Let's use Washington Mutual and Wachovia as 2 examples. In both cases, the debt wasn't wiped out, the Wall Street buyers (JP Morgan and Citi) are assuming that - and odds are history will prove that they were very attractive deals. The deposits weren't wiped out, the buyers and the FDIC have your back on that one.
What is being wiped out?
- Thousands of jobs. The two banks between them employed over 150,000 people, mostly Main Street people. Not too many Wall Street fat cats live on Main Street.
- The common stock of both. Lots of irony here. The problem was the credit, but the equity is what Joe and Jane Main Street own in their 401(k) plans. Gone.