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Cougar
Bubble Blatherer
Joined: Fri Feb 22, 2008 10:51 am
Posts: 71
Location: Redmond
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 Where WaMu went wrong Saturday night I was seated next to a person who had just got back from vacation. While away they got news of being laid off at the end of April. They work(ed) for WaMu as a loan processor. I said “didn’t you see this coming?” No response. It is estimated 800 in the Seattle area to lose their jobs, Bellevue loan center to close at the end of August. Not only did WaMu not take care of their own but also many of those who were granted a loan that should not have. Why would a mainstay like WaMu get so greedy? To keep growing rapidly, the Seattle company loosened its lending standards, took on shaky real-estate loans and lent money to risky mortgage brokers. http://seattletimes.nwsource.com/html/b ... amu14.html
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| Mon Apr 14, 2008 8:53 am |
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deejayoh
Bubble Banter Boss
Joined: Mon Feb 26, 2007 12:14 pm
Posts: 1154
Location: Capitol Hill
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Re: Where WaMu went wrong I read this article this morning and just thought, yup - that all seems about right. I thought the writer seemed to have done their homework. Lots of good info that isn't generally available (e.g. WAMU is holding $44B in low/no-doc option ARMs on their books!!!) where is " Finance" to 'splain to all of this why this is a good thing? Quote: Deejayoh - I used to work for WAMU in the Operational Risk Dept so I think I know more about them than you do! Yes, WAMU does sell off mortgages, but it was their correspondant loans (ones they were the underwriters for other mortgage producers). Their policy is to keep mortgages from people that bank at WAMU...there are a few relatively minor exceptions but not common, its a quirky detail.
Currently I have a good friend that works with in credit dept and they told me that they are making more money on holding the current loans than selling them in the market, thus it means the market value is underpriced. Its simply SUPPLY & DEMAND, more people are forced to sell loans for solvency issues, thus those that just WANT to sell them would receive a lower price. That is the reason WAMU hasnt sold any in months.
For people that get into the program, they will have several years to work out a stratgy to refinance if prices moderate, get raises and promotions at work, and other variety of ways to stabilize yourself over time. Most loans that get the extra time will be fine.
It has been estimated that approx 15% of Suprime loans will go bad, but what about the other 85% of people that pay on time? (or use whatever percentage, its larger than 50%, thus more people are ok than suffer). Of PRIME loans, it is estimated that less than 5% will go bad. So that means the other 95% of people that have a loan are doing just fine, or scraping by and wont go into forclosure.
It is true that we have not hit bottom, yet most likely by the end of 2008. It will be ugly and more crap to hit the markets.
DJO - Im quite sure that I know more about the Banking Industry than you do, so no need to lecture me. I work with insuring banks all day (worked on a small bank's account today). 
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| Mon Apr 14, 2008 9:16 am |
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rose-colored-coolaid
Bubble Banter Boss
Joined: Mon Jun 18, 2007 10:26 am
Posts: 1977
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Re: Where WaMu went wrong Isn't it weird in retrospect all the reprimands like Finance's that we kept hearing. "I originate loans, so I know more than you", "I show homes, so I know more than you", "I do landscaping, so I understand the industry better than you."
As things teetered on the precipice, everyone seemed to switch on 'fortune teller' mode, with accuracy approaching the level of fortune telling. What concerns me though, is that they should have been right. People like Finance should have been a lot smarter than people like me. But somehow the greed blinded them.
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| Mon Apr 14, 2008 12:15 pm |
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Ubersalad
Bubble Bloviator
Joined: Sun Jul 15, 2007 4:15 pm
Posts: 350
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Re: Where WaMu went wrong By the way, WAMU stepped way up in 2006 and begin offering very competitive construction and alt-a program. I remember beating any other lender at 80% LTV and no-doc by almost 1%. Their construction lending was also practically giving away money...
IMO, WAMU is where they're at by industry pressure...
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| Mon Apr 14, 2008 2:47 pm |
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EconE
Bubble Bloviator
Joined: Thu Mar 08, 2007 3:29 pm
Posts: 273
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Re: Where WaMu went wrong In 2006, every WAMU branch I drove by in Los Angeles had their windows painted with "100k HELOCS, no income or SSN verification required"...or something along that line. Good thing Washington is doing so well. Somebody is gonna have to pay the taxes to bail out So. Cal. And yeah...what happened to Finance?
