It was announced yesterday that Washington Mutual was infused with 7 billion dollars from a private equity group thus saving them from being the next Bear Sterns. There were stipulations with the gift however. Washington Mutual that has been a top four originator of mortgages in the nation is not offering loans from the wholesale side. They are still producing from the retail bank outlets but no longer accepting loans from brokers.

Citigroup reported today that they sold 12 billion in CDOs or collateralized debt obligations. It is said they sold them for 10 to 50 cents on the dollar. Earlier in the month UBS and Duestch wrote down  23 billion combined.

All this news may seem to be bad news, but I see it much differently. This is our capitalistic market unwinding itself. There will be a need for companies that made bad loans to leave the market. The cream will rise to the top and the investors will feel confident again that mortgage backed securities are safe. Even though Citi sold for an extreme discount it is better than writing off the assets 100%, and it shows for the right price there are investors willing to accept the risk. It is the trickle that will turn back into the river of liquidity we need for an efficient financial market.

 So the next time you hear this "bad news" know this is the market cleansing itself and returning to a more normal market. Then hurry and turn off the TV or radio so you don't have to listen to them rehash the whole mortgage meltdown and housing mess for the next 30 minutes.