Open WaMu Thread

Here’s a piece from Bloomberg News yesterday on WaMu’s troubles: Rule hobbling suitors batters WaMu stock

Shares of Washington Mutual fell 29.7 percent to a nearly 18-year low Wednesday on concern a new accounting rule could hinder attempts to find a buyer.

WaMu stock dove 98 cents to $2.32, the lowest close since November 1990. The stock of the Seattle company, the nation’s biggest savings and loan, has tumbled nearly 46 percent since the board Monday announced the ouster of CEO Kerry Killinger, and the shares are down 93 percent in the past year.

Potential acquirers ended talks to buy WaMu this year in part because the accounting rule would force buyers to compute a target’s assets at market prices instead of deriving values from measures including the purchase price, two bankers involved with the talks said.

Newly installed WaMu Chief Executive Alan Fishman, who sold the last bank he ran, said Monday a sale wasn’t in the bank’s future. “You don’t build a company to sell it,” he said.

Fishman was CEO of Brooklyn’s Independence Community Bank, which was sold to Philadelphia-based Sovereign Bancorp in 2006.

Others aren’t so sure.

“The market will likely view the removal of WaMu’s former CEO as the last remaining hurdle for the board to consider pursuing a possible sale,” Merrill Lynch analyst Kenneth Bruce wrote Monday to investors. Complicating a potential sale: “the poor quality of WaMu’s loan portfolio.”

Anybody out there still have money at WaMu? What’s the consensus among Seattle Bubble readers on the bank’s chances of lasting beyond this month?

There’s been quite a bit of talk about WaMu in the last week, so consider this your open thread to air your thoughts, worries, and hopes for WaMu.

(Bloomberg News, 09.11.2008)

0.00 avg. rating (0% score) - 0 votes

About The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market. Tim also hosts the weekly improv comedy sci-fi podcast Dispatches from the Multiverse.

103 comments:

  1. 1
    crispy&cole says:

    Shamu is a zombie bank right now…the FDIC is trying to figure out what to do with them. Either they are taken over by some larger bank or its a pizza party on a Friday night very soon.

  2. 2
    Sniglet says:

    As the Bloomberg article points out, there is no one who would want to buy WaMu if that means taking on it’s toxic assets as well. Quite simply: there is no such thing as a “heatlhy” financial institution left that could buy them.

    However, I suspect that WaMu will make it through the month, and maybe even until December. The FDIC doesn’t have sufficient assets to handle a WaMu conservatorship, and until the government passes some more bail-out legislation to re-capitalize the FDIC, or set up some new public bank holding entity (e.g. RTC 2.0), then WaMu will continue to bumble along as one of the living dead.

    What’s absolutely certain is that the federal government will be involved in whatever happens to WaMu. If some merger were to miraculously occur, it would only happen due to government financing (e.g. with the government agreeing to take bad loans off WaMu books, or providing some sort of guarantee against losses).

    The BIG question is not whether WaMu will go under (a foregone conclusion), but what the consequences of such an action will be? My current thinking is that a WaMu failure will not have all that much of an immediate material impact on real-estate, or the Puget Sound in particular. They have already hugely wound down many of their operations, and are laying people off left and right.

    In fact, maybe an FDIC conservatorship could be a positive thing. Just as we saw with IndyMac, the FDIC was far more lenient in working out new terms with struggling borrowers. These viscerated banks have been reluctant to accept significant work-outs with borrowers for fear of having to take even more write-downs.

  3. 3
    crispy&cole says:

    “My current thinking is that a WaMu failure will not have all that much of an immediate material impact on real-estate, or the Puget Sound in particular. They have already hugely wound down many of their operations, and are laying people off left and right.”
    __________________________________________________

    Laying people off left and right will have a huge impact.

  4. 4
    Timber says:

    Yeah even if WaMu hangs around awhile longer its stock is in free fall still. You would have to be pretty naive to keep any money in a bank when their stock becomes a penny stock. Stock already down 12% for the day and I bet it closes under $2 a share. http://www.reuters.com/article/marketsNews/idINN1047237720080911?rpc=44 The short positions against WaMu just keeps climbing and climbing.

  5. 5
    unearthly says:

    WAMU employs over 4k in Seattle alone; this one will leave a mark and it’s only the beginning. There’s no demand for ex-bankers so where will those people go and what happens to their houses?

