How many times are we going to explain the difference between Liquidity and Capital Assets.
Steve, This is the same worn out argument that drives me nuts. A company can be well capitalized but have liquidity problems like WAMU did in 2008.
Perfect Example, I have a liquidity problem because my money is tied in WAMU stocks but that doesn't make me poor because I can click sell and get the present day market value worth of my stocks for my liquidity.
WAMU had tons of Assets that could have been liquid or the could have borrowed against them from the FED but everyone was already against them trying to save JPM and Citi which like Killinger said "Too Clubby to Fail"
The idea that you think $3B loss is enough to take down a $300B institution is false.
Now lets talk about value.
1. The headquarters in Seattle is worth about $1B.
2. The Retail Banking Network that took decades to develop and was WAMU's most profitable business was worth $15B.
3. Providian Credit Card was bought for $6.5B and at the time of seizure and sale was estimated to have about $10B in receivables and about 8% default rate.
4. Mineral and Land Rights.
5. 5 Million Shares of Visa Class A shares.
6. Wind Energy Holdings.
7. Cash on hand at WMBfsb.
Now ask yourself, Why would JPM perform an immediate merger for WMBfsb?
GLTY. There's is a Major Difference between Liquidity and Capital.
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