To no one's great surprise, Washington Mutual is now soliciting offers for its acquisition by some sort of bank willing to provide a lot of capital. And we mean a lot. As The New York Timesreports, WaMu's roughly 75 percent drop in share price means that it needs many billions to secure itself against bad loans in the subprime mortgage market. (Its market cap is down from about $40 billion to $4 billion.) Some analysts believe WaMu needs $5 billion immediately to survive, and may lose $28 billion through the end of next year.
Possible buyers include Wells Fargo, JPMorgan Chase, HSBC, and Citigroup. None of which, of course, are based in Seattle. If any of them bite, you can be sure that thousands will be made redundant--many of them here at WaMu's shiny new HQ on Second Avenue. No gloating here: Senior management all deserve to lose their jobs, options, and bonuses (along with departing CEO Kerry Killinger). But those really feeling the hurt will be the midlevel people, not the decision makers. And some of them now, too, may soon be having difficulty paying their mortgages, along with those subprime borrowers in foreclosure.
Unless Bill Gates or Paul Allen wants to buy a S&L, cheap. For now, WaMu is represented by Goldman Sachs. But, hey, to save fees--what about eBay?