WABOO...

Guest columnist Dime $ack:

Well, this is good news for the govt, cause now the FDIC won't have to pony up for the deposits. JPMorgan bought all those from the govt, along with WM's crappy mortgage portfolio. They immediately wrote the mortgage portfolio down 20%. So they are not expecting many of those mortgages to get repaid.

Depositors and people who bank with WM will be fine. All I see in my crystal ball is a bunch of Wamu branches either closing or becoming Chase branches, and most of the jobs in Seattle going away. I feel bad for the employees, and feel lucky that I didn't pursue a Wamu job after school, but that company really messed up. You can blame their ex-CEO and all their VPs and other execs. They pursued a really risky strategy, ignored the risks, and lost. Very stupid. Common stock holders are already wiped - bond and preferred equity holders are about to be.

Besides that my crystal ball is useless. I was expecting the markets to really go down this morning because the bailout stalled, but I think they are basically expecting congress to get something done despite last nights shenanigans. The McCain posturing was totally counterproductive, and the republicans clearly don't understand what a complete credit meltdown could mean (who really knows if that would happen, but there's a pretty good chance the only reason it hasn't is because of this bailout). We're not really bailing out the banks at this point, we're bailing out ourselves. If credit markets completely freeze I would expect there to be a deep economic contraction with lots of job losses. Just think - no companies (big or small) could get loans to finance their operations. Imagine a small business that buys inventory for Christmas, sells it, and pays back the loan. There will be no loan for that company to get, so they won't do any business for Christmas. No hiring employees, no buying advertising, no purchases of any business services. Imagine that on a very large scale.

Right now congressmen are quibbling over equity stakes and exec comp limits. Some want insurance on the securities instead of purchasing them outright. I think some of this stuff is nonsense - and it could complicate things more. Sure, go ahead and try to limit exec comp but really this is pennies compared to 700B.

I think the congressmen are hearing from their constituents - who also have no idea what this bailout really entails - that they don't want to bail out Wall St. You can read comments on NYTimes and blogs everywhere where people are pissed. They make it sound like we're just giving 700B to a bunch of greedy bankers. We're really buying some crap securities from many banks all over the world to try and get the financial system moving and keep it from locking itself down.

Again, it's impossible to know what will happen under any scenario. All I know is having the credit markets shut down would be very bad - mostly for low income people who would probably lose their jobs, and don't have anything saved to begin with.

Dime $ack out.