  6. 6
    AndyC says:

    Washington Mutual is valued at under $3.5 billion. That is an 85% discount to their book value. While the bank is certainly in very poor shape, I question whether it will become insolvent. They have a HUGE number of bad mortgages that will continue to be written down, but as recently as July analysts were predicting that WaMu could return to profitability by 2010.

    At $2.00 per share I wonder if the upside on the investment wouldn’t be worth it… As for people making a run on the bank? If people have more than $100k at WaMu I wouldn’t be surprised to see them draw down. I don’t foresee a large scale run…

  7. 7
    DavidB says:

    It’s hard to imagine this bank surviving. It wouldn’t be surprising to see them taken over by the Fed in the next 2 weeks. This is going to have a severe impact on the Seattle area when they go under!

  8. 8
    EconE says:

    where will those people go?

    Pizza Delivery!

  9. 9
    Sniglet says:

    WAMU employs over 4k in Seattle alone; this one will leave a mark and it’s only the beginning. There’s no demand for ex-bankers so where will those people go and what happens to their houses?

    I doubt the FDIC would lay-off WaMu employees any faster than the bank has been doing on it’s own. The FDIC still hasn’t laid off most of the InyMac staff, and I don’t see how that policy would change much if they seized WaMu.

  10. 10
    unearthly says:

    Wamu is garbage and heavily exposed in areas that haven’t collapsed yet. The mortgage collapse is starting to creep up the food chain and that’s where the damage will happen (Seattle, SF proper). I’m pretty sure they can’t just write down losses forever; the MBS holders want their money back. Any company desperate enough to offer 5% CD’s should be seized immediately.

  11. 11
    vboring says:

    WM marking assets to market – to any real market – would not only kill any potential deal, but also set an asset valuation that other banks would be forced to use when they have to mark their similar assets to market. This is how you spell system-wide failure.

    obviously, that won’t happen.

    My bet is that the FDIC will be given emergency funding and take WM into receivership.

    Another option is for the Fed to step in and do a Bear Stearns, but who is left to take on WM, and how much will the Fed have to pay them to do it?

    Or, maybe there will be an emergency rule change so that banks are no longer required to use any accounting rules whatsoever. Just mark everything to fantasy and rake in the profits.

    No matter what, though, we are pretty much guaranteed to have to chip in to the purchase price, via FDIC funding, Fed lending, or some other crazy new intention.

  12. 12
    vboring says:

    and lets not forget that all of our beloved federal institutions are simultaneously trying to figure out what to do with LEH.

    it is going to be an interesting weekend.

  13. 13
    98115renter says:

    Question: If WaMu goes into FDIC conservatorship, do normal deposit/checking accounts continue to operate normally. or do assets disappear until you make a claim from the FDIC?
    WaMu is my primary checking account, but I don’t have a high balance.

  14. 14
    Ken Mott says:

    Just keep your moneys under 100k at the back, although the fdic on has $50 some billion dollars and not enough to cover a large back failure like this. Prepare to see the value of the dollar drop.

  15. 15
    deejayoh says:

    Wamu is garbage and heavily exposed in areas that haven’t collapsed yet.

    I don’t think the second part of this statement is accurate. If you look at their Balance Sheet, most of their “held for investment” paper is in CA, FL, and IIRC – midwest states. All areas that are leading in late payments/defaults. The troubles with one of their MBS have been quite famously documented by Mish on his blog.

    In addition, they have had to “hold for investment” much more of this paper over the last year than they would have liked – further depleting their capital base.

    If only our resident WAMU know-it-all “Finance” would come back – perhaps he could set us all straight – or at a minimum provide some light comedy!

    I always love to point back to this tirade from him whenever WAMU takes it’s next step down.

    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.

    Sniff. I really miss the little guy

  16. 16
    TonyL says:

    I have kept a checking and savings account there since there are two branches really close to me. I have already moved most of my savings to other banks already. I am a bit nervous about it only for the hassle of if it will it interrupt my online banking. The savings account doesn’t have much left in there now but it is earning a decent rate.

    Does anyone know when these banks get taken over by the Feds does banking run as usual or do they just send you a check for your balance?

