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View Full Version : Economics WaMu is next, downgraded to junk yesterday


banyon
09-17-2008, 07:06 PM
Washington Mutual is for sale: sources
Wed Sep 17, 2008 7:36pm EDT

NEW YORK (Reuters) - Washington Mutual Inc (WM.N: Quote, Profile, Research, Stock Buzz), the giant U.S. savings and loan beleaguered by mortgage losses, has put itself up for sale, sources familiar with the matter said on Wednesday.

The Seattle-based thrift has hired Goldman Sachs & Co and Morgan Stanley to run an auction and potential suitors include Citigroup Inc (C.N: Quote, Profile, Research, Stock Buzz), HSBC Holdings Plc (HSBA.L: Quote, Profile, Research, Stock Buzz), JPMorgan Chase & Co (JPM.N: Quote, Profile, Research, Stock Buzz) and Wells Fargo & Co (WFC.N: Quote, Profile, Research, Stock Buzz), one source said.

A sale is neither imminent nor guaranteed and the thrift is exploring other options, a second source said.

Representatives of Washington Mutual, TPG and the other banks declined to comment or could not immediately be reached.

Analysts have long expected the credit crisis would force weaker lenders into the arms of stronger rivals. A sale of Washington Mutual, the largest U.S. savings and loan, had been widely expected.

"Everything is for sale in the banking world these days," said Ralph Cole, a portfolio manager at Ferguson, Wellman Capital Management in Portland, Oregon. "Washington Mutual should be shopping itself. You'd have to do due diligence on the balance sheet, but people understand the value of a branch network and deposit funding."

On Monday, Bank of America Corp (BAC.N: Quote, Profile, Research, Stock Buzz) agreed to pay $50 billion for Merrill Lynch & Co Inc (MER.N: Quote, Profile, Research, Stock Buzz), which has lost $19.2 billion in the last four quarters.

Wachovia Corp (WB.N: Quote, Profile, Research, Stock Buzz), which lost $9.11 billion in the second quarter, approached Morgan Stanley (MS.N: Quote, Profile, Research, Stock Buzz) about a merger on Wednesday, according to published reports.

Washington Mutual overcame a critical hurdle to a merger earlier on Wednesday when its largest investor, David Bonderman's private equity firm, TPG Inc, agreed to let the thrift raise capital, even if TPG's holdings were diluted.

Washington Mutual shares rose 20 cents to $2.21 in after- hours trading after falling 31 cents to $2.01 during regular trading.

The shares have fallen 94 percent in the last year on concern about mortgage losses and that, in a worst case scenario, it might face the same fate as mortgage lender IndyMac Bancorp Inc (IDMC.PK: Quote, Profile, Research, Stock Buzz), which regulators seized in July.

VERY NEW CEO

Washington Mutual has lost $6.3 billion in the last three quarters and was downgraded to junk status by Moody's Investors Service and Standard & Poor's.

The thrift has projected $19 billion of mortgage losses through 2011. Last week, Washington Mutual said it expected to set aside $4.5 billion for credit losses in the third quarter, down from the second quarter's $5.9 billion, and that it expected to remain well-capitalized.

A possible sale surfaced just nine days after Washington Mutual named Alan Fishman chief executive, replacing the ousted Kerry Killinger. Fishman used to run Independence Community Bank Corp, a Brooklyn, New York lender acquired in 2006 by Sovereign Bancorp Inc (SOV.N: Quote, Profile, Research, Stock Buzz).

Analysts have said the thrift might not find a buyer until there is more clarity about its mortgage losses.

"You would have to deal with the accounting, you would have to mark everything to market," said Albert Yu, a portfolio manager at Clover Capital Management Inc in Rochester, New York.

JPMorgan Chief Executive Jamie Dimon is considered the most likely acquirer, given his goal of expanding in retail banking in the western United States. Washington Mutual ended June with $309.7 billion of assets and 2,239 branches.

TPG agreed to waive a provision requiring Washington Mutual to make up any dilution if the thrift raised more than $500 million of equity for less than $8.75 per share, or sold itself for less than that price.

The private equity firm earlier this year acquired a $2 billion stake in Washington Mutual at about $8.75 per share, as part of a $7 billion capital raising by the thrift.

Regulators did not ask TPG to waive the provision, but the firm did so because it could have dissuaded a bidder, a source said.

