WaMu Failure: What it Means for Seattle

From today’s Seattle Times: Feds seize WaMu in nation’s largest bank failure

WaMu’s 43,200 employees won’t feel any immediate impact, though it’s likely JPMorgan will drastically shrink the thrift’s headquarters staff. More than 3,500 people work at WaMu’s 42-story headquarters at Second Avenue and Union Street, along with 800 people elsewhere in Seattle and 1,500 people elsewhere in Washington state.

WaMu is also downtown’s largest office tenant, with about 1.6 million square feet in the central business district. It put some space on the market in recent months, helping raise downtown’s vacancy rate.

JPMorgan reportedly sent e-mails to all WaMu employees asking them to report for work as usual today.

Not surprisingly, I’ve got a few friends that work at WaMu corporate downtown. I really feel pity for them. The fact that WaMu put itself into such a dangerous position was not the fault of the rank-and-file corporate employees, but they’ll be the ones to feel the brunt of this failure.

I’d like to be clear that I do not take any pleasure in knowing that 4,300 people in Seattle are likely to lose their jobs, or the effect that will have on Seattle’s economy.

Another interesting bit from the article:

JPMorgan, which earlier this year offered to buy WaMu for $7 billion in stock — a deal former CEO Kerry Killinger turned down in the belief he could salvage the company — was the high bidder in an auction the FDIC conducted Wednesday, Bair said. Three other banks submitted bids for WaMu’s banking assets.

So four banks were bidding on WaMu’s assets, and $1.9 billion was the highest bid. Dang.

(Drew DeSilver, Seattle Times, 09.26.2008)

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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.

134 comments:

  1. 1
    rent for now says:

    I wonder what ‘they’ will say now for the reasons to buy RE in Seattle.

  2. 2
    David McManus says:

    Does this mean it’s now a great time to buy?

  3. 3
    deejayoh says:

    It sounds like – in no particular order
    1) blow to civic pride
    2) ~4000 high paying jobs lost (and from what I heard from friends who had gone there, WAMU overpaid for talent)
    3) Huge amount of downtown office space coming back onto the market

    I think the most evident effect will be the 3rd. The commercial rents are rising in seattle crowd is in for a surprise. Maybe Microsoft will take the space. Or Warren Buffet. (that was sarcasm)

  4. 4
    Jonny says:

    welcome to the first phase of the Not So Great Depression

    bailout or not, we’re headed down quite an ugly path. 3-5 years at a minimum. with mismanagement of the kind that got us into this mess, this could take 10 or more years.

  5. 5
    Jillayne Schlicke says:

    From the Federal Home Loan Bank’s website:

    “Seattle – On September 25, 2008, in a transaction facilitated by the Office of Thrift Supervision and the Federal Deposit Insurance Corporation, JPMorgan Chase acquired substantially all of the assets, all of the deposits, and certain liabilities of Washington Mutual Bank of Henderson, Nevada. The transaction included the transfer of Federal Home Loan Bank of Seattle member Washington Mutual Bank, FSB of Park City, Utah, a wholly-owned subsidiary of Washington Mutual Bank.

    As a result of the transaction, approximately $16 billion of Federal Home Loan Bank of Seattle advances outstanding to Washington Mutual, FSB are now outstanding to JPMorgan Chase. The Federal Home Loan Bank of Seattle remains fully collateralized on these advances.”

    http://www.fhlbsea.com/OurCompany/News/NewsReleases/2008/20080926.aspx

  6. 6
    frede says:

    Bill Gates could have bought WaMu and put it on his keychain.

  7. 7
    pfft says:

    $1.9 billion plus the write downs that need to be taken. sort of like buying a home on the cheap because you need to pour money into it to fix it up.

  8. 8
    Scotsman says:

    $7 billion down the drain for Texas Pacific Group – one of the most respected PE firms in the world. That’s a big chunk of cash that just went up in flames. So much for their big save last spring. This is where deflation starts.

  9. 9
    Dave says:

    Why do we need a $700B bailout when they can just handle it this way. Paulson should just give some of that money to the FDIC and the FHLB and let them work their magic, just like they did on Lehman and WaMu. And all the other banks that will need the same treatment. Give the pain to the owners and not the taxpayers.

  10. 10

    ANOTHER ONE BITES THE DUST

    I’m with Tim, this is horrifying.

    It gives me some solice to remember, the scientific type Seattle Bubble bloggers tried to warn Seattle years ago, but the media’s pink pony hypnotism blinded most of the mob.

    Our Dem/Rep politicians were paid to know and they just [purposely?] dropped the ball in denial years ago [or were paid off in campaign contributions to zip their mouths?].

  11. 11
    deejayoh says:

    JPM will take a $31B writedown from what I have read – so they are in essence paying $33B for Wamu – plus taking on any future downsided.

    From what I have read previously, the estimates of potential writedowns there are more in the $20B range – so if that is correct JPM shareholders will be seeing some upside in a couple years.

  12. 12
    Notabull says:

    “Why do we need a $700B bailout when they can just handle it this way. Paulson should just give some of that money to the FDIC and the FHLB and let them work their magic, just like they did on Lehman and WaMu. And all the other banks that will need the same treatment. Give the pain to the owners and not the taxpayers.”

    I agree, although I don’t know the full implications of that plan. We would essentially be giving one hell of a big chunk of change to FDIC and saying to the banks “ok, the window is open, if you’re going to fail, do it NOW and let’s get this done with!”.

    We’d probably have to offer incentives to make them all want to come forward otherwise they might hang back like they’re doing now. Perhaps the FDIC could massively increase the insurance costs to the banks that they believed were going to fail, in order to partially fund their eventual failure.

    The ONE good thing about this situation is that the public is getting a dose of what happens when regulation is not tight enough. Regulation, per se, is not a bad thing and the Kudlows and CNBC talking heads of the world need a slap in the face to make them realize this.

  13. 13
    deejayoh says:

    Hey Tim – can you shake that inventory reader for King Co SFH? Seems to be stuck.

  14. 14
    The Tim says:

    Heh, I’ve been noticing that too. I keep checking the feed sources to make sure they’re still updating properly. Seems pretty weird that it’s been holding steady for so long, but that’s what the MLS is saying.

  15. 15
    Markor says:

    I’m thinking of getting a 5% CD at JPMorganChaseWamu unless someone can talk me out of it.

  16. 16
    jon says:

    “Why do we need a $700B bailout when they can just handle it this way. Paulson should just give some of that money to the FDIC and the FHLB and let them work their magic, just like they did on Lehman and WaMu.”

    That seems to be a large part of the Republican House plan. Unfortunately, they also threw in a capital gains tax holiday, which is the Republican equivalent of the free housing thrown in to the Democrat’s plan.

  17. 17
    rose-colored-coolaid says:

    What’s interesting is that this is largest bank failure ever, and it’s hardly even news. McCain deciding he will in fact debate tonight has captured more headlines…actually Lindsey Lohan dating a girl has probably captured more headlines than WAMU’s failure.

    Our nation is really confused right now.

  18. 18
    Sniglet says:

    Has JP Morgan assumed all of WaMu’s debt? Are WaMu bond-holders safe?

  19. 19
    Markor says:

    I hope Obama slams McCain tonight for his grandstanding on the bailout.

  20. 20
    alex says:

    So Wamu rejected a 7B offer in JPMorgan Stock earlier this year… how much would that 7B be worth today, had someone kept the stock?

  21. 21
    deejayoh says:

    Are WaMu bond-holders safe?

    What I read is that senior bondholders are going to be kept partially whole- $7b outstanding – they will get $0.27 on the dollar. ($1.9/7.0)

    Subordinated debt and equity is all wiped out.

  22. 22
    Dave says:

    Notabull…

    The FDIC can recover funds from future premiums they charge banks, so they don’t need to quickly (or steeply) raise rates. They have already talked of borrowings funds from the Treasury, which is the same source of funds that Paulson is using for his giveaway to the banking industry. And the banks SHOULD pay more for FDIC insurance, because depositors are scared to place their money in any account that is not insured.

  23. 23
    Dave says:

    Did Lindsay Lohan REALLY date a girl???

  24. 24
    tyler says:

    I post this link hesitantly, as the video becomes very political in the last few minutes, but the first few minutes give a nice recap of the runup to this mess. I am curious what people here think.

    http://www.youtube.com/watch?v=H5tZc8oH–o

    I have been reading the discussion here about whether this is cyclical/normal, etc., and have been enjoying that debate quite a bit.

  25. 25
    Ray Pepper says:

    Not sure about you but I find the whole Lindsay Lohan relationship a great distraction. I really wish though Lindsay picked Antonella Barber or Jessica Simpson. Then I would follow it as close as my 11pm Family Guy episodes.

  26. 26
    Jillayne Schlicke says:

    There’s a really good interview going on right now on the Dave Ross show 710 AM 97.3 FM

  27. 27
    Sniglet says:

    It looks as if WaMu bond holders are getting creamed. This is all starting to make sense now… The reason the whole deal was able to be pulled off is because JPM was able to shed liabilities to bond-holders. Otherwise there wouldn’t have been a need for FDIC intervention.

