Re:Brexit Is a Lehman Moment for European Banks
by saalweachter on Sunday July 10, 2016 @11:52AM
(#12065980)
It was similarly surreal when WaMu disintegrated -- they sold their deposits to Chase for less than the amount of the deposits, which seems odd at first ("they just sold a pile of money for less than the money itself was worth"), but isn't really. WaMu couldn't just spend those deposits, they were only worth the amount of money that could be extracted in fees for holding the accounts and from invested the deposited money, which was naturally less than the value of the pile of money.
[ Parent
| on HN ]
Re:Brexit Is a Lehman Moment for European Banks
by kevinali1 on Sunday July 10, 2016 @05:11PM
(#12067291)
Aren't deposits a liability? How can you sell a liability? Do you mean they sold their loans?
Re:Brexit Is a Lehman Moment for European Banks
by saalweachter on Sunday July 10, 2016 @06:35PM
(#12067592)
WaMu's $170 billion in customer deposits were "sold" to Chase for $1.9 billion (I thought both numbers were bigger, but so says Wikipedia). If you were a WaMu banking customer before the implosion, you were a Chase banking customer afterwards.
Re:Brexit Is a Lehman Moment for European Banks
by kevinali1 on Sunday July 10, 2016 @07:45PM
(#12067844)
Again, you can't sell deposits. Chase assumed the business of WaMu, which included liabilities - mostly deposits. Deposits are a liability and it is impossible to sell a liability. So saying "they sold their deposits to Chase for less than the amount of the deposits" is entirely inaccurate. It's somewhat counter-intuitive because deposits "seem" like assets and loans "seem" like liabilities - but it's actually the other way around on the balance sheet.