UK's Market Oracle reports that short selling stock of HBOS (Halifax Bank of Scotland) that began in March [chart] after the bailout of US investment bank Bear Stearns has finally brought down the largest mortgage bank in the United Kingdom. Nearly one in three Britons are customers of the mortgage bank. In an emergency purchase sponsored by the Bank of England, Lloyd's bought out HBOS before it collapsed. HBOS stock crashed 60% in just three days. A similar action was taken by Bank of America when it purchased faltering broker dealer Merrill Lynch and mortgage company Countrywide Financial. The purchased prevented a further deterioration of the bank's precarious condition and a run on its assets by alarmed investors and lenders. However, the bank's stockholders will be the big losers as Lloyd's will undoubtedly pay a distressed price for the bank. Its stock last traded at L1.40 a share. More importantly to the global financial market is that the destruction of so much capital injects more fear into counterparts further restricting liquidity. The Federal Reserve announced another tranche of $180 billion in temporary currency swaps to stave off credit paralysis.On this side of the pond our biggest thrift, Washington Mutual is looking for a buyer to solve its financial problems now that a private equity group has agreed to a sale. The group advanced the bank $7 billion in return for more shares in April. Since then the group has lost 75% of its equity value. A purchaser will not be easy to find given that the savings and loan has a lot of potentially bad mortgage debt on its books. The S&L originated billions in subprime loans. In July company executives revealed to analysts that it faced losses of $19 billion related to subprime lending. Last summer WaMu stock was trading at $57. On Wednesday its share price closed at $2.10.
Wackydoodle sez: "I sure 'nuff like to meet this feller, Moe Money. I got me a pig I'd like to sell 'em!"