    “It seems that WaMu’s major debt holders have been stranded by regulatory intervention,” David Hendler, an analyst at bond research firm CreditSights in New York wrote in a report today. “The deal structure seems to be unprecedented in that it excludes bondholders at the holdco and bank levels from the major assets and liabilities of the operating bank.”

    http://www.bloomberg.com/apps/news?pid=20601087&sid=aCpGk.NPYZ3g&refer=home

  28. 28
    victorchai says:

    http://www.kbhome.com/HomeSearch.aspx

    A sunny,$200,000 brand new house in CA vs. a cloudy $500,000 condo in Seattle.
    Your choice!!!!!

  29. 29
    CCG says:

    “I hope Obama slams McCain tonight for his grandstanding on the bailout.”

    I keep sending Obama faxes railing that since McPain supports the bailout, Obama can bury him right now simply by opposing it. I’m seeing people standing on freeway overpasses waving signs that read “NO BUSH BAILOUT” for Christ’s sake. Maybe he’s confident that he’s going to win anyway and doesn’t want to offend his masters (and they’re every politician’s masters, don’t kid yourself). I told him I’d vote third-party before I’d vote for anyone who supported this.

  30. 30
    Interloper says:

    A tangent: I wonder how the Seattle location of WAMU’s headquarters affected their risky business — and today’s uiltimate bank failure. Did all the Pink Pony talk, our rosy local real estate news media, and the ignorance of our citizens about the national real estate bubble make WAMU take more risk than if the company had based in, say, Phoenix?

  31. 31
    deejayoh says:

    It was in the Seattle Times this morning, if correct, pretty clearly laid out.

    WaMu investors, for the most part, are out in the cold.

    The $1.9 billion that JPMorgan paid for WaMu’s operations will go into a fund overseen by the FDIC for WaMu’s creditors. The only investors likely to get anything will be holders of WaMu’s senior unsecured debt. With $7 billion of that outstanding, those investors are looking at a payout of around 27 cents on the dollar.

    Stockholders will get nothing, as will holders of more than $11 billion in WaMu subordinated debt and preferred stock. That includes private-equity fund TPG, which along with big institutional shareholders pumped $7.2 billion into WaMu five months ago.

  32. 32
    patient says:

    “Our nation is really confused right now” and if you believe our leaders it’s also incredibly spoilt. Many leaders paint a scenario where americans can’t get a mortgage or a car loan as a living hell worth blowing $700b of tax money to avoid. WTF I don’t have a car loan or a mortgage and it’s far from hell. If people don’t have the cash for a new Hummer buy a cheaper used car cash. You can get one for about two months worth of payments on a loan or lease. If you can’t get a mortgage, rent. If you can;t afford to rent you can’t afford a mortgage. Noone shouldbe surprised that peoples confidence in our leaders and the need for a bailout plan are totally shot and getting worse.

  33. 33
    CCG says:

    “A tangent: I wonder how the Seattle location of WAMU’s headquarters affected their risky business — and today’s uiltimate bank failure. Did all the Pink Pony talk, our rosy local real estate news media, and the ignorance of our citizens about the national real estate bubble make WAMU take more risk than if the company had based in, say, Phoenix?”

    Undoubtedly, although they’d probably have failed even sooner if they’d been in Phoenix. If they’d been based in, say, Michigan, they might have been okay.

  34. 34
    jon says:

    “I keep sending Obama faxes railing that since McPain supports the bailout, Obama can bury him right now simply by opposing it.”

    Save your faxes. The Democrat Senate leadership handed their side of the negotiations at the White House last night to Obama to lead. The meeting ended up with lots of partisan bickering and no deal.

  35. 35
    anna says:

    Essentially FDIC walk away with no dent on its balanace sheet. So it doesn’t need to ask Congress for more money. This is not as bad as i thought.

    Instead of 700B bailout, we should just watch and see what happens. Or give 700B directly to SBA, for businesses that didn’t make the mistake of mortgages and so on, or give directly to taxpayers for a stimulus.

  36. 36
    Cascadian says:

    “Why do we need a $700B bailout when they can just handle it this way. Paulson should just give some of that money to the FDIC and the FHLB and let them work their magic.”

    This is essentially James K. Galbraith’s plan, though he adds in a $200 billion fund for the purposes of Warren Buffett–style recapitalization efforts by the treasury. He also concludes that no matter what we do our economy is going to be in trouble for years.

  37. 37
    Ray Pepper says:

    After Palin’s interview with Couric yesterday and her last 2 interviews prior Obama is a lock for the White House. The lack of judgement in her selection sealed McCain’s fate. The more she talks the worse it will get for McCain. We should start seeing less and less of her in October.

    Bank it!

  38. 38
    Lake Hills Renter says:

    It seems to me that most people up for election this year (both presidential candidates, 1/3 of the senate, all of the House) are too afraid of outright opposing any large bailout because of getting the blame if the house of cards crashes before the election. It’s better to shuffle your feet and continuously rearrange the furniture than to actually publicly state that you oppose a bailout on principle. That’s why I have gained a lot of respect for those that are willing to stand up against it.

  39. 39
    Timber says:

    “It seems to me that most people up for election this year (both presidential candidates, 1/3 of the senate, all of the House) are too afraid of outright opposing any large bailout because of getting the blame if the house of cards crashes before the election. It’s better to shuffle your feet and continuously rearrange the furniture than to actually publicly state that you oppose a bailout on principle. That’s why I have gained a lot of respect for those that are willing to stand up against it.”

    I look at it the other way the majority of the American people are against this plan. So it would make more sense to vote against sending the taxpayers money down the crapper right before the elections.

  40. 40
    Dave0 says:

    Markor,
    Don’t buy a CD for 5% from WaMu. Check out the “Velocity Checking” offer that Verity Credit Union has. That’s where I stash my savings. You get 5.05% apy on up to $40,000 in the checking account, as long as you use the debit card 12 times a month, sign up for electronic statements, and log into their website once a month. Oh, and they’ll also refund any ATM fees another bank might charge you, so you can use any ATM. If there is a transaction under $5 that I would normally put on my rewards credit card, I just put it on my Verity debit card. I usually spend around $50 a month on the debit card, and just transfer some cash back into the account each month to refill it back to the level I want. Commercial banks like WaMu can’t compete with credit unions. I don’t plan on ever using a commercial bank again and think this financial crisis may end up being the end of commercial banks altogether.

  41. 41
    patient says:

    “I look at it the other way the majority of the American people are against this plan. So it would make more sense to vote against sending the taxpayers money down the crapper right before the elections.”

    You would think but if you listen they all hedge with the comment: “We provide a plan and then it up to Paulson to determine if it will fix the problem”. Pathetic. I agree with LHR, I have huge respect for the ones that have the guts to oppose the bailout.

  42. 42
    unearthly says:

    For Senior bond holders $0.27 cents on the dollar is a pretty good wipe out. I expect some heavy losses on the credit swap side as bond holder look to collect on defaults. Wonder if anyone will pay out and risk Bankruptcy – let the cascade begin…

  43. 43
    Dave0 says:

    Sniglet,
    Some debt holders will get something, others will get nothing, as The Seattle Times states:

    The $1.9 billion that JPMorgan paid for WaMu’s operations will go into a fund overseen by the FDIC for WaMu’s creditors. The only investors likely to get anything will be holders of WaMu’s senior unsecured debt. With $7 billion of that outstanding, those investors are looking at a payout of around 27 cents on the dollar.

    Stockholders will get nothing, as will holders of more than $11 billion in WaMu subordinated debt and preferred stock. That includes private-equity fund TPG, which along with big institutional shareholders pumped $7.2 billion into WaMu five months ago.

    In my mind, the next logical question is, who are the largest holders of WaMu debt? Those are likely the next dominoes to fall.

  44. 44
    Dave0 says:

    “WaMu has $28.4 billion in outstanding bonds, with Capital Research and Management the largest debt-holder, Bloomberg data show.”

    Source: http://www.bloomberg.com/apps/news?pid=20601103&sid=aVA8ErWOAjmI&refer=us

    I’m glad I don’t have my money being managed by The Capital Group, they’re probably not going to have a good year. 2% of their holdings just disappeared overnight.

  45. 45
    SeattleMoose says:

    WAMU…..just another example of how the innocent majority are gonna have to pay for the sins of the guilty-as-H#ll few. Who I might add became filthy rich off their shenanigans.

    WHEN ARE THE CRIMINAL ARCHITECTS OF DESTRUCTION GOING TO BE HELD ACCOUNTABLE!!!!???

  46. 46
    Markor says:

    Dave0: Don’t buy a CD for 5% from WaMu. Check out the “Velocity Checking” offer that Verity Credit Union has. …

    Thanks for the advice. I might do both. I like credit unions and would use them exclusively for CDs if I could get 5+% from enough of the local ones.

