We are hearing a slightly different story from the Bloomberg that there *might* be bidders, unnamed, from an undisclosed source.
Opaqueness, manipulation, influence-peddling, and deceit are the new hallmarks of American business, so it is difficult to determine what is genuine and what is rumour.
The Financial Times
No bidders come for Washington Mutual
By Saskia Scholtes in New York
September 18 2008 20:19
Hopes of finding a buyer for Washington Mutual dimmed on Thursday as an auction for the beleaguered US bank had yet to attract any bids.
Shares in WaMu got a 14 per cent boost after news it had put itself up for sale, but interest from prospective buyers remained thin on the ground because of reluctance to take on WaMu’s portfolio of risky mortgage debt.
Goldman Sachs is conducting the auction for Seattle-based WaMu, which is the sixth largest US bank, with $310bn (€215bn, £170bn) in assets and more than $140bn in deposits.
Goldman has approached a number of banks, including Citigroup, JPMorgan Chase and Wells Fargo, according to people close to the situation.
The banks declined to comment, but people close to the talks said JPMorgan was not planning to bid for WaMu, while San Francisco-based Wells Fargo generally focuses on small acquisitions. Citi is also believed to be wary of expanding its US retail operations.
Fred Cannon, analyst at Keefe, Bruyette & Woods, said that while WaMu’s franchise and retail branch network on the west coast of the US made it an attractive prospect for banks such as JPMorgan, a buyer would have to take up to a $37bn accounting hit from the deteriorating mortgage portfolio.
The lack of interest means that Goldman may soon have to evaluate other options for the bank. These could include raising capital by selling off the attractive assets, which would still leave WaMu holding the mortgage portfolio, or raising fresh capital to allow the bank to stand alone – a challenge in the current environment. (Never fear, the Chuck Schumer Memorial Financial Welfare Hospital is under construction - Jesse)
TPG, the private equity firm, on Wednesday tried to facilitate a sale of ailing Washington Mutual, waiving its right to be compensated for dilution from any future capital-raising.
TPG led an investor group that put $7bn into WaMu in April, with $2bn coming from TPG.
Since then, TPG has sold down its exposure to the nation’s largest savings-and-loan company and now has about $1.3bn spread across three of its funds.
TPG’s right to a so-called “reset” – originally meant to safeguard the value of its minority investment in WaMu – made it difficult to attract new capital and effectively functioned as a poison pill.
WaMu’s troubles have accelerated over the last week after downgrades to junk status from both Standard & Poor’s and Moody’s rocked investor confidence.
The bank said the downgrades have no immediate impact on its liquidity position.
