Banks
Monday Morning News Needs a Filter
Marek Fuchs
04/14/08 - 10:46 AM EDT
If you want to know all the reasons I hate Mondays, read Beware Monday Morning Merger Talk. But here's the synopsis: When takeovers were the rage, if someone wanted to put a company in play, they'd leak details (as they were) to reporters on Sunday for Monday publication. The story was sure to receive good play and most likely get written by less-experienced journalists forced to work weekends.
Best of all for the Sunday leakers: The article would often fail to include sources who could put the prospective takeover into perspective, like "this won't happen" or, "if it does, it won't work." That's because good sources, like the rest of us, are generally busy throwing baseballs to their sons on Sundays, rather than swatting away silly speculation.
So while mergers aren't the stories of the day any more, I'll tell you why I still hate Mondays: bank rescues.
Look at how active "people familiar with the matter" were the last two Sundays, while the rest of us took a day of rest instead of whispering to reporters. It is Monday morning's new déjà vu.
They Just Don't Get News Leaks! |
"Wachovia Corp., which barreled into adjustable-rate mortgages with the huge acquisition of Golden West Financial Corp. near the peak of the housing market, could announce as soon as Monday that it is getting a capital infusion of several billion dollars from outside investors, according to people familiar with the matter. Final terms of the deal were being hammered out Sunday night but it appeared likely the fifth-largest U.S. bank in stock-market value would receive $6 billion to $7 billion. In return, the investor group would get shares priced roughly $23 to $24 apiece -- a 15% discount to Wachovia's share price Friday."Last Monday's effort on Washington MutualWM:
"Private-equity firm TPG and other investors are close to a deal to invest $5 billion in Washington Mutual Inc., people familiar with the matter said Sunday. The injection of new capital would allow the country's largest savings and loan to ease its pressing capital requirements, the people said, amid punishing losses from the national mortgage crisis. But it would substantially dilute current WaMu shareholders, who have already lost 74% of their investment over the past year. WaMu's market capitalization on Friday was just under $9 billion, after its shares dropped 11% that day."Why does certain news, like the same column of acrid smoke, always come on Mondays? Well, for all the reasons I stated above. It is the best way to get news out there prominently and favorably. You are not burying it on a weekend or holiday, you are getting it out there, getting it read. You just don't want the details entirely understood or dissenters featured in the commentary. In last week's Washington Mutual piece, you get the obligatory line about how the effort "could be viewed as an encouraging sign for the nation's ailing banking system, and Wall Street will be watching to see whether it is an indication that the worst is over." But if you are looking for someone at Washington Mutual to be put on the spot about that claim, don't look too far. They aren't there. Top officials were probably out on the links with dead cellphone batteries. In their stead -- and taken remarkably seriously even after all this time of make-it-up-as-you-go balance sheets -- is an earnest reference to the bank's book value. In today's article, Wachovia did not respond for comments (see: golf links) so the Journal had to rely on the kindness of a fully vetted press release. Advantage: company leaking the news. And in case you think merger plays are dead and buried, look no further than last Monday in the Financial Times: Headline: " Delta and Northwest revive talks on merger." This story has been going round and round, but check this lead:
"Delta Air Lines and Northwest Airlines, the US carriers seeking to add scale in the face of a brutal industry-wide downturn, have revived their talks to merge, people familiar with the talks said."Why to hate these manic Mondays: same story no matter the market.