ever provide a 2008-style bailout again. More»

Students Revolt Against Big Bank Recruiting

Protests spread across Ivy League campuses

(NEWSER) - Half of those surveyed in Harvard's class of 2010 went into finance or consulting; at the University of Pennsylvania, the figure was even higher—and some students are fed up with the "brain drain." Inspired in part by the Occupy movement, students have launched protests against recruiting by big banks, consulting firms, and hedge funds at top universities ranging from Princeton to Stanford, NPR reports. "You've got 20% to 30% of some of the top talent in this country going into a sector that is not necessarily contributing to economic and social productivity," says movement leader Teryn Norris. More»

Feds Sue Big Banks Over Mortgages

US accuses them of dodging due diligence as crisis fallout spreads

(NEWSER) - The Federal Housing Finance Agency—the agency behind Fannie Mae and Freddy Mac—has filed suit against more than a dozen big banks for their role in the mortgage meltdown mess. The feds, seeking billions in compensation, accuse the banks of misrepresenting the quality of mortgage securities, reports the New York Times . The suit accuses institutions including Bank of America, JPMorgan Chase, Goldman Sachs, and Deutsche Bank of failing to perform proper due diligence and missing evidence that borrowers’ incomes were inflated or falsified. More»

Liberals Push to Toughen Bank Bill

See Goldman troubles as opening to break up banks, restore firewall

(NEWSER) - The Left is suddenly playing offense in the push for financial reform legislation, with liberal senators preparing a barrage of amendments to beef up the bill. One would break up the nation's six largest banks—Goldman Sachs, JPMorgan, Bank of America, Wells Fargo, Citigroup, and Morgan Stanley—whose combined assets make up 60% of the gross domestic product, according to the AP . “They're just too big,” says co-sponsor Ted Kaufman. “They're too big to manage, too big to regulate.” More»

WaMu 'Poisoned' Financial System: Senate Report

Senate panel says lender knowingly built 'mortgage time bomb'

(NEWSER) - Washington Mutual made subprime loans it knew would go bad, then packaged them into risky securities, creating a “mortgage time bomb,” according to a Senate report. The permanent investigations subcommittee is grilling former WaMu execs this morning. The report also says the bank packaged and sold loans it knew were tainted by fraud, without disclosing the fraud to buyers, the Los Angeles Times reports. WaMu even pushed some buyers who qualified for prime loans into subprime ones. More»

NEWS FROM OUR PARTNERS

What is Newser?

Face it: there's too much news. At Newser, we choose the most thought-provoking and entertaining stories from hundreds of US and international sources and reduce them to a headline, picture, and two paragraphs. And we do it 24/7—you can come back morning, noon, night (and in between) for something new that matters. Read less, know more.

Learn more »

Partnering with: Slate

View Newser on the mobile website

Morgan Stanley, WaMu Edge Closer to Deals