(Additional reporting by Jessica Hall in Philadelphia, Elinor Comlay, Juan Lagorio and Dan Wilchins in New York; Editing by Richard Chang and Andre Grenon)


http://www.reuters.com/article/ousiv/idUSN1720034220080917?pageNumber=3&virtualBrandChannel=0

banyon
09-17-2008, 07:07 PM
said Monday’s action by Standard & Poor’s, which lowered its rating for the Seattle thrift to “junk,” is based on market conditions overall, not specifically on the bank’s financial condition.

http://www.bizjournals.com/portland/stories/2008/09/15/daily15.html

Bootlegged
09-17-2008, 07:07 PM
I predict a reversal in the financials tomorrow as the naked short selling rule goes into effect.

bango
09-17-2008, 07:10 PM
I am glad that I no longer work for them. I am even more glad that I do not have anything invested in them.

SBK
09-17-2008, 07:13 PM
Why sell? Just have the gobment bail you out....

2bikemike
09-17-2008, 07:15 PM
I have been watching WAMU the last few weeks. In the plus column they had large amounts of deposits that helped to strengthen their financials. Of course that did not out weigh there horrific mortgage mess.

My daughter works for another bank and has been really busy opening accounts from frightened WAMU customers. So much for the strength of their deposits.

Cave Johnson
09-17-2008, 07:34 PM
I have been watching WAMU the last few weeks. In the plus column they had large amounts of deposits that helped to strengthen their financials. Of course that did not out weigh there horrific mortgage mess.

My daughter works for another bank and has been really busy opening accounts from frightened WAMU customers. So much for the strength of their deposits.

I have an account with WaMu and am opening another tonight.

***SPRAYER
09-17-2008, 07:48 PM
When does the FDIC run out of cash? Or are we picking up the tab for this, too?

RJ
09-17-2008, 07:50 PM
Well, this explains all the concessions I got when I called them a few months ago to cancel an account. They sure were accommodating. Actually, in our current economic environment, I'd advise everyone to call their CC companies and ask to cancel their accounts. You might be surprised what you get.

RJ
09-17-2008, 07:54 PM
When does the FDIC run out of cash? Or are we picking up the tab for this, too?



Hell no! The Chinese are picking up the tab!

And as long as we have ink and paper we'll never run out of cash.

Meanwhile, down at the mint......

"Overtime tonight, boys, we're bailing out another bank".

***SPRAYER
09-17-2008, 07:56 PM
Hell no! The Chinese are picking up the tab!




Wait until they find out.

RJ
09-17-2008, 08:05 PM
Wait until they find out.


Yeah, that's the funny part. Just wait 'til they open their mail.

"Hey, what's this $80b charge to AIG???? Who ok'd this?"

It's gonna get zany.

alnorth
09-17-2008, 08:22 PM
I dont believe Wamu will survive. Maybe they would have if they were allowed to quietly struggle, but now that they are the huge national headline story, a bunch of uneducated morons with accounts well under the FDIC limits are going to make a run on the bank. Once that really starts, there is not a bank on the planet that can withstand it.

RJ
09-17-2008, 08:28 PM
I dont believe Wamu will survive. Maybe they would have if they were allowed to quietly struggle, but now that they are the huge national headline story, a bunch of uneducated morons with accounts well under the FDIC limits are going to make a run on the bank. Once that really starts, there is not a bank on the planet that can withstand it.


I don't think so. I think the people you're talking about won't even know it happened until it's over.

Mr. Laz
09-17-2008, 08:30 PM
:eek:

getting scary

Soupnazi
09-17-2008, 08:34 PM
Whatever your political beliefs are, the American populace needs to be united behind an effort to get Washington to start breaking up the banking conglomerates. This whole mess could've been averted if congress had not allowed every single proposed consolidation to go through. Now we're left with an even smaller number of people controlling the entire banking system.

Both parties are at fault, both parties have been all for every single takeover effort. The only one common people gave a crap about is the Anheuser Busch sale, for god's sake. The feds need to come in and break up entities like AIG, Bank of America, et al, to make any type of difference in the future. It's no surprise to me that the number of commercial banks and investment banks have been drastically reduced during the same time that this subprime debacle has taken place.

alnorth
09-17-2008, 08:37 PM
Whatever your political beliefs are, the American populace needs to be united behind an effort to get Washington to start breaking up the banking conglomerates. This whole mess could've been averted if congress had not allowed every single proposed consolidation to go through. Now we're left with an even smaller number of people controlling the entire banking system.

