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How long?

david_mcmanusdavid_mcmanus
edited January 2008 in The Economy
before this puppy is actually worthless?

Rah rah WAMU!!! Rah rah WAMU!!! Rah rah WAMU!!! Rah rah WAMU!!!

http://finance.yahoo.com/q?s=wm

Currently down 13% at 7:46AM on 1/9/08. Got puts?!?

Comments

  • casey1167casey1167
    WaMu is too big to fail. Mr. McManus, you obviously are new to this site, and do not realize anything as big as WaMu is too big to be worthless.

    Thank you.
    (Please disregard anything I have said about CFC in the past related to this fundamental truth.)
  • SunTzuSunTzu
    WaMu still have a few tricks in the bag before it goes, not that it's impossible for it to fail, but it could still layoff a few thousands more of people and sell a few branches. Unlike CFC it can borrow directly from the Fed which CFC has to rely on Federal Home Loan Bank. Wamu could be taken over by private equity or some other bank.....
  • casey1167casey1167
    SunTzu, you are totally correct. The only wild card in all of this is how many loans WM might have to buy back that are worthless. All it would take is some judge somewhere to say there was fraud in the loan process, and many loan originators would toast.
  • jillaynejillayne
    Buried in yesterday's business news was this story:
    Washington Mutual altered employment agreements with Chief Executive Officer Kerry Killinger and Chief Operating Officer Stephen Rotella governing what they'll be paid if they leave or if the lender changes hands.

    The new terms change the definition used to calculate termination pay and add a six-month delay under some circumstances, the Seattle-based company said in a regulatory filing Monday.

    WaMu also changed its agreements with Chief Financial Officer Thomas Casey, James Corcoran, president of the retail bank, and all other executive officers giving them "certain payments and benefits" if the lender is sold.

    WaMu shares have dropped 70 percent in the past 12 months, giving it a market value of $11.7 billion.

    http://seattletimes.nwsource.com/html/b ... efs08.html
  • Lake Hills RenterLake Hills Renter
    My landlord works for WaMu. I hope (for my own sake) he keeps his job. Fortunately, he's not in the mortgage area, but still... :shock:
  • financefinance
    SunTzu - You are incorrect! Countrywide can borrow from the FED (Atlanta FED) and has almost maxed out the amount they can borrow, there was even a huge article about it and WaMu borrowing rates in the WSJ several weeks ago.
  • casey1167casey1167
    Finance - Sir, the problem is, little people like me do not have spread sheets big enough to really understand how CFC finances it's self. I read their financial statements, and notes, and at the end I was lost as to were the money was going to come from in the future, although it was evident were is had come from in the past. Everything I have read points to them being maxed out in all areas, and all the collateral has not only been spoken for, but spoken for more than once. I don't think people want to lend if thier third down on the subordinated issue....
  • TJ_98370TJ_98370
    ..
    An article dated 26 Nov 2007:

    Sen. Schumer questions Countrywide borrowing

    .....In a letter to the regulator of the Federal Home Loan Bank system, Sen. Charles Schumer said Countrywide, the largest U.S. mortgage lender, may be abusing the program.

    At the end of September, Countrywide had borrowed $51.1 billion from the Federal Home Loan Bank system -- a government-sponsored program.

    "Countrywide is treating the Federal Home Loan Bank system like its personal ATM," Schumer, a New York Democrat who heads the housing panel of the Senate Banking Committee, said in the letter. "At a time when Countrywide's mortgage portfolio is deteriorating drastically, FHLB's exposure to Countrywide poses an unreasonable risk."......

    While the article is dated (August 2007) I found it helpful in understanding CFC's situation

    Why Countrywide Is In Trouble

    What is the problem at Countrywide?

    "The country's largest mortgage lender by volume has lost access to some sources of the money it needs to make home loans. The main problem so far is in the market for commercial paper, where companies borrow money for periods from one day to about three months. As of June 30, Countrywide relied on commercial paper for about $13 billion in financing, which it used to make loans that it would then turn around and sell to government-sponsored mortgage companies such as Fannie Mae and Freddie Mac or to private investors. In the past year, Countrywide had made an average of about $41 billion in loans every month, most of which it sells directly to Fannie Mae and Freddie Mac."


    How is Countrywide different from other troubled mortgage banks in the headlines?

    "Many lenders that have closed or filed for bankruptcy protection in the past several months have been mortgage banks, which borrow short-term in credit markets, lend to home buyers, then sell the loans to Wall Street banks or keep them as investments. They aren't banks in the usual sense and don't take deposits."

    "Countrywide, by contrast, is a savings and loan holding company that includes a thrift unit, Countrywide Bank FSB, and mortgage bank unit, Countrywide Home Loans. That gives it more ways to borrow money than would be available to a mortgage bank alone. The thrift takes deposits, can borrow from the Federal Reserve and Federal Home Loan Bank and has short-term financing agreements with private banks."
    ..
  • deejayohdeejayoh
    finance wrote:
    SunTzu - You are incorrect! Countrywide can borrow from the FED (Atlanta FED) and has almost maxed out the amount they can borrow, there was even a huge article about it and WaMu borrowing rates in the WSJ several weeks ago.

    Finance, once again you astound with your knowledge of banking. Wamu is member of the federal reserve system. Countrywide is not. As SunTzu correctly stated - they can borrow from the FHLB - which is NOT the fed. It is a GSE that loans to mortgage lenders.

    http://minneapolisfed.org/pubs/fedgaz/00-10/banking.cfm
  • TJ_98370TJ_98370
    .
    Perhaps some confusion stems from the fact that Countrywide Financial Corp has a banking segment and a mortgage banking segment. The bank, Countrywide Bank FSB, takes deposits and can borrow from the Federal Reserve and Federal Home Loan Bank. Apparently the mortgage bank, Countrywide Home Loans, cannot borrow from the Federal Reserve Bank.


    Mozilo Interview

    ....MOZILO: Well, we have a bank. And the bank can use the discount window. The situation with Countrywide, Susie, is that the bank has access -- the bank is highly profitable bank. It has been a great bank. It's well capitalized, has access to the window, but the assets, much of the assets that we have are not in the bank. They are in the mortgage bank that doesn't have access to the window. So we are trying to continue to restructure and reorganize Countrywide so that the entirety of Countrywide has access to the Fed. So we have -- so we have liquidity....

    Federal Reserve Board Discount Rate / Discount Window
    .
  • deejayohdeejayoh
    TJ - thanks for the clarification. The story to which finance was referring was about countrywide leveraging the Atlanta FHLB.

    http://www.mortgagenewsdaily.com/112620 ... chumer.asp

    They've borrrowed $51B from FHLB. doubt they even had time to talk with the Fed!

    I saw the piece about them trying to move their assets to the banking side a while ago - it seems that in their race to outrun bankruptcy they haven't managed to make the transition
  • david_mcmanusdavid_mcmanus
    Yay, 2 bill in losses!

    Everything is fine, though, move along, nothing to see here!

    http://seattletimes.nwsource.com/html/businesstechnology/2004130918_webwamu17.html
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