  47. 47
    Markor says:

    Ray Pepper: After Palin’s interview with Couric yesterday and her last 2 interviews prior Obama is a lock for the White House. The lack of judgement in her selection sealed McCain’s fate. The more she talks the worse it will get for McCain.

    I doubt it all. It’s hard for Seattleites to understand, but worse is better for Republicans. Their platform is mainly a fight against the intelligentsia.

  48. 48
    cora says:

    Verity is for US citizens only, though. For some reason they and SMCU have issues with opening accounts for non-citizens. Mind, I’ve lived in Washington for most of my life, and it’s a little annoying that they don’t disclose that asterisk until you’re opening an account. And no, it’s not their charter, it’s their own conscious decision.

    WaMu was actually pretty cool about that. My first US bank account was at WaMu. I closed it a few months back, alas. Washington Federal is stable and has ben pretty good to me but their rates stink. I wish Verity would get over it…SMCU is no loss, but Verity has a lot of neat products that I’d like to partake of.

  49. 49
    sunsplint says:

    I’ve heard a few economic discussions out there that support a non-bail-out plan. Essentially, the theory is that the market is working and that the bailout would be a very narrowly focused intervention that would alleviate a certain portion of the condemned(investment banks) in an unfair manner.

    I wish we could see all of the alternatives being discussed by congress.

  50. 50
    Markor says:

    SeattleMoose: WHEN ARE THE CRIMINAL ARCHITECTS OF DESTRUCTION GOING TO BE HELD ACCOUNTABLE!!!!???

    The craftiest ones probably broke no laws. The laws need to change. But they probably won’t, if only because most voters will forget all about this issue when enough borrowed public money quells the economic jitters. The bottom line is that voters sowed this downfall. The foxes just took advantage.

  51. 51
    Dave0 says:

    Getting back to what the WaMu fallout means for Seattle… I’m guessing that a large percentage of the shareholders & debt holders of WaMu that are in the Seattle area. Considering that all of these people’s equity just got wiped out, that’s less money they can invest elsewhere, such as into a down payment on a house. So, it seems like we may see a large hit on the low end of the local real estate market, where first-time buyers have to depend on investments from outside real estate for a down payment (rather than just using equity from their current home). I’d be curious to see if there is any hard data out this related to this theory.

  52. 52
    Thomas B. says:

    Dave0 @ 49
    Beyond the jobs lost, the people with stock are hurt. I remember a few months ago the news showed a few people that were angry at WAMU and Killinger. They stated that their entire savings or a large portion of their savings was in WAMU stock. These people probably have no money now.

  53. 53
    Alex says:

    It’s not just the WaMu jobs going up in flames. Think about smaller companies serving WaMu, like cleaning, office supplies, stuff like that. They will all lose business.

  54. 54
    Thomas B. says:

    “WHEN ARE THE CRIMINAL ARCHITECTS OF DESTRUCTION GOING TO BE HELD ACCOUNTABLE!!!!???”

    Huh? This is as ambiguous as saying “da man” did it. Should we hold realtors liable for artificially inflating prices, lying to buyers, deceiving buyers, manipulating the housing market, etc.? Should we hold the mortgage brokers liable for extending credit to those with poor FICO scores? Should we hold local politicians liable for fanning the flames of the bubble (and it was a clear bubble) so they can get more tax revenue to use in their pet projects? Who are the criminal architects? It’s “da man” isn’t it.

  55. 55
    Thomas B. says:

    Alex @51
    Also all the buildings that WAMU owns will go to either JP Morgan, or another buyer, probably out of state. That means the money that WAMU did make on rents and revenues will go to New York instead of staying in Washington.

  56. 56

    SOME AMERICAN HISTORY TO REMEMBER

    “…I believe that banking institutions are more dangerous to our liberties than standing armies . . .
    If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] . . . will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered . . . The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.” —
    Thomas Jefferson — The Debate Over The Recharter Of The Bank Bill, (1809)…”

    The rest of the URL:

    http://images.search.yahoo.com/images/view?back=http%3A%2F%2Fimages.search.yahoo.com%2Fsearch%2Fimages%3F_adv_prop%3Dimage%26fr%3Dyfp-t-501-s%26va%3Dgreat%2Bdepression%26sz%3Dall&w=383&h=236&imgurl=nwomirror.tripod.com%2Fdepression.jpg&rurl=http%3A%2F%2Fnwomirror.tripod.com%2F&size=14kB&name=depression.jpg&p=great+depression&type=JPG&oid=8911b23a587f864e&no=3&tt=45,827&sigr=10s3iafsn&sigi=113dove05&sigb=136miaguk

  57. 57
    EconE says:

    It’s interesting to read who we “bubbleheads” like to hold accountable for the mess we are in. The Prez, Greenspan, Bernanke, Banks etc etc.

    Who do you think the people that lose their homes will hold accountable when their day of reckoning comes?

    I’d be willing to bet that they are going to place the blame directly with the people that were within arms length of their transaction. You know…the Realtor that found them their “ever appreciating” asset, and the mortgage broker who sold them their “don’t worry…you can refinance out of it” loan.

    There are surely going to be quite a few ticked off former homeowners over the next couple years. I sure wouldn’t want to be the person that sold them on the home…or the loan.

  58. 58
    david losh says:

    Check out the “Velocity Checking” offer that Verity Credit Union has. You get 5.05% apy on up to $40,000 in the checking account, as long as you use the debit card 12 times a month, sign up for electronic statements, and log into their website once a month. Oh, and they’ll also refund any ATM fees another bank might charge you, so you can use any ATM. If there is a transaction under $5 that I would normally put on my rewards credit card, I just put it on my Verity debit card

    This is where the problem is.
    It’s your savings in the bank, bonds, CDs, stock market, hedge fund, capital manegement account, and so on. Your money is the problem.
    Home loans, or toxic mortgages are nothing in the scheme. People wanting to hold onto the family home I don’t see as the problem.
    It’s the large investors of principle who depend on the cash flow to make things look good that are the problem. Investors want to hide behind the savings account holder, the home owners, the pension funds, and 401Ks.
    You guys are the schills for Capital Research and Management, and the like, give me a break.
    Do you really, honestly think that your $1.5 million dollars in savings spread out over 15 FDIC protected accounts is the focus? No.
    These large inter national investment companies will hold onto the principle, the savings they have, in the billions and trillions of dollars until the day you die of starvation.
    Capital Research and Management has the money. They have so much money they can take a few billion dollar loss on WaMU.
    I know it’s hard, but this is nothing in the bigger picture of global markets.
    It’s global.

  59. 59
    Dave0 says:

    Sorry David, I’m trying to your last post here, but can’t quite understand what you’re getting at. It sounds important, but like you can’t quite put into words.

  60. 60
    NostraDamnUs says:

    Oh quit your whining – you’ll all be looking to buy by year’s end or at worst mid-year, 2009 :).

    What does it MEAN that WaMu failed?. Approximately?

    Means (for both ends):

    – Greed doesn’t pay
    – Basic math skills help when buying a home

    Unless there’s a nuclear detonation in the Puget Sound – the “proverbial” bottom has been here for the last 6-12 months, and probably (emphasis on _probably_) is going to stick around for another 6-12 months, before things start to inch up slowly, but surely this time.

    And in another 10-15 years, may you all live that much (times 10 :), you will see a re-run of what went on over the last couple of years.

    And then again…

    And then again…

    … ad infinitum.

    Just don’t let greed or fear, discourage or encourage you. ACT. And take what you’ve got according to what you’ve got.

  61. 61
    Nostradamus says:

    All it means someone couldn’t do math when they bought a home and was greedy.

    10 years from now, we’ll have another re-run of what’s going on right now.

    Unless there’s a nuclear attack, the cycle doesn’t stop. It varies in its amplitude, but it doesn’t stop.

    Best time to buy – if you were serious about it was between 6-12 months ago and 6-12 months from now, if you are looking for the proverbial bottom.

  62. 62
    Scotsman says:

    So, does the loss of WAMU mean that Seattle is no longer a world class city?

    WAMU gone, Boeing to Chicago, shipping business to Tacoma, when will MSFT head south?

  63. 63
    Dave0 says:

    Don’t worry Scotsman… We have the South Lake Union Trolley! That will ensure that Seattle stays a world class city!

  64. 64
    joe says:

    I heard today that there will be some very sizable cuts next week. They were going to occur this week, but they were delayed due to a possible sale.

    Also, Chase will move quickly to cut over the next few months.

  65. 65
    jon says:

    “That means the money that WAMU did make on rents and revenues will go to New York instead of staying in Washington.”

    Most of the money that WAMU ever made went into building now-vacant properties in CA and FL.

  66. 66
    Dave says:

    Troll…

    Do your posts always look like that?

  67. 67
    david losh says:

    Moving your money around to the best new rate, convenience, or solvency isn’t really the issue.
    You give your money to a bank, they lend it a hudred times in a month, make money, give you 1/12th of 5%.
    While you watch your savings account the principle balances of billions, and trillions of dollars are “invested” by the big players to make more money.
    You get your 5% and are happy, but look at the terms and conditions of that “free checking” account, or savings, or CD.