  17. 17
    TJ_98370 says:

    Hey Tim –

    I like your bubblewrap sponsers. That’s actually kind of funny.

    Way off topic, I know. But I had to comment.

  18. 18
    Shaq says:

    They have an Option ARM portfolio of $53 Billion. You’re telling me that’s been marked to a reasonable level?

  19. 19

    HERE’S ANOTHER TWIST

    Maybe banks like WAMU are good to keep your money in, after all, they fail first while FDIC still has money left. The subsequent banks to fail will see FDIC “empty handed”?

    Actually, if bank doors close all over Seattle, like the last Great Depression, the only safe place for money is a cash can at home. I imagine the rich have huge amounts of cash and gold coins in their safes right now, LOL.

  20. 20
    TJ_98370 says:

    .
    Brother Bernanke is not going to let WaMu or Lehman Bro’s fail……
    .
    Fed May Expand Funding Aid to Banks in a `Mother of Year-Ends’
    .

  21. 21

    Do I need to get my money out? I know it’s insured, but will there be a delay in getting the money if the bank fails?

  22. 22
    unearthly says:

    @ deejayoh

    ‘I don’t think the second part of this statement is accurate. If you look at their Balance Sheet, most of their “held for investment” paper is in CA, FL, and IIRC – midwest states’.

    That’s what scares me the most. Take for instance the Bay Area collapse, what you’ll notice is that so far it’s been mostly contained to lower-income areas with large sub-prime exposure (East Bay and NE San Jose). There are tons of I/O and Option ARM’s that will recast within 1-2 years in the South Bay, Pennisula, and SF proper. WaMu has significant exposure to these areas many of which are in that $53-Billion Option ARM pool. This thing is slowly moving up the food chain.

  23. 23
    Scotsman says:

    When concerned depositors start pulling out their money that will push it over the edge. I don’t think they’ll last two weeks at this point.

  24. 24
    DavidB says:

    Even if WAMU is sold, their headquarters will be moving. How many thousands of people are employed at the company headquarters in downtown Seattle? This will have a significant impact on the local area.

  25. 25
    fancypants says:

    I too wonder how seamless the FDIC takeover would be. I have a biz account with them. I went ahead and pre-payed next months bills (guessed what they would be), and I’m holding off putting a big deposit in.

  26. 26

    “Actually, if bank doors close all over Seattle, like the last Great Depression, the only safe place for money is a cash can at home. I imagine the rich have huge amounts of cash and gold coins in their safes right now, LOL.”

    So a good investment right now might be in mattresses, so people will have a place to put their money under?

  27. 27
    jon says:

    “Does anyone know when these banks get taken over by the Feds does banking run as usual or do they just send you a check for your balance?”

    The Feds just put in new management, change the name, and keep on running the bank while they look for a possible buyer to take it off their hands. They have limits on how much you can get out of the ATMs during the weekend when they are doing the takeover.

  28. 28
    Timber says:

    “So a good investment right now might be in mattresses, so people will have a place to put their money under?”

    You sir are correct. With all the money I took out of my WaMu account I was able to turn around and invest it into Serta.

  29. 29
    The Tim says:

    Ira @ 26:

    So a good investment right now might be in mattresses, so people will have a place to put their money under?

    FYI, there’s a good chance that will turn into a Naked Loon article in the very near future. Too funny.

  30. 30
    Eleua says:

    Watch the insurance rates on WM’s debt. At these rates, they can’t borrow money, and since Skeletor wiped out the preferred of Fanron/Fredron, they can’t go that route with any reasonable expectation of success.

    When a bank can’t borrow, it is over.

  31. 31
    AndyC says:

    According to the FDIC website, IndyMac depositors had access to their insured accounts three days after the takeover.

    http://www.fdic.gov/bank/individual/failed/IndyMac.html

  32. 32
    Emma Anne says:

    Kathleen – so far people have gotten their money pretty much right away. But the FDIC is only required to get your money to you in a reasonable amount of time. I’m guessing that could be pretty long once a lot of banks are failing at once. In addition, they don’t have to pay interest after the time the bank is taken over (though again I think they have been doing so up to now). If it were me, I would take my money out of a bank that was likely to fail. My car is insured to, but that doesn’t mean I don’t avoid accidents if I can!

  33. 33
    Notabull says:

    “Do I need to get my money out? I know it’s insured, but will there be a delay in getting the money if the bank fails?”

