WaaaahhhhMu

Washington Mutual was just closed down and its assets sold to JP Morgan Chase and Company. This means that I am once again a Chase customer. Is there no refuge from the customer service hell that is Chase?

To my mind, this reinforces the idea that a private solution exists in consolidation as well as that John Allison was exactly right in damning poorly-run banks. Washington Mutual was holding about $70 billion in bad mortgage debt and lost $3.3 billion in the second quarter.

Unfortunately, I’d wager that this episode will contribute to the sense of panic in our politicians, lending further urgency to get something—anything—done. Things are seeming increasingly inexorable—if this bailout takes place, we will feel the consequences for decades.

[UPDATE (9/26/2008): My mistake, it “has to happen.”]

[UPDATE 2 (9/26/2008): I didn’t really discuss it but JP Morgan is spending $1.9 billion to get $307 billion in deposits plus WaMu’s significant lending portfolio. It’s a fire sale and JP Morgan would have had to spend 10 times that six months ago. This bailout, though, won’t work at fire sale prices so you’ll see the government accepting above-market valuations when it purchases the “toxic” mortgage debts.]

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