    You get 5.05% apy on up to $40,000 in the checking account, as long as you use the debit card 12 times a month, sign up for electronic statements, and log into their website once a month.

    It’s a contract for you so you get a fraction of what the bank makes from your money. A loan document is even more complicated.
    If you relate this to WaMu, they are making money, today. WaMu has lots of money and it comes in daily. You can be all excited about the jobs or FDIC insured accounts, go ahead.
    The main business of WaMU is to collect, bundle, and funnel dollars into Pension funds, Retirement accounts, and Investment instruments. The end resulting dollars earned become the Institutions principle which they never touch. It’s billions of dollars, cash, making interest, daily, or invested in ways to drive the stock market, daily, to make more principle dollars. They won’t touch the principle. They will let the stock holders die of starvation before they touch the principle.
    I moved away from calling WaMu a bank a few sentences ago, because they have divisions, within divisions, that trade dollars, then trade dollars with other banks, the fed, foriegn currencies, then send it to a remote location to have it reinvested bank into the Institution.
    I’ll challenge any of you to know what WaMu does, because I sure don’t. It is an investment, inside of an investment, that invests, in other investments.
    It’s just easier to look at our returns from a “free checking” account.

  68. 68
    The Tim says:

    Dave @ 66, I’ll address that.

    What you see above in comments # 60 & 61 are a sort of soft-ban I have put on a few people that consistently have come here and left inflammatory / antagonistic comments. When I cracked down with the comment policy I put the disemvoweler ban on these people.

  69. 69
    Harley Lever says:

    The sky is falling, the sky is falling!!!

    Isn’t this what the Bubble heads want?

    I am starting to think that this blog is made up of more anarchists, than renters hoping to buy a house one day. Many of you cheer for revolution, the Greatest Depression, and that this city turn to ruin.

    Why not leave? You don’t like Seattle. You hate Microsoft, you hate Boeing, you dismiss everything great about this city. If Seattle is so bad, why do you stay???

    The only thing I can think of is because you hope for anarchy.

    Why would you want to own a home here if everything you hope for comes true?

  70. 70
    The Tim says:

    Harley, I think you are misinterpreting the sentiment. The way I see it, what you call “cheering for revolution and the Greatest Depression,” most here would describe as a necessary dose of medicine to clear out the economic sickness that has been festering and wrecking havoc behind the scenes for nearly a decade.

    Is a society and economy built entirely upon a foundation of greater and greater debt a desirable situation that we should strive to prop up at all costs?

  71. 71
    TheHulk says:

    Harley,

    What do you think is better? An economy where everything grows at a nice uniform pace of 2-3% every year (including housing) or this current boom bust cycle where a few lucky people cash out and for every “lucky” person, hundreds are left holding the bag.

    I think of this period as bitter medicine for tough times. While I certainly dont hate any of the companies around here or for that matter around the world, I certainly hate all the people (from people who faked incomes to the wall street analyst who gave AAA ratings to all the MBS’s that passed thru their desks). If any of those people today are jobless and have a home facing foreclosure, I would say it is nothing else but justice for the actions they committed.

  72. 72
    Harley Lever says:

    The Tim,

    I couldn’t agree more with the need of a heavy dose of medicine for everyone involved. From those who over leveraged themselves to the banks who freely gave credit blindly.

    However, when you have comments like “Personally, I’m both cheering for the collapse of our economy, which might spur a revolution, and hoping that I’ll survive it.” form our buddy Demersus. It makes me wonder.

    Euala provides some great food for thought, but in the end it seems he would rather be right about his 85% economic collapse predictions than ponder the true devastation of such a prediction.

    The Tim your biases in reporting the information seem to always cheer the negative and poo poo the positives. You have stated several times that San Diego is the place to live. Why are you not there? Based on you analysis San Diego is near being an outstanding value. You cannot label people as “Pink Ponies” and claim not to have a bias.

    What I would say to you and everyone on this board is that we are all interconnected and have a vested interest in keeping the United States a strong and prosperous nation. If WAMU loses, then we all lose. I too get the short end of the stick. But go back and look through all of your statements and tell me that many of you were not cheering this.

    I feel foolish. I bought a house that I can afford, and will now have to help the others who bought way more than they can afford. These people need that hard dose of medicine. But I would never hope for “Revolution” or a “Collapse of our Economy”.

  73. 73
    deejayoh says:

    Harley, I wouldn’t assume that everyone who participates on this site agrees with every nut job post that comes up – the logical extension of that approach would have me headed over to Dave’s house tonight to watch “Mean Girls”

  74. 74
    Ron says:

    Here it is.. THIS IS HOW THE: Condos are Doing 0 DOWNS STILL.. This is from an insider working at one of the APARTMENT/CONDO Conversions..

    effectively..
    They are Actually making the DOWN PAYMENT for you.. This is the Senario.

    Hypothetically: They WANT 300,000. Dollars for the Unit.
    (I Was told in sort of a secret gesture..) that they will get a appraiser to come and comp the Units for extra 3% above what they want. I would imagine it would be easier to get 50+ units to comp out 3% higher.

    See FHA Wants a 3% downpayment… FOR EXAMPLE: They get the appraisal to come in at 309,000. dollars – They effectively write the loan down for 309,000. dollars they give the Unit to you Oweing 300,000. – however I didnt get as far as asking if the Actual sales price would show the 309,000.- im pretty sure it would though… KIND OF FUNNY: Giving you extra 9,000. dollars of Equity drawn out of thin air.. You might think this is Fraudulent? maybe- if you could ever prove it.

    The other part of the Trick is that FHA from what I was also told wants at least 50% of the Units to be closed on before they will accept the loans..

    At this particular Apartment/Condo conversion and probably holds true for most, the Bank lends the money for the Project then also Underwrites the Loans for the Buyers of the Units.. THERE VERY MOTIVATED- To sell them.. they have all the motivation in the world.

    (THEY BUNDLE ALL THE LOANS TOGETHER TILL THEY HIT THE 50% MARK)

    The HAT Trick happens when they hit the 50% Closure rate then Flip the Loans off to FHA.. Now Taxpayers are footing the bills on the Future Foreclosures.

    Aparently they spent 3 months will no sells Until they Switched to using this tactic.. THE POWER OF NOT HAVING ANY SKIN IN THE GAME COMING IN THE FRONT DOOR.. Also the reason there is going to be so many more Foreclosures going forward.

    Now the Champaine Apartment/Condo units are using apparently the same tactic.. just weeks ago they were going apartment now they have thrown up the same 0 down on there sales flyers… WE ALL KNOW THERE REALLY ISNT 0 DOWN.. Anymore-.. im sure many of you passed those same type signs as of recently offering 0 Down..

    Hopefully I clearly explained it.. Ron.

  75. 75
    johnnybigspenda says:

    Harley @ 69… you are getting close. Especially judging by The Tim @ 70’s response.

    I used to pop in here quite frequently about a year ago… when the debate was more about “if there was a bubble that would pop in Seattle”…. now its about… well, actually … what IS it about? Looks like a support group for people who are sure of the impending doom and gloom… sitting around and agreeing with eachother.

    I agree there is a lot of REALLY BIG stuff going on right now that is important (which are covered very well 100X over), but Tim… your brand (www.seattlebubble.com) is coming into question… Seattlebubble.com will not be useful much longer if you do not take a step back and evaluate where YOUR blog fits into the http://WWW... there are many… please bring something new to the table… sarcasm and cynicism is not cutting it any more.

  76. 76
    Ron says:

    I have noticed in Public that people are increasingly feeling that Real Estate is going to be taking a big hit… Just at the athletic club was at the pool and there was a Old guy that I know at as having several rental homes.. he was Going Off- cussing… some of the people left- I thought it was amusing in the sense this guy was now talking about/cussing about his properties potentially being worth less in the future.

  77. 77
    LUC says:

    johnnybigspenda,

    If you’re not happy with the content on this blog no is stopping you or anyone else from from starting their own blog. The blogosphere is an open environment.

  78. 78
    Harley Lever says:

    Deejayoh,

    Your (Bubbleheads) silence when the nut jobs make these statements is peculiar. Many of you vehemently debate those who do not agree with your position, no matter how passive. Yet when some one actually cheers on “economic collapse” and “revolution” they get a complete pass. Sometimes what you do not say, says a lot more than what you do say.

    I agree with and understand much of the anger. I among the most cynical when it comes to mortgage companies and some of their actions. I was actually in the process of getting a loan that was predatory and fraudulent. The loan officer tried to manipulate the situation from every angle financially, emotionally, and deceptively. I walked away 4 days before we closed.

    In a way I wish the absolute worst for that loan officer. However, to wish poorly upon him or hope that his bank will close is short sighted. We are all interconnected in this mess. In the least a micro-fraction of my taxes would go to supporting his unemployment. Even worse, thousands of people would be out of work.

    To cheer for revolution and economic collapse or to give the statements a free pass with your silence is to cheer for your own demise.