Both parties are at fault, both parties have been all for every single takeover effort. The only one common people gave a crap about is the Anheuser Busch sale, for god's sake. The feds need to come in and break up entities like AIG, Bank of America, et al, to make any type of difference in the future. It's no surprise to me that the number of commercial banks and investment banks have been drastically reduced during the same time that this subprime debacle has taken place.

The size of the banks is completely irrelevant to this crisis. In fact, its quite the opposite, the very largest banks not run by morons have a better chance of survival. Most of the world thinks the US has too many banks, and we are going to see a lot of merging.

Mr. Laz
09-17-2008, 08:38 PM
i'm sure glad my credit card stuff was purchased by WAMU last year. :shake:

Soupnazi
09-17-2008, 08:46 PM
The size of the banks is completely irrelevant to this crisis. In fact, its quite the opposite, the very largest banks not run by morons have a better chance of survival. Most of the world thinks the US has too many banks, and we are going to see a lot of merging.

I respectfully disagree. The largest banks are having far more trouble with this scenario than the regionals. The consolidating has created an environment of group-think on wall street that allowed most of the investment banking community to sell these CDO's to a smaller group of investors (mega banks) with much larger chunks of capital to purchase them. The net effect is that they all behaved very similarly.

Simply Red
09-17-2008, 08:47 PM
talk about poor marketing.

***SPRAYER
09-17-2008, 09:28 PM
Smith Barney has outsourced it's signature verification dept. to Bangalore India.

I shit you not

RJ
09-17-2008, 10:00 PM
Smith Barney has outsourced it's signature verification dept. to Bangalore India.

I shit you not


Wow. That's really funny in a not at all funny sort of way.

That's the kind of stuff you just can't make up.

Cave Johnson
09-17-2008, 11:04 PM
I dont believe Wamu will survive. Maybe they would have if they were allowed to quietly struggle, but now that they are the huge national headline story, a bunch of uneducated morons with accounts well under the FDIC limits are going to make a run on the bank. Once that really starts, there is not a bank on the planet that can withstand it.

What about us educated folk who know the FDIC limit but understand the potential hassles of dealing with an insolvent bank?

http://www.newsday.com/business/la-fi-indymac17-2008jul17,0,6292550.story

alnorth
09-17-2008, 11:24 PM
A few days? (usually much less) Your joking, right? Your going to change accounts to avoid, at the worst case scenario a few days but more likely 1-2 days?

Bootlegged
09-18-2008, 08:58 AM
See if this rally holds.

Cave Johnson
09-18-2008, 12:44 PM
A few days? (usually much less) Your joking, right? Your going to change accounts to avoid, at the worst case scenario a few days but more likely 1-2 days?

I don't have to justify my decision to anyone. That said, I need to open a business account and would rather do so with a solvent bank that will be a going concern.

And their customer service blows. They cancelled my debit card without telling me last year and took 3-4 weeks to issue another.

http://www.washingtonmutualsucks.org/

http://www.washingtonmutualsucks.com/

Bootlegged
09-18-2008, 02:33 PM
up 400

alpha_omega
09-18-2008, 02:46 PM
They might save some $$$ if they would quit sending me 18 pieces of junk mail every f***ing day!

J Diddy
09-18-2008, 02:48 PM
They might save some $$$ if they would quit sending me 18 pieces of junk mail every f***ing day!



QFT

ROFL

Stewie
09-18-2008, 04:48 PM
WaMu holds my mortgage. I wonder if my automatic payment will be changed to Ben Bernanke's account or if he'll stop by my house with a tin cup looking for payment.

The big banks aren't in trouble? Try this on for size:


The size of the notional value of the mountain of all derivatives of which 95% are OTC Derivatives: $1,144,000,000,000,000. That is One Quadrillion PLUS. (Source: The Bank for International settlements). It's nothing but total insanity.

DaneMcCloud
09-18-2008, 05:34 PM
7.13.2008:

I was told tonight on very good authority that Wachovia, WaMu and Lehman are the next line to go.

I hope my sources were wrong...

http://chiefsplanet.com/BB/showpost.php?p=4845364&postcount=15