    With the large amount of online savings accounts out there, I really see no reason WHY anyone out there has any decent amount of money stuck in one bank, regardless of who it is.

    HSBC is a large international bank, which has so far been out of the news with regards to bad loans. In fact, the Economist recently mentioned them as a possible buyer of some of the bad US banks. Right now they have a 3.5% APR online savings account going. Set one up, transfer half your money, and sleep a little easier. It comes with an ATM card and you can transfer money in and out for free in about 3 business days. No, I don’t work for HSBC, but I happen to like them.

    It is VERY UNLIKELY that WAMU going under will mean you’ll lose any of your sub-100K deposits, but is it worth the hassle? Is it worth the worry? Is it worth the possible delay in getting to your funds?

  34. 34
    alex says:

    Dang, it looked like a sweet deal at $6 per share!!!

  35. 35
    TJ_98370 says:

    When a bank can’t borrow, it is over.

    Eleua – What about the discount window?

  36. 36
    Dave0 says:

    “With the large amount of online savings accounts out there, I really see no reason WHY anyone out there has any decent amount of money stuck in one bank, regardless of who it is.”

    Amen… I took my money out of WaMu a long time ago. Now I have $1000 in BECU’s “Member advantage” accounts making 7.5% apy and the rest in Verity Credit Union’s “Velocity” checking making 5.05% apy. No commercial bank can compete with that.

  37. 37
    Dave0 says:

    “Dang, it looked like a sweet deal at $6 per share!!!”

    Yeah I fell for that too. Bought some stock at $3.65 on 8/25 and some more at $3.61 on Monday (9/8). I was feeling great about it when the stock closed at $4.12 on Monday, but since then it’s been torture waiting for it to go back up.

  38. 38
    The Tim says:

    If they do pull out of this somehow, the stock is an absolute steal right now. Imagine buying 5,000 shares @ $2, and 5 years from now they’re back up to $30. $10k becomes $150k Dang.

    Don’t think I could swallow the risk of flushing $10k down the toilet though.

  39. 39
    Notabull says:

    “If they do pull out of this somehow, the stock is an absolute steal right now. Imagine buying 5,000 shares @ $2, and 5 years from now they’re back up to $30. $10k becomes $150k Dang.

    Don’t think I could swallow the risk of flushing $10k down the toilet though.”

    If you buy WAMU right now you have to do it with the same frame of mind as if you were going to the casino, enjoying too many drinks, and playing roulette. If you’re a lucky bastard you’ll spend $100 and make $1000. But expect to lose $100…

  40. 40
    The Tim (as anonymous) says:

    Just installed a comment-editing plugin that allows editing for up to 2 minutes after posting a comment. Testing it out as a non-admin.

    This part was added after posting. Sweet!

  41. 41
    Eleua says:

    TJ,

    WM is not a bank. It’s a S&L. I am not aware of the FED extending the DW to S&Ls, but that gives me something to check on.

    I have to think that “someone” has a plan to keep WM from exploding and spraying everyone with fecal material, but I can’t think of what that could possibly be. It may be obvious, but I don’t see it. Whatever it is, we will likely see it within the next 9 days.

  42. 42
  43. 43
    vboring says:

    the stock is a slot machine right now.

    95% chance it’ll get absorbed, conservatored, receivered, or similar and shareholders will get wiped out.

    5% chance some kind of miracle will happen and it’ll pay out big.

    but there is a big gray threshold between investing and gambling – and this is well past that threshold.

    (post editing is pretty sweet!)

  44. 44
    Eleua says:

    TJ,

    The other thing to consider is that WM would have to post some acceptable collateral at the DW, should they be allowed to borrow. The entire reason they are in trouble descends from their lack of acceptable collateral.

    That’s why the swaps on WM debt are running almost half of the face value.

  45. 45
    victorchai says:

    I don’t know, it’s back to 2.40 now and going…….up…up …….and away….

  46. 46
    John says:

    That’s how Warren Buffett and a Saudi prince got their initial positions in Wells Fargo and Citibank respectively. They bought at some ridiculous price many years ago. People who bought WM today may turn out to be geniuses…or suckers.

