BradleyJ

Another Big Bank Failure: More Likely Than Not to Occur

One thing Reg is forgetting is that the US gov guaranteed $26 billion of the Bear Sterns toxic assets acquired by JPMorgan Chase. And while initially acknowledging that JPMC bought WaMU at a fire sale price, he completely ignores the retail banking upside of that fire sale purchase; those valuable assets were bought at such a low-ball price that they may totally, or at least largely, offset the downside cost of the (presently) junk subprime assets also onboarded. Many, many successful mergers have a sale price where most of the cost of the purchase is not in cash paid out but rather in onboarding the bought company's debt.

Let's not forget basics. Just because we have low clouds and fog does not mean the sky is falling.