Top of the news: We’re not bitter here in Seattle as the government begins “stress testing” the major banks. No, not us. It’s just too bad the stress testing wasn’t done when Washington Mutual might still have been saved, and we could have kept a major corporate headquarters — and perhaps preserved some of the nest eggs of thousands of WaMu shareholders, not to mention thousands of jobs..
President Obama’s budget includes another $750 billion in bailout money for the banks, double the original figure made available after it was decided to let WaMu fail and fall into the arms of JPMorgan Chase. So Chase became even more “too big to fail” while WaMu went away. Tell me what I’m missing here? Maybe that WaMu wasn’t as politically connected as Chase, Citi and BofA. Ultimately, their bottomless gullet for taxpayer money will make rescue of WaMu look like chump change.
Earlier intervention on WaMu, along with some rescue money, could have potentially saved the nation’s largest thrift and preserved a more competitive banking system with more potentially healthy players. So stress test away as former employees and shareholders here just get the stress.
The Back Story: JPMorgan Chase’s announcement today that it will eliminate 12,000 jobs as it absorbs WaMu (To be clear: It’s eliminating 2,800 positions, in the form of attrition, on top of the 9,200 actual layoffs announced in December) fits into a scary pattern of job cuts in this recession. The federal Bureau of Labor Statistics reported that nationally 2,227 mass layoffs occurred in January, resulting in the loss of 237,902 jobs. (You can follow the mass layoffs locally on the Seattle Times’ Layoff Ledger). Meanwhile, new unemployment claims rose more than expected last week. What’s unusual about this downturn is the velocity of the cutbacks. Job losses are coming faster and deeper than during any post-World War II recession. Total jobless claims nationally now top 5 million.
Today’s Econ Haiku:
GM’s red ink grows
Taxpayers must have purchased