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Comment by cm2187 | Hacker News Reader

The capitalisation of a bank is not based on its market value but on its accounting value, i.e. how much money shareholders brought in, and how much profits the bank retained over the years.

A falling share price doesn't impact the bank's capital ratios. It does impact however its capacity to raise more capital if required, which is not a good thing.

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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.

Aren't deposits a liability? How can you sell a liability? Do you mean they sold their loans?

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.

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.

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