    What do the Bubbleheads see as the end game? Do you think having the economy collapse is an opportunity to buy the home of your dreams? Even if you keep your job, might you be obligated to help a loved one or support a parent? I hear of very few stories about how many millionaires the Great Depression turned out.

  79. 79
    Harley Lever says:

    Ron,

    Rental rates are going up. Assuming he is not stuck in an ARM, he should be delighted by the downturn in real estate. You do not often flip rentals.

  80. 80
    kingcounty homeowner says:

    Folks; Life is not fair and it sure sucks if you are not at the top of the food chain.
    Kerry Killenger (CEO of WAMU from 1990 to 2008) got paid $54 million from 2002-2007. Alan Fishman (CEO of WAMU for less than a month) is ‘entitled’ to $18 million in pay and bonuses.
    The rank and file WAMU thrift workers, whose 401k’s and stock options were wiped out, get to walk away with such largess.

    Here are the links for the 2 articles on the CEOs salaries:
    http://finance.yahoo.com/tech-ticker/article/73916/WaMu-Wipeout-%27Gross-Mismanagement%27-by-Former-CEO-Killinger?tickers=WM,JPM,BAC,C,XLF,WFC,WB

    http://www.associatedcontent.com/article/1066149/wamu_ceo_alan_fishman_gets_18_million.html

  81. 81
  82. 82
    Sniglet says:

    What do the Bubbleheads see as the end game? Do you think having the economy collapse is an opportunity to buy the home of your dreams?

    I do not relish a depression, but I do believe one is necessary. This is the only way to purge the gross mal-investments from the global economy, and teach society the old lessons of prudent investing and saving.

    Frankly, I have been disgusted by the superficial consumerism that has come to embody society. I am looking forward to my children growing up in a world where people aren’t competing for who has the most, and friendships matter more than status.

    By the way, I am NOT predicting the appocalypse. Rather, I suspect we will simply have a severe depression. The world didn’t come to an when Japan’s economy tanked in the 1990s, neither was it really all that terrible during the 1930s. 80% of Americans still kept jobs during the depression, and lived fulfilling lives. My grand-father tells stories of the tough, but rich, childhood he had on a farm in the Canadian prairies in the 1930s. I can only hope my children will have similar experiences.

  83. 83
    jon says:

    The US was not destroyed by the depression, but much of the rest of the world was not so fortunate. As a result of the political instability created, many tens of millions of people were killed. We have exactly the same rhetoric coming out of Iran that was coming out of Nazi Germany, and we haven’t even begun the actual painful part of a depression. Pakistan is a nuclearized powder keg that is ready to blow a lot more than just a hotel. China is already seamingly at a low level trade war with us, having just cut off interbank loans with all US banks, continuous probing with internet attacks, and the military threats against Taiwan. Russia has attacked Georgia, is moving towards to laying claim to the Arctic, and is prepared to use natural gas supplies to Europe as leverage.

    A credit crisis is peanuts compared to what else is out there.

  84. 84
    Jonny says:

    “A credit crisis is peanuts compared to what else is out there.”

    Not this one.

  85. 85
    Jonny says:

    Harley: I have been expecting this collapse for many years now and it should have been obvious to anyone who can do basic math as far back as 1996. In particular, it should have been bloody obvious to one Alan Greenspan, the chief culprit in the entire mess. None of this is to say I’m “cheering for collapse” (although I’ve been against all the irrationality for years because I knew it would lead to this). Who wants collapse? (definitely a better question to have asked in 1996!) What I do cheer for is sanity, truthfulness and honesty leading to real growth and prosperity (as opposed to lying, cheating, twisting the truth and printing scads of worthless paper). It is not sane, truthful or honest to look at the present situation and expect anything other than a serious and prolonged collapse. Whether one plan or another will ease problems for one group of people or another is perhaps debatable, but in the end no bail-out of any size will fix this in a few months as there is just no way around the mess now. That said: In my opinion, failing to take this seriously enough (and as a long-term problem with no quick fix) will only leave us unprepared for what’s to come. In fact, it’s precisely all this whistling-past-the-graveyard insanity of the past 10-15 years that is actually _responsible_ for the situation we’re in. We don’t need more denial now! But in any case, what people hope or don’t hope is irrelevant now. It’s down to nuts and bolts and pure and simple math that cannot be wished away by magical risk-erasing derivatives or balance sheet shenanigans. We’re now a debtor nation with a giant pile of worthless paper (who are only (temporarily) avoiding full-on governmental bankruptcy ala Argentina because the world economy would be at risk if we went bankrupt) and it will take YEARS to turn things around. And because we’re now backed into the corner we started towards in 1996, we must and WILL finish the inevitable cycle: fear, anger, acceptance, depression. Only then can the destructive phase end and the growth phase begin again. This is how it has been for centuries and this time will be no different. You can hope all you want, but you will only be disappointed. Get angry if you want, but you’re ahead of the crowd as we have not reached the end of the “fear” phase yet and I think people will be angry for years after fear peaks in 2009. Until they get tired of it and sink into the inevitable depression. The bright side of it: if we accept the consequences of our past actions and get to work now (collectively and as individuals), we don’t have to stay depressed too long.

  86. 86
    jonness says:

    “The Tim your biases in reporting the information seem to always cheer the negative and poo poo the positives. ”

    Harley: This is the worst financial crisis since the great depression. Bubble heads have been realists about this situation since well before it began. We are not mocking Seattle, we are simply talking in a non-delusional manner about the current state of the economy and what must happen before the situation is corrected. Once it’s corrected, we can attempt to salvage this country from the ruin caused by blind nationalistic bias fueling the constant need for our country to borrow more and more money it can’t afford to borrow.

    The situation is very easy to understand. Say you borrow more money than you earn for a few decades until you reach a point that a great deal of your salary must be used to pay interest on the huge amount of money you borrowed. But instead of admitting you have a problem, you keep your eyes closed and call anybody “negative” who mentions that you should stop borrowing money. After all, as long as you borrow more money, you live like a wealthy man while making a peasant wage. You have new homes, new cars, and a yard full of shiny new toys.

    But you can’t get over the feeling that things are getting out of hand, because you are borrowing much more money to pay interest on the money you already borrowed than you started out borrowing in the first place. Then suddenly the big picture hits you. You are broke, and you will spend the rest of your life paying for the toys you bought. The worst part is, the toys will be old, worn-out, and in the graveyard before they are payed for. You will never have new money again, because you have borrowed everything you will be worth for the next 30 years, and all’s that’s left is 30 years of cashless toil. You are tapped out.

    The situation above is hypothetical, but it’s absolutely the shape the U.S. is in both as a nation and for many on the individual level. We live way beyond our means as a nation, and we do so by borrowing way more money than we make. The price for this is higher taxes and huge debt as opposed to low taxes and money in the bank. We are not just facing a housing bubble, we are facing a debt bubble. And so far, our best plan to solve the debt bubble is a speedy decision by our nation’s policy makers to borrow an unprecedented amount of additional money.

    We owe about $11 trillion as a nation. There are 150 million people working in the U.S. That means my GF and I owe $73,333.34 so far, and that figure is rapidly going up each year as our nation continues to spend more than it earns.

    Now borrowing another trillion here and there to give to rich bankers who made a booboo doesn’t seem like a big deal to most people, but each additional trillion equates to another $13,333.34 my GF and I are obligated to pay back (or at least service the debt on) on top of what we already owe. This amount of debt multiplied by all families in our country is staggering and threatens to bankrupt the nation. Now throw in the $90 trillion in obligations to Social Security and Medicare I purposely left out of the discussion, and ask yourself just how much more we can actually afford to borrow.

    America is a drug addict as are its citizens, and the drug of choice is credit. As any good drug councilor knows, one of the main symptoms of addiction is denial. And until the addict breaks out of denial, he has a 0% chance of healing and assuming a healthy balanced lifestyle. The bubble-heads have broken out of denial ahead of the pack and are anxious to embark upon the painful process of beating addiction so that we may reap the enormous benefits on the other side.

  87. 87
    deejayoh says:

    Harley – well, I’d watch who engages who. you know that quote about wresting pigs? I learned what it meant a while ago.

  88. 88
    jonness says:

    My math is a little fuzzy there: I should say the sum of my GF and my debt is about $146, 666.00 and going up $13,333.00 per additional trillion of debt. And this doesn’t include up to $1,200,000.00 in Social Security and Medicare obligations we are on the hook for.

    Personally, I’m not convinced the average family is going to be able to pay for these kind of debt obligation. But who knows, maybe borrowing another trillion or two to give out as Christmas bonuses to rich bankers and corporations isn’t bad for the country after all? Time will tell.

  89. 89
    what goes up must come down says:

    harley, man do you take the cake, why don’t you go back a read some of your old posts — you know the ones in which you tried to convince people there wasn’t a bubble in the first place.

    Now that the house of cards has started to come down you blame the people who were trying to point out to others THAT IT WAS A HOUSE OF CARDS.