  47. 47
    fancypants says:

    Once upon a time, when MCI was looking like crap, I decided to get myself a Roth IRA. I put $250 into MCI, $750 in Silicon Graphics (I liked their computers), and $1000 in Pixar (I liked their films). I lost the $250 almost immediately. A few years later I lost the $750 from Silicon Graphics going bankrupt, and my Pixar investment went from 1k to 8k. Then it became Disney stock and has kind of hung out there ever since.

    I don’t know the moral of that tale. I guess the moral is I’m not buying WAMU stock now.

  48. 48
    Timber says:

    “I don’t know, it’s back to 2.40 now and going…….up…up …….and away….”

    Yeah stock price may of gone up a bit but it won’t change whats on the books and at some point those books are going to have to be written down to fair value. When that happens then you will see huge losses.

  49. 49
    victorchai says:

    ““I don’t know, it’s back to 2.40 now and going…….up…up …….and away….”

    Yeah stock price may of gone up a bit but it won’t change whats on the books and at some point those books are going to have to be written down to fair value. When that happens then you will see huge losses.”

    Get this…rumor is JP is taking over…

  50. 50
    Notorious ART says:

    john,
    Wells Fargo may have been bought at ridiculous prices at the time but Buffett will not buy a company based on low price alone. He makes sure the company has solid fundementals and good management. WAMU has neither!

  51. 51
    victorchai says:

    2.80?now sth is going on…

  52. 52
    Thepull says:

    I would imagine a lot of short covering is going on, the volume is kind of insane.

  53. 53
    Aaron says:

    I don’t really understand why WaMu is so doomed right now. Didn’t they have around $40B liquid at the end of June? That’ll absorb a LOT of write-downs, even at $3.3B loss/quarter. Shouldn’t that be enough to last for quite a while…?

    I’ve seen a lot of estimates like “WaMu will have to writedown $19 billion to $25 billion”, but even then they wouldn’t be out of cash… am I totally missing something?

  54. 54
    gpxl says:

    “Imagine buying 5,000 shares @ $2, and 5 years from now they’re back up to $30. $10k becomes $150k Dang.”

    Wasn’t it that kind of speculation that has so many homebuyers underwater? ;-)

  55. 55
    The Tim says:

    Yes well there’s a reason I said “imagine” instead of “you should be.”

  56. 56
    Markor says:

    I have some money in WaMu, and use their bill-payer service. I expect a seamless transition if they are taken over, including by the feds. If not, I’ll pay my bills separately until things are restored. If something worse happens I win big because I’ll get to buy properties for dimes on today’s dollar after there are runs on all major banks and we step firmly into Great Depression II.

  57. 57
    WestSideBilly says:

    gpxl @ 54 :

    If you were buying WM with borrowed money, then yes, it’d be similar in terms of speculation. If you’re buying it with real money, then it’d just be gambling.

  58. 58
    check it out says:

    http://newsroom.wamu.com/phoenix.zhtml?c=189529&p=irol-newsArticle&ID=1196448&highlight=

    For some reason I don’t think i’ll be seeing pizzas being delivered tomorrow afternoon here…

  59. 59
    AndyC says:

    Here’s another report from Fitch Ratings:

    “SAN FRANCISCO (MarketWatch) — Fitch Ratings late Thursday downgraded Washington Mutual Inc.’s WM long- and short-term issuer default ratings because of continuing asset-quality challenges amid a gloomy financial-sector outlook. Fitch cut its long-term IDR for WaMu to BBB- from BBB, and its short-term IDR to F3 from F2. The rating outlook is negative.”

  60. 60
    Notorious ART says:

    I wonder how “reliable” the funding sources are….

    “In addition, the company continues to maintain a strong liquidity position with approximately $50 billion of liquidity from reliable funding sources.”

