Have you heard of Washington Mutual?
As the ongoing political mudslinging continues in Congress it has reported that Washington Mutual, one of the oldest and largest of the US mutual groups, has been acquired by JPMorgan at a knockdown $1.9 billion. After revealing that the group was unable to cover its short term liabilities the authorities stepped in and arranged a knock down sale to financial giant JPMorgan.
The name Washington Mutual (or WaMu) will be a name which figures prominently in the press over the next few days as the Bush administration will no doubt use it as a hammer to crack the US bailout nut which has stalled in Congress. Even though there had been little mention of the group in the UK press it has long been considered to be in trouble by US observers, hence the 95% fall in the share price over the last few months.
There is now obvious concern of a knock on affect to the mutual sector as, like we have seen in the UK, investors scour the markets for what they perceive to be the next possible candidate for failure. It is this witch hunt and lack of confidence which could actually tip the balance in favour of the Bush administration and its pursuit of the Holy Grail, the $700 billion US bailout.
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