    See some people take glee in this situation which I don’t believe is right but those people are most likely the ones you mocked as crazy just a few months ago and so they have this over reaction.

    Why don’t you take some responsibility by saying that you were wrong and if more people would have been standing up and saying hey what is going on doesn’t make sense. How can housing anywhere start out stripping incomes by factors of 10 make any sense? See if people questioned things more early on maybe we wouldn’t be in this mess.

    But no you want to blame the people who tried to stop the wreck because they WERE THINKING. Why don’t you look in the mirror and think YOU were part of the problem. Guess what you can blame anyone you want but now it is time to pay the piper and your belly aching can’t stop it.

  90. 90
    jonness says:

    192 of the world’s brightest economists plead with politicians to stop blindly following Paulson into oblivion and use their brains before crafting a rescue plan:

    http://faculty.chicagogsb.edu/john.cochrane/research/Papers/mortgage_protest.htm?ref=patrick.net

  91. 91
    Yesler Hill says:

    I admit to a little schaudenfruede, but I also admit it was more fun to watch coming, than to have it actually be here. And I say this from the bottom of the pyramid already.

    I can complain and rail against any damn thing I want regarding how Seattle’s turned out, I’ve lived here most of 49 years. I’m not saying everything was glorious in the past, but it was a hell of a lot cheaper, and First Avenue was a better place. I much prefer a more working and middle class city to the elitist, nouveau riche, cakesniffer playland it’s become.

    And if this economic downturn slows the gentrification; I’m not opposed.

    I can easily imagine a whole lot of Nickelsvilles popping up around the greater Seattle area. Seattle was the home of the first Hooverville, I think; so why not brand the new era of shantytowns with our glorious mayor’s name?

    I also, personally, think a severe economic crisis will be the mother of necessity, and so open people’s thinking and worldview to alternative and counter views to what been accepted as US economic policy the last nearly 30 years. And that’s a good thing to my thinking.

  92. 92
    Demersus says:

    Harely, you again misrepresent my statements. I clarified soon after I made that pst that my motivations are for our country to get through a tough time and learn some lessons such that my children and potential grandchilder do not have to finance the reckless and excessive lifestyles of those whose actions are ultimately the demise of our economy, our democray, our nation. What I wish for is that the “alchoholic”sobers up; if that means a lot of pain for a short time then so be it. There is no easy way out of this mess, putting it off only makes the problems exponentially worse. This is why I chear, the first step to recovery is to admit you have problem. Be more objective man, I also stated clearly that I consider myself a patriot of this nation, a responsible citizen who never got himself into the messes that may did by blindly believing they could continue to borrow in order to maintain an unsustainable lifestyle.

  93. 93

    This is depressing.

    Will someone wake me in 3 years…at least prices will be down by then. Terrible economy + sellers not willing to accept it = misery for renters.

  94. 94
    Demersus says:

    Also, I find the term “Bubblehead” to be disingenuous. What it implys is that we did’t know what were talking about; but near-term history shows just the opposite. We were trying to warn everyone to get out of the way of the train, heck, to get off the frickin’ train before it runs off the collapsed bridge to nowhere. Now that you see we were right, your anomosity turns to us. We didn’t cause this problem; we just realized it was true long before many would accept it.

    Friends of mine bought $400K+ condos despite my insistance that is was a bad, bad move.

    They now lament those purchases. Do I like being in the position of saying, “I told you so”? Not really, but damn it, I will say it when it’s true. What did you tell your kids the first time they put their hands on a hot stove burner? I told you it was hot, listen next time.

    I work 3/4-time as the network manager for a consulting firm. My job is very secure; full benefits. Furthermore, I have zero consumer dept and my rent on a 1 bedroom duplex with garage in a convenient area to my work is less than 29% of my gross income. That’s responsible, practical, pragmatic living.

  95. 95
    John says:

    Maybe home prices here can finally crash. I read the CEO of JPM is known as a hatchet man, gutted Bank One corporate staff when it was taken over.

  96. 96
    david losh says:

    That’s responsible, practical, pragmatic living
    #94
    I came at the right time.

    What’s going on today in the economy has a direct correlation to what we are all doing here. We are on the internet discussing. We get news, research, data, and analysis.
    This web site is a business.
    It collects or hopes to collect advertising dollars, or paid links, or consulting, or a thousand other ways of making money, from the internet.

    I work 3/4-time as the network manager for a consulting firm. My job is very secure; full benefits. Again #94

    What does that mean?
    What I think is that it’s a computer network for a consulting firm. Consulting about what? Is it a computer, internet thing? Or do they then publish reports via the internet?

    This is nothing like the Great Depression. This has to do with businesses that were allowed to create credit schemes. The internet business has opened millions, billions, or trillions of avenue to create wealth. It’s mind boggling to me the possibilities of business today compared to ten years ago.
    I can sit here in my Seattle home and sell products in South America. We all buy from China. I know for a fact that doing business with China was difficult in 1995. There was no way to do the simple accounting on those billions of products produced in a country of a billion people.
    Computers have opened the door to business. They have opened doors for all of us.
    The solution is simple. We make more money. Hiding or spending less or saving for a rainy day is the problem. If you are so smart then help solve the problem by doing more.
    Stop doing business with banks. You can do better. Stop giving your money to the hedge fund 401K programs that make money for the managers while they give you, well today they are giving you, nothing. The madness stops when you stop giving, saving, money to corporations.
    You, today, have the ability to manage your own money by investing in things you believe in. This is a time of opportunity. Small businesses will need your help to survive these times.
    Why do you give your savings to a bank who invests in a fund that lends to small business because the risk is less and the returns are higher? It would be better to offer help in your own neighborhood.
    You can do business in Borneo from home. Why not? You’re smart, sophisticated people who understand banking; why not use that for good?

    Now this is a Real Estate blog and I just want to point out that what is going on in the Financial Markets has nothing to do with Real Estate or Real Estate loans. In the bail out plans it’s interesting that any tie to mortgages has been chopped off.
    You can point to Fannie Mae and Freddie Mac but Real Estate mortgages were the canary in the coal mine. When Real Estate died it meant the end of business as usual. It’s complicated and I’m tired of talking about it, but I wanted to make the point.

  97. 97
    deejayoh says:

    I read the CEO of JPM is known as a hatchet man, gutted Bank One corporate staff when it was taken over.

    Dimon was the CEO of Bank One when it was taken over by JPM – and he did the slashing well before the JPM merger

  98. 98
    Demersus says:

    David Losh,

    What it means is that I pulled myself up by my bootstraps and developed the skills necessary to compete well in an ever more competive marketplace. It also means that I live well within my means, which I consider to be a responsible manner in which to conduct my personal affairs. It means that I have no sympothy for those whom reached beyond their means to acquire that which they did not deserve. I don’t quite understand what the heck point you were trying to make about my statements. But, my statements stand on their own. I didn’t get myself into a situation that I could not manage, therefore I resent being asked to assist those whom did.

  99. 99
    Demersus says:

    And, if you don’t know what a network is at this point in time, 2008, well, what can I say except DUH!

  100. 100
    Demersus says:

    Again, David, I’ve re-read your post and I can’t tell if you’re criticizing my statements, or using them in support of your own. I personally stopped using commercial banks over a decade ago. I use only credit unions and I have accounts at 4 different ones, in different states.

    Anyone?

  101. 101
    TJ_98370 says:

    Off topic but way cool –
    .
    Eleua made the front page of the Kitsap Sun!
    .
    NK Blogger: Oppose Bailout, Stop Living ‘Debt Fantasy’
    .

  102. 102
    david losh says:

    I use only credit unions and I have accounts at 4 different ones, in different states.

    That’s my point. Saving that money and you refuse to help others.

    In my little life I’ve paid off two personal residences starting from scratch. By paying them off rather than using the principle of one to pay down the other.

    if you don’t know what a network is at this point in time, 2008, well, what can I say except DUH!.

    This is a job that in 1995 probably exsisted on a limited basis. Today it’s a new industry. There are thousands, millions, and billions of new industries that people can do in the home, if they chose.
    You have a job, why?
    Is what you are doing meaningful?

    The point is about talk of a Great Depression or the comparison to a Great Depression. The world has expanded in the past ten years. The technology has made a huge difference in the way business is done. We will survive without a WaMu, Goldman Sachs. or Merrill Lynch. These people were having the last hurrah. They grabbed all the cash they could. They have cash, they can survive without giving them more.

    Credit Unions are the banks today, banks are deregulated into Investment Institutions. Get your money out, start a business, help other people start businesses, and grow. You have the opportunity today to be the Lehman Brothers of tomorrow.

    This is my personal philosophy, this is what I do, it’s my choice. What you do is your choice. This post has to do with what impact a WaMu will have. People are talking about savings accounts. This WaMu thing stopped being a bank or friend of the family a while ago. Good riddance, it is a tool to steal money, legally, that’s all. We are discussing how to help a bunch of crooks, we know they are crooks, but we want to say they have control over the economy. Those days are over.

  103. 103
    Demersus says:

    WTF does this mean?

