And Another One Bites The Dust

This morning’s NY Times brings news of the demise of the banking operations of Wachovia, which have just been sold to Citigroup. What does the Wachovia web page say again… oh…. “We’re here for our customers”, doth say the Wachovia CEO. But I digress. Citigroup has apparently won the bidding for Wachovia over Wells Fargo (whose win would have created a bit of overlap in California), and gives Citigroup the national network it has already covered. Wachovia is a new name in California, but recently became known here because of its purchase of the former World Savings (where I had one of my earliest savings accounts).

As we all know, this comes on the heels of the purchase of Washington Mutual by Chase. Washington Mutual entered the California market through its purchases of Great Western Bank and Home Savings. A third big bank failure out here was IndyMac, which although still operating, is yet to be acquired to my knowledge.

So, the questions are: Whose next? Will the bailout bill prevent the next victim? Johnny Olsen, who are our candidates? According to the LA Times, there are three: Downey Savings, FirstFed Financial, and National City Bank. The first two are in Southern California, the last in Chicago. The first two I know to have problem Option ARM loans, so the real question is: will there be a run (as there was in WaMu’s case), or will they just run out of capital? For now, we’ll have to wait and see. My bets are on Downey (which is lukewarm news, as they have our mortgage).