The goal was least cost for the taxpayers (FDIC) with WAMU
Reader comment on: The Financial Crisis And The Free Market Cure
Submitted by Re: Wamu (United States), Oct 5, 2012 19:55
The FDIC was able to sell the two banking subsidiaries of the WAMU holding company to JP Morgan and not take a loss on the deal, whereas closing the bank would have cost a lot of money to the FDIC. Given the legal structure if one loaned money (bought a bond) from the holding company and did not know that it was a possibility then one had a very poor financial advisor. Of course IMHO the crisis demonstrated how in general most financial advisors don't know anything. Of course this is nothing new in 1873 Jay Cookes bank failed after he sold bonds to little folks on his reputation from the Northern Pacific, which was a losing operation. A demonstration that historically financial advisors are just used car salespersons in fancy suits.
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