  61. 61
    Sniglet says:

    WaMu stock is up above $3 in after hours trading. I guess people were expecting even a BIGGER write-down.

    http://calculatedrisk.blogspot.com/2008/09/wamu-45-billion-in-loan-loss-provisions.html

  62. 62
    Jay says:

    As for WaMu’s DW eligibility.. I think it qualifies. It’s a deposit institution, isn’t it? Besides, if the Fed created the TSLF for brokers, it’s somewhat ludicrous to think that WaMu would not be allowed to use the TAF. As for collateral, let’s just say the Fed didn’t create TAF to make money. In any case though, despite the billions and billions of losses, I think WaMu can survive, IF IT DOES NOT LOSE THE CONFIDENCE OF DEPOSITORS. See, the Fed can extend emergency credit line to WaMu or engineer some other alternatives (such as break-up of good and bad bank), but “run on the bank” situation can develop into something more lethal and uncontrollable. At the end of the day, for the Fed, it’s yet another moral hazard vs. market stability question, and I do expect that they will act before the bank run really starts, and another shotgun marriage is likely IMO. Maybe James Dimon is screening calls from Seattle for the one from New York or Washington.

  63. 63
    matthew says:

    Dave0,

    Were you the guy that was arguing with me some 6-12 months ago on here that the financials were historically cheap and ready to rebound and that there was no way we would see major bank failures?

    I can swear it was you but I could be wrong.

  64. 64
    matthew says:

    Interesting article on just how large WaMu is:

    https://self-evident.org/?p=217

    Washington Mutual has $310 billion in assets and $182 billion in deposits. (Their market cap is now below $4 billion.) So think of WaMu as 10 IndyMacs.

  65. 65
    sanguis says:

    I have money in WAMU. FDIC means the US government guarantees the deposit under 100k. If the US government fails we aren’t in a great depression, we would be in hell on earth. I think we are headed towards massive inflation to help wash away all these bad debts.

  66. 66
    matthew says:

    FDIC down to about 45 billion in their insurance fund…. No wonder they have been talking about borrowing money from the Treasury…

    tick… tick… tick… tick…

  67. 67
    victorchai says:

    Don’t worry, try NYSE:WM-K, it went up to 15 dollar…almost 400% aftermarket, so it’s safe to say the whoever bought WM, the buy out was above $10…so, no, wm will not sink…
    PS I like the new Edit tool… just found out.Thanks Tim

  68. 68
    TJ_98370 says:

    FWIW – Washington Mutual is indeed a savings and loan association and it apparently does have access to the discount window:
    .
    Federal Reserve Bank of San Fransisco
    .
    …..Most discount window borrowing from the Federal Reserve is done by commercial banks. However, credit unions, along with other types of depository institutions (including federal savings banks, mutual savings banks, and savings and loan associations), also may borrow from the Fed’s discount window to offset temporary shortages of funds. …
    ..

  69. 69
    Dave0 says:

    Dave0,

    Were you the guy that was arguing with me some 6-12 months ago on here that the financials were historically cheap and ready to rebound and that there was no way we would see major bank failures?

    I can swear it was you but I could be wrong.

    Nope, that wasn’t me. I’ve been on board that the end of the world is coming for a while now. I just had a extra few hundred dollars in my brokerage account so I decided to gamble a bit and try to make some quick money on WaMu’s volatility before they fell (it worked with Fannie Mae a couple weeks ago). I think I might have held on a little too long though. We’ll see tomorrow if I can make some money and get out.

  70. 70
    TJ_98370 says:

    ….Don’t worry, try NYSE:WM-K, it went up to 15 dollar….

    .
    victorchai-
    .
    Humor us incompetents, can you make a link to NYSE:WM-K? I would like to see what you are talking about.
    .

  71. 71
    Dave0 says:

    http://finance.google.com/finance?q=NYSE%3AWM-K

    check out the after hours price…. (I love this new edit feature!)

  72. 72
    Alan says:

    Imagine if you had bought $1k of Bear Sterns options the week before they went kaput. The right options would have turned $1k into $2.5M.

    Buying Wamu common stock is a suckers game.

  73. 73
    Dave0 says:

    Alan, please explain exactly how you could have turned $1k to $2.5M with the right Bear Stearns options. I’m curious… seriously.

  74. 74
    Bob says:

    With this much warning in advance, I doubt there are any remaining WAMU checking accounts with more than $100,000 in them.

    The risk to the FDIC is minimal.

  75. 75
    TJ_98370 says:

    .
    Google Finance —- NYSE:WM-K – After Hours: 15.40 +12.25 (388.89%) – Sep 11, 4:43PM EDT
    .
    Holy Sh*t !!! What the heck is going on !?!

  76. 76
    Scotsman says:

    The ticker symbol for WAMU is WM. For Weis, it’s WM-k. I think the previous poster made an error. WAMU has only gone up a bit after-hours.