    “That’s my point. Saving that money and you refuse to help others.”

    No one helped me save the money I’ve earned, and it’s not like I’ve got a lot of it. I came from a family of modest means; hard-working blue collar. I didn’t grow up with some sort of entitlement mentality other than I believed this was a nation of free people in a free market and that bad behavior is not rewarded. I was dillusional.

    What my firm does is none of your business. But, I will say that the business we are in only gets better as the ecomomy gets worse. We are not in finance or technology. It’s been around nearly 30 years with great success and a great reputation.

    Then you go on to say, “They have cash, they can survive without giving them more.”

    Um, huh? Nevermnd, I’ve got a headache just trying to figure out what you mean.

  104. 104
    Demersus says:

    Billions of new industries? What Universe are you from? There’s only 6 billion people on the planet. What, a different industry for each of them?

  105. 105
    wakeup says:

    why WM is such a big deal for seattle RE? Every body knows the jobs in branches are safe. The headquarter only has 3500 jobs. Let’s say it will cut 2000. How many of the 2k people really have to sell house? None of them can find a job?

  106. 106
    cosmos says:

    I was perusing the Queen Anne neighborhood’s local rag the other day. It was 46 pages long and it appeared to me that 22 pages were legal notices for foreclosures. Anyone care to comment?

  107. 107
    Thomas B. says:

    The headquarter only has 3500 jobs. Let’s say it will cut 2000. How many of the 2k people really have to sell house? None of them can find a job?

    First, the 3,500 number is inaccurate. It’s closer to 5,000.

    Second, the jobs at headquarters are high paying executive, accounting, legal, etc. jobs. These are the people most able to buy homes in a tight credit market. Tellers and branch managers don’t make enough money to buy houses at current Seattle prices. Additionally, people that had the executive jobs have more disposable income than a branch manager, hence able to spend more, which means higher revenue from sales taxes.

    Third, some may choose to move to NY to continue their career in banking, but those that do stay will have a hard time finding a like job, paying the same pay since Seattle isn’t a financial hub.

    Fourth, all the money that use to flow into region is now gone. WAMU owns a lot of property in and around Seattle. Those rents and revenues now go to New York and not Seattle.

    Fifth, the accountants, consultants, law firms, etc. that supported WAMU are now without a large client.

    Sixth, the tax revenue gained from having WAMU in Seattle and Washington is now gone.

    I can go on and on, but you get the point. Putting even 500 new homes on the market due to WAMU’s failure would not be good for the housing market in Seattle.

  108. 108
    victorchai says:

    Thomas B. // Sep 27, 2008 at 12:17 pm

    The headquarter only has 3500 jobs. Let’s say it will cut 2000. How many of the 2k people really have to sell house? None of them can find a job?

    First, the 3,500 number is inaccurate. It’s closer to 5,000.

    Second, the jobs at headquarters are high paying executive, accounting, legal, etc. jobs. These are the people most able to buy homes in a tight credit market. Tellers and branch managers don’t make enough money to buy houses at current Seattle prices. Additionally, people that had the executive jobs have more disposable income than a branch manager, hence able to spend more, which means higher revenue from sales taxes.

    Third, some may choose to move to NY to continue their career in banking, but those that do stay will have a hard time finding a like job, paying the same pay since Seattle isn’t a financial hub.

    Fourth, all the money that use to flow into region is now gone. WAMU owns a lot of property in and around Seattle. Those rents and revenues now go to New York and not Seattle.

    Fifth, the accountants, consultants, law firms, etc. that supported WAMU are now without a large client.

    Sixth, the tax revenue gained from having WAMU in Seattle and Washington is now gone.

    I can go on and on, but you get the point. Putting even 500 new homes on the market due to WAMU’s failure would not be good for the housing market in Seattle.
    ——————————————————————————————————-
    Don’t wake them up Thomas…. let them keep dreaming….the pink pony…

  109. 109
    jonness says:

    Demersus:

    I could be wrong, but my interpretation is David Losh’s posts are not critiquing you.

    “I use only credit unions and I have accounts at 4 different ones, in different states.

    That’s my point. Saving that money and you refuse to help others.”

    By saving your money in a credit union and overseeing your own investing, you cut out the middle-man bankers whose intentions are against their own depositors. Why should you pay bank CEO’s to live like kings when you can keep that money for yourself?

    There are lot’s of newly emerging ways to make money, whether network consulting, internet marketing, etc. These are new models of business can survive without the need for gigantic monopolistic banks.

    Your choosing to live fiscally conservatively is a wise decision, and more people should aspire to live in a similar manner.

  110. 110
    Demersus says:

    Ok, ok, I think I see David’s point now and I apologize for jumping into defensive mode. It’s just that sometimes his writing leaves a lot of room for interpretation, but other times I find him to be very clear. I was trained to do technical writing, so I always read my work as if I’m not the one who wrote it, not the one with the inate understanding of it’s intent.

    I guess the thing that really threw me was his statement in #96, “I came at the right time”. I read that as him saying that he needed to straighten out my point of view for me. But, maybe that was his way of saying that he concures.

    Either way, sorry again for getting up-in-arms about it.

  111. 111
    david losh says:

    This blog is a great example of a small business. This guy quit a job that I understand was good. He is frugal, has savings, and tracks his expenses. It’s internet based from his home, again from what I understand.
    He’s spending money in what may be an irresponsible manner by providing us with this forum.
    Many people here talk about saving money or investing in 401Ks. Many more talk about employment figures for the region.
    When you dumb it down, the possibilities are endless. You have a computer, you are meeting millions of people, OK thousands, and if you turn out a good product you might make money.
    We are in a time of opportunity much different from any other recession.
    The exception I take is with responsibility.
    Investing in yourself, your community, or other people is irresponsible, it’s risky.
    I take exception to the idea that giving your money to a bank is responsible.
    Corn is today’s smart money. Put your money in corn, it’s going up every day, but I find putting money in corn irresponsible. It drives up the price of food.
    Oil, I made money in oil, biotech, gold, and other things that are less uplifting. I had a Merrill Lynch account for years.
    What I prefer is investing in people in my community.
    Now, this guy provided this forum, he’s been kicked around a lot today, but he did something. Good, bad, responsible, or irresponsible, he’s out there, taking the risk.
    Give him the credit.

  112. 112
    mikal says:

    David, are you drinking?

  113. 113
  114. 114
    Jillayne Schlicke says:

    bailout agreement “tentatively” reached.

    http://online.wsj.com/article/SB122257682963083173.html

  115. 115
    herman says:

    i hear that a disproportionate share of bankers and lawyers live on bainbridge.

  116. 116
    Buceri says:

    “why WM is such a big deal for seattle RE? Every body knows the jobs in branches are safe. The headquarter only has 3500 jobs. Let’s say it will cut 2000. How many of the 2k people really have to sell house? None of them can find a job?”

    Why in the world would JPM keep 1500 high paying downtown jobs?? Every downtown job is gone. Disappearing or relocated to NY.

    Yes, the teen wearing braces and a shirt 2 sizes too big around is neck, making $10/hour as a teller, will get to keep his job.

    But the domino effect, as expressed by victorchai, will be even bigger. I can see legal council, accounting, marketing; third party jobs loosing their biggest account.

    I am not sure how soon it will be, but everyone should be gone in 6 months…

  117. 117
    Ron says:

    Washington Mutual Inc. owns its portion of the 42-story high-rise tower it built in partnership with the Seattle Art Museum, or approximately 944,000 square feet of space, according to its annual report.

    Greg Johnson, president of real estate development and management firm Wright Runstad, thinks there would be strong interest among foreign and domestic institutional investors in the building should it be put on the block.

    “They would view it as a terrific opportunity at the right price,” Johnson said. “To own a really high-quality asset in a long-term, high-quality market like Seattle, with fabulous views, attractive architecture — that would compete very favorably with other downtown office buildings.”

    An acquisition of WaMu appeared increasingly likely as this edition went to press. The company was reportedly assessing its options, including raising more money or finding a buyer.

    Completed in 2006, the headquarters building — WaMu Center — is located in the 1300 block of Second Avenue. Washington Mutual officials were not immediately available for comment.

    The split ownership of the property is not likely to bother a potential buyer. Mixed-use ownership has become relatively common in recent years, said Johnson.

    More troublesome is setting a price on the property.

    The most recent office building sales in Seattle occurred before the economy soured. Boston-based Beacon Capital paid what brokers estimate was $450 per square foot for the Equity Office Properties portfolio of properties in downtown Seattle and Bellevue.

    That would put the value of WaMu Center at as high as $425 million, brokers estimate. At the time it was built, the estimated construction cost for the 42-story tower was $350 million.

  118. 118
    Jonny says:

    would make a nice building for condos.

  119. 119
    Ron says:

    Thats Just Washington Mutuals portion… The Building is bigger.

  120. 120
    Ron says:

    GOOD Write up.. Front Page Seattle times online

    The events of the past week leave a crater in the Puget Sound economy. It may well widen.

