Wednesday, September 17, 2008

Deals under discussion

---JPM and Washington Mutual is back on the table apparently. The Fed and Treasury would like nothing better than getting WM off the table and JPM would get a west coast franchise plus tons of cost cuts from the bloated and overlapping WM businesses. JPM has played a key role in the Lehman filing to stabilize markets by providing significant liquidity and Treasury and FDIC arm twisting could be a quid pro quo.
---My guess, big guess, is that Wachovia and Morgan Stanley are kicking the ball back and forth. A day ago I would not have believed it, but rumor is that Morgan Stanley is seeking a deposit base. The Charlotte banks seem to move in lockstep and after BAC/MER that's the only incentive needed for Wachovia. The problem is that Wachovia is up to its eyes in problems of Ken Thompson's creation but, rethinking that, other earnings streams could be helpful. Both Mack and Steel, the respective CEO's, are Duke grads and have North Carolina backgrounds. Any deal would likely be highly dilutive to Wachovia shareholders in the short term but they should be accustomed to that after 25 years of Crutchfield and Thompson.

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