  77. 77

    Went to both a wamu and wells fargo today. The wamu branch was extremely busy. Lots of transactions, lots of interest in their 5% CD promotion which, i believe ends tomorrow?

    Wells Fargo was dead.

  78. 78
    TJ_98370 says:

    Washington Mutual Inc. PRFD ‘K’

    (Public, NYSE:WM-K)

    3.15 +0.14 (4.65%)
    Sep 11 – Close Open: 2.70 Mkt Cap: 60.20M P/E: – Dividend: –
    High: 3.23 52Wk High: 24.40 F P/E: – Yield: –
    Low: 2.50 52Wk Low: 2.25 Beta: – Shares: 19.11M
    Vol: 1.02M Avg Vol: 101,000.00 EPS: – Inst. Own: –
    After Hours: 15.40 +12.25 (388.89%) – Sep 11, 4:43PM EDT

  79. 79
    cheapseats says:

    Lots of shorts hurting? Or not on the PK??

  80. 80
    Scotsman says:

    I don’t think it’s a legit print- the “R” is at $200, up from $3.00. But we’ll see tomorrow!

  81. 81
    Alan says:

    I did the calculation the day after Bear Sterns dropped. I forget the exact numbers. I think it dropped from $60 to $2 overnight. You could have purchased options to sell a share of Bear Sterns at $30 for something like $0.02 the week before the drop. $1k would buy options on 50k shares. After the drop, each option would have been worth $28. 50k times $28 is $1.4 million. The multiplied I worked out with the actual numbers was around 2500x.

  82. 82
    cheapseats says:

    Looks like that was a fluke, though it is still doing well today.

    4.11 +0.96 (30.48%) Real-time: 10:13AM EDT

  83. 83
    Matthew says:

    Don’t worry, it’s dropping like a lead balloon. Now at 2.78 (-.05).

  84. 84
    Buceri says:

    Washington Mutual falls after outlook, cut to junk
    Fri Sep 12, 2008 9:36am EDT

    NEW YORK (Reuters) – Washington Mutual Inc shares fell on Friday after the largest U.S. savings and loan projected another big write-down for soured loans and was downgraded to “junk” status by a leading credit rating agency.

    At least four analysts cut their price targets for the thrift, though Goldman Sachs & Co raised its rating to “neutral” from “sell.”

    Washington Mutual shares were down 16 cents, or 5.7 percent, to $2.67 in pre-market trading. Through Thursday, the shares had fallen 34 percent this week and 92 percent in the last year.

    In an unusual move to quell investor anxiety about its survival prospects, Seattle-based Washington Mutual late Thursday released third-quarter projections six weeks early and said it had ample liquidity. The thrift has said losses from home loans could reach $19 billion through 2011.

    But Moody’s Investors Service lowered Washington Mutual to below investment-grade status, citing “reduced financial flexibility, deteriorating asset quality, and expected franchise erosion.” Fitch Ratings also downgraded the thrift.

  85. 85
    Buceri says:

    Anonymous??

  86. 86
    Dave0 says:

    Cheapseats was talking about the prefered stock (WM-K) and Matthew’s talking about the common stock (WM)

  87. 87
    Sniglet says:

    The markets certainly don’t seem to be all that concerned about WaMu today. Their stock is actually in positive territory.

  88. 88
    Buceri says:

    I am sure Tim will open a new thread for this soon…

    Seattle-area foreclosures soar
    Filing rate increased 54% in August from a year earlier

    By AUBREY COHEN
    P-I REPORTER

    Seattle-area foreclosures were up 54 percent in August from a year earlier, according to a new report.

    The area, defined as King and Snohomish counties, had 1,185 properties with foreclosure filings, up 15 percent from July, according to RealtyTrac, an Irvine, Calif., company that tracks foreclosures.

    The area’s rate of one filing for every 906 households put it 133rd out of 230 areas RealtyTrac ranks, up from 147th in July.

  89. 89
    Everett_Tom says:

    Buceri,

    Wow.. Your comment:9:32am…
    Blog post with virtually identical headline:10:10am

    Maybe there is something to this predicting the future thing… Did you use linear regression for that? :)

  90. 90
    The Tim says:

    Hey, I was working on it when the comment went up. I’m only _so_ fast here.