    Safeco, founded in 1923, was absorbed Monday into Liberty Mutual of Boston. The home-business-auto insurer was a victim of the equivalent of a financial drive-by shooting: fears about its portfolio, though unfounded, in the credit crisis, and the Wall Street addiction to mergers, helped along by rootless chief executives, highly compensated for selling off their firms.

    By Friday, the largest bank failure in U.S. history leveled Washington Mutual. The 119-year-old institution’s headquarters helps define the city’s skyline; its leaders helped precipitate the worst financial collapse since the Great Depression. Depositors will be protected as JPMorgan Chase takes over. The same can’t be said for its thousands of employees and Northwest shareholders who loyally supported the hometown thrift.

    Yet the danger to the dwindling number of Fortune 500 companies in the Northwest is not over. Whatever one calls this economic distress, it is putting companies under stress they haven’t seen in years — even decades — and shows no sign of letup. Two companies that must be on every local chamber of commerce’s worry list are Alaska Airlines and Weyerhaeuser.

    Alaska Airlines is eliminating 1,000 jobs starting in November. Ultimately, it may fall victim to the same misplaced dynamics of consolidation. High fuel costs and a litany of structural woes have hit nearly every airline save Southwest on the merger watch list.

    Then we have Weyerhaeuser, a company that literally built the Northwest economy from the forests up. It’s not in danger of being acquired. In the last year, it has sold off large divisions and announced that 1,000 headquarters jobs are being eliminated.

    Already sliced in half from its former dominant size, Weyerhaeuser is destined to become a Wall Street play called a real estate investment trust (REIT). It may be good for investors. Yet it will certainly mean a smaller engine in the regional economy.

    Regular readers of this column know I am obsessed with the importance of major headquarters companies. These are the ones with large, well-paid employment bases, where decisions of national and international reach are made, where talent and capital flow.

    These companies not only support a quiet universe of vendors, but they produce ranks of experienced executives that leave to start new firms. When the chief executive lives here, he or she can knock heads and write checks to make the kind of great community that will attract the best and brightest. At their best, these companies have deep roots of stewardship and philanthropy. I don’t know of a successful city without them.

    Loss of headquarters

    To be sure, Boeing moved its headquarters, but the heart of its business — building commercial airplanes — lives here. The loss of headquarters jobs was a small percentage of the well-paid work force that remains in the region.

    Boeing workers continue to be the top givers to United Way, in total dollars. The Chronicle of Philanthropy reported that in 2006, Washington Mutual employees pumped $50.5 million into various organizations; Weyerhaeuser employees gave $15.7 million.

    In the cases of Washington Mutual and Safeco, the damage will be severe. It includes the loss of paychecks, talented workers, giving to arts and charities, and power in world capital markets.

    Most cities lost their major financial headquarters in the 1980s and 1990s. Seattle, while losing the likes of Seafirst, happily preserved two significant players for years, but now even they are gone.

    Downtown office space

    For downtown Seattle, the loss of workers with disposable income and the vacating of vast tracts of office space will present a major challenge. Washington Mutual owns or leases 1.6 million square feet of space downtown — more than any other company.

    More than 3,500 workers report to WaMu jobs downtown. I know of no successful city without a healthy center-city downtown.

    But the real and potential fallout from Alaska Airlines and Weyerhaeuser is also great. For example, having a major airline hub is a big part of the revenue flowing into Seattle-Tacoma International Airport.

    And Weyerhaeuser, sawed down to a REIT from an integrated timber company: It’s difficult to see it reaching its ambitious promises of innovation when most revenue must pass directly to shareholders, rather than go to research and development.

    Another consequence of these losses is a body blow to the region’s enviable economic diversity. One-trick ponies don’t do well: Ask Houston in the 1980s or Phoenix now.

    A healthy mix of sectors ensures that at least some businesses will be prospering. Now Seattle, which has seen the pain that can come from over-dependence on aerospace in the 1970s and technology in the late 1990s, is more vulnerable.

    This turning point comes at an unsettling time, and not just with the sea changes in the capital markets. Part of Seattle’s genius has been reinvention. Like most U.S. cities, it lost iconic companies. Unlike them, it kept growing new ones. But now Microsoft, Starbucks and Amazon.com are maturing. And a cohort of growing firms has been snapped up by outside companies this year.

    We’re net losers in the critical game of mergers and acquisitions. For example, Getty Images and Pyramid Breweries were sold. While some operations will remain, the decision-makers will be based elsewhere. Tully’s Coffee sold off its wholesale business. Meanwhile, promising technology and biotech firms are being pinched by the credit crisis.

    Fortunately, Seattle and the Puget Sound area are blessed with so many assets and advantages. So many, indeed, that we might be tempted to be complacent about becoming a branch-office town. Or we might try to cleverly say we’ve transcended all that, thanks to technology, become a postmodern whatever.

    Don’t kid yourself.

    The world is not flat. More than ever, it’s sorting itself into big winners and big losers, and the key units of competition are metropolitan areas. Last week, we lost wealth that had taken decades to create. Last week is history. Going forward, the region will need to take stock of what it must do to compete in the street fight that is the world economy.

  121. 121
    Matthew says:

    But I thought our economy was different? I thought our job market was robust and would forever shield us from housing declines!?

    Has someone been hunting pink ponies???

  122. 122
    deejayoh says:

    When I lived in LA in the early 90’s, they lost a ton of HQ. Security Pacific, Crocker Bank, Arco, Unocal, Northrup Grumman, + some other aerospace I can’t remember all disappeared in the space of 5-10 years. That really prolonged the downturn there, IMO – and as a matter of fact things didn’t really seem to come back until the housing boom. Wonder what will happen down there now?

  123. 123
    wakeup says:

    WM close is the last hope for people here waiting for seattle RE to crash. Most likely they will be disappointed . Just pray.

  124. 124
    Robert. Martin says:

    As a previous senior administraive assistant for WaMu, I can honestly say that the company morale was low, the employees were arrogant, cruel, and incompetent. That’s why I quit after three months. I just wanted to blow my head off.

    Perhaps they will turn WaMu headquarters into low-income apartments units for the poor. Now that would be ironic! LOL

    You know what they say: “Pride comes before the fall.”

  125. 125
    Ron says:

    Wakeup- nice blogger name….now that might be something you might need to do.

    You notice in the Article the Writer Referred to Seattle Being a City, near the Beginning of the Article, Towards the End it was Switched TO TOWN..

    World Class Town?? MAYBE..Huum

  126. 126
    EconE says:

    WM closing is our last hope for affordable RE?

    LOL

    Plenty of toxic loans out there waiting to reset.

    Time is on OUR side.

  127. 127
    wakeup says:

    when Boeing headquarter moved to Chicago, anybody saw a housing crash in seattle? At the same time we had a .com bubble. I know you guys will never wake up. Assume you have been waiting for the bubble burst since this forum began in 2005, how many additional years are you going to wait? I know even if the housing crash 50%, people here will still wait for 80% crash. Keep dreaming.

  128. 128
    victorchai says:

    It’s not all about jobs Wake up…It’s demand and supply…

  129. 129
    b says:

    wakeup –

    you really should read a newspaper one of these days. here is a hint: the worldwide credit collapse and subsequent severe recession won’t magically miss Seattle and its precious Ballard shitboxes.

  130. 130
    Ron says:

    .com bust was just private investors Gambling with Actual Dollars.. I never saw much fallout from That Or Boeing Headquarters, personally…

    What you mean, You got yourself in a Expensive Mortgage the Last 3-4 years and now you want to justify your actions..you have found yourself overexended in Housing is about the Only Reason We get your type on this website.. IN FACT I CANT THINK OF ANY PEOPLE….Throwing out the remarks you haven’t… Or housing is what all your net worth is In..

    Now Your Probably going to Lie and throw out some Balony how you been in a Mortgage/House since 94..

    Didn’t you Know Nobody really Owns a House… ONLY THING THATS REAL IS CONTROL= Hopefully at a Reasonable Price.

  131. 131
    Ron says:

    THIS MESS WAS CREATED OUT OF BORROWED- DOLLARS… Let me get that straight to you… Borrowed Money is Leveraged many-many-many times over in the Financial World.. ITS THAT LEVERAGE THAT IS CREATING THE MESS..

    The mathmaticians in the Banking System thought there Math accounted for Human Behavior..

  132. 132
    Scotsman says:

    Uh, Wakeup- guess you missed it. The bubble has already burst. Seattle prices are down 10% or so and continuing to fall.

  133. 133
  134. 134
    jon says:

    http://mortgage.freedomblogging.com/2008/09/30/requiem-for-a-heavyweight/1880

    “According to the Fed’s Home Mortgage Disclosure Act database, WaMu nearly quadrupled its investment in high-risk subprime (and to a lesser extent Alt-A) loans after the housing boom ended.”

    In comment #3 of that post, the reporter is looking for help in how to sift through all the data he has from the Fed’s Home Mortgage Disclosure Act database. Maybe some private equity firm that blew through $7B would be interested in that for a lawsuit?

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