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| Mon Apr 14, 2008 4:02 pm |
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deejayoh
Bubble Banter Boss
Joined: Mon Feb 26, 2007 12:14 pm
Posts: 1154
Location: Capitol Hill
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Re: Where WaMu went wrong rose-colored-coolaid wrote: People like Finance should have been a lot smarter than people like me. Well, he used to "work for WAMU in the Operational Risk Dept". Given where they are today, I guess that department was in charge of taking on lots of operational risk. I think he's off with Meshugy having a pity party. Watching their HD-DVD players, and trying their best to continue acting prescient.
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| Mon Apr 14, 2008 5:10 pm |
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Alan
Bubble Banter Boss
Joined: Sun Feb 18, 2007 7:08 pm
Posts: 780
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Re: Where WaMu went wrong Finance used to be Finance Guru. He changed his name when people pointed out that he didn't know what he was talking about. If he was responsible for helping Wamu manage risk then I'm not surprised they ended up where they are.
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| Mon Apr 14, 2008 5:24 pm |
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Ubersalad
Bubble Bloviator
Joined: Sun Jul 15, 2007 4:15 pm
Posts: 350
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Re: Where WaMu went wrong Wasn't he a graduate of WSU business school? How much can he possibly know?
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| Mon Apr 14, 2008 6:02 pm |
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faster
Bubble Blatherer
Joined: Tue May 22, 2007 4:09 pm
Posts: 112
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Re: Where WaMu went wrong deejayoh wrote: I think he's off with Meshugy having a pity party. Watching their HD-DVD players, and trying their best to continue acting prescient. C'mon man, let's not drag HD-DVD players into this. 
_________________
Kary Krismer does not read Seattle Bubble, but he does reply to posts here.
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| Mon Apr 14, 2008 7:25 pm |
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Lake Hills Renter
Bubble Banter Boss
Joined: Sun Feb 18, 2007 9:13 pm
Posts: 550
Location: Bellevue
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Re: Where WaMu went wrong HD-DVD, the BetaMax of the new century.
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| Mon Apr 14, 2008 9:06 pm |
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sniglet
Bubble Banter Boss
Joined: Thu Feb 22, 2007 2:58 pm
Posts: 679
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Re: Where WaMu went wrong I have a fairly forgiving attitude towards the management of WaMu, and other financial institutions that are seeing trouble from mortgage finance. These managers didn't have much of a choice during the boom: either you play along and go for the profits and volume that were available or you get fired.
WaMu shareholders would have crucified any CEO who led the firm to underform industry competitors (e.g. CFC) with growth and profits. Back in 2005 any bank manager who had decided to sit out the Alt-A or sub-prime markets due to fiscal prudence would have been out of a job in a matter of days. What choice does that leave? Play the game or switch careers.
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| Tue Apr 15, 2008 8:23 am |
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Alan
Bubble Banter Boss
Joined: Sun Feb 18, 2007 7:08 pm
Posts: 780
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Re: Where WaMu went wrong A banker's goal is to take risks that make him go broke only when every other banker goes broke too.
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| Tue Apr 15, 2008 8:25 am |
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sniglet
Bubble Banter Boss
Joined: Thu Feb 22, 2007 2:58 pm
Posts: 679
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Re: Where WaMu went wrong Alan wrote: A banker's goal is to take risks that make him go broke only when every other banker goes broke too. Well, it looks like WaMu's management was right on track according to Alan's dictum. All the banks are going down the hole at the same time... Wachovia, Citigroup, CFC, BofA, and almost everyone else are being clobbered big-time.
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| Tue Apr 15, 2008 8:39 am |
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Alan
Bubble Banter Boss
Joined: Sun Feb 18, 2007 7:08 pm
Posts: 780
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Re: Where WaMu went wrong And everyone is fairly forgiving of them all. After all, if no one else could see this coming how could they be expected to?
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| Tue Apr 15, 2008 8:58 am |
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deejayoh
Bubble Banter Boss
Joined: Mon Feb 26, 2007 12:14 pm
Posts: 1154
Location: Capitol Hill
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Re: Where WaMu went wrong Ubersalad wrote: Wasn't he a graduate of WSU business school? How much can he possibly know? More than me!
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| Tue Apr 15, 2008 9:29 am |
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