  91. 91
    victorchai says:

    WM is flying…..

  92. 92
    Teacher_Greg says:

    … into the mountain.

  93. 93
    casey1167 says:

    Someone please explain how you can be rated in the “junk” area (Moody, etc.), and still be viable. If WM stays in the junk arena for the next couple years of losses, they simply cannot be competitive in the market place, thus they are no more. Chances are the mortgages they are holding are worse than anyone expects, if they were marketable at all, WM would have sold them off to clean up its balance sheet.

  94. 94
    unearthly says:

    Washington Mutual has been on the endangered list all year, but the wheels have been off the wagon for a while. Here is just one example.

    WaMu refinanced this 1,500sf house in City Heights just over a year ago – when it was obvious that the market was in trouble, and the smarter banks should have been reeling in their lending practices.

    The owner paid $83,000 when he bought it from Home Savings in 1995.

    WaMu loaned him $449,000 in June, 2007.

    It’s now being offered as a short sale – for $140,000!

    Worried About WaMu?

  95. 95
    richie says:

    Game Over! WM is finished. Fed always makes announcements on Sunday: Bear Stern in mid-March, Indymac in mid-July. Freddie and Fannie last weekend.

    I hope nobody is holding WaMu stock.

  96. 96
    richie says:

    LEH is going to file Chapter 7 tonight. My gut feeling is that WM stock may sink below $1 in the morning. The future is bleak. I do not believe that it can survive for another week if there is a run on the bank. JPM will purchase all the retail banking outlets from FDIC directly without assuming the liability of the bad real estate notes. It will create a banking empire from coast to coast and north to south. FDIC will put the sour notes in a receivership trust with the proceeds from JPM’s purchase and the remaining equity of WM, if any, as the capital for the trust.

    This will be the best case scenario. The only people who are going to lose jobs are the ones in mortgage lending and processing area.

  97. 97
    unearthly says:

    As many as 45 percent of borrowers with payment-option adjustable-rate mortgages issued from 2004 to 2007 and bundled into securities may default, according to Fitch Ratings analysts Roelof Slump and Stefan Hilts. Washington Mutual held $52.9 billion of the mortgages, also called option ARMs or negative amortization loans, on its books in the second quarter, with defaults doubling to $3.2 billion from the end of 2007, according to a filing with the U.S. Securities and Exchange Commission.

    Washington Mutual Hobbled By Increasing Defaults on Option ARMs

    IMO 45% is underestimating the problem; I’ve heard the number of homedebtors paying the minimum (negative amortization) approaches 80%.

  98. 98
    patient says:

    new rumours about JPM being interrested in taking over WaMu. Perhaps BoA taking over Merill is inspring/rattling them. Are the new mega banks of the future being created at this point of time? BoA + Countrywide + Merril, JPM + Bears + WaMu?, Wells + Goldman next? Seems like IBs without a healthy commercial bank to supply capital could be a thing of the past.

  99. 99
    Markor says:

    patient: Seems like IBs without a healthy commercial bank to supply capital could be a thing of the past.

    Read, IBs without the ability to put the money in passbook savings accounts at high risk. Surely there will be an impenetrable Chinese wall between them! And if not, surely the FDIC will keep coming to the rescue! The US can borrow indefinitely and any amount, after all.

  100. 100
    Buceri says:

    Federal regulators gauging other banks interests in purchasing Washington Mutual

    NEW YORK (AP) — The U.S. government has been reaching out to large banks in an effort to organize a buyout of the beleaguered Washington Mutual Inc., according to a person briefed on the talks between regulators and banks.

    The obstacle, however, is that “no one knows what’s in their books,” the person said, speaking on condition of anonymity because of the sensitivity of the matter. There could be, he said, “a minimum amount of value there.

  101. 101
    Aaron says:

    Rumor has it that WaMu is up for auction

    I hope someone notices this post.

  102. 102
    matthew says:

    I bid 1 dollar. Their corporate space would make nice condos….

  103. 103
    David McManus says:

    I thought WM was too big to fail? I thought Seattle’s economy was strong strong strong? God, I bet RAL is going nuts right now.

Leave a Reply

Use your email address to sign up with Gravatar for a custom avatar.
Your email address will not be published.

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

Please read the rules before posting a comment.