What a Steal!

JPM buys WaMu from the FDIC for $1.9 billion. Actually, they bought the deposit-taking subsidiary. The holding company is now left with all the debt and nothing else, according to excellent research from Seekingalpha.com.

They will write off $31 out of $307 billion in assets.

And here's the kicker: they don't assume any of WaMu's $89 billion in debt, and they pay nothing for equity.

What a steal!

The question now is, do I buy any NCC? They're down 32% on the WaMu news...

Or do I pay homage to Jamie Dimon and buy JPM? Well, how much is WaMu worth? JPM wrote down WaMu assets by $18/(WaMu)share ($31 billion / 1.7 billion WaMu shares). But they dumped off $89 billion in debt ($52/share). In effect, they got paid $56 billion to pick up WaMu. Caveat: this could be lowered due to future writedowns. However, those will probably be minimal, as WaMu already has $12-15 billion to cover loan losses.

I might not be able to control myself.

This might go down as one of the greatest deals of all time.