Posted on 09/21/2008 6:09:48 PM PDT by Ugot2Bkidding
Washington Mutual CEO Kerry Killinger stood before a Wall Street investors' conference last September and declared that his company — the company he had led since 1990 and built into the nation's sixth-largest bank and one of its biggest home lenders — not only would survive the collapse of the mortgage bubble but would prosper.
Despite what Killinger called "a near-perfect storm" in the U.S. housing market, he said, "We have appropriate capital and sources of liquidity (i.e., cash) to weather the storm."
Killinger declared that WaMu would add billions in new mortgages to its books, in a bid to gain market share. "This, frankly, may be one of the best times I have ever seen for taking on new loans into our portfolio," he said, especially "as weaker competitors close down or finally fess up that they need to adjust capacity to current reality."
Just over a year later, Killinger's dream of turning WaMu into a coast-to-coast Wal-Mart of household finance has crumbled.
The CEO himself is gone, ousted by the board earlier this month. And even after bouncing 42 percent Friday, the stock has lost 88 percent of its value since his speech, as traders question whether the Seattle-based thrift can access enough cash to stay in business. The company now is seeking to sell all or part of itself to the highest bidder.
How did things come to this? How could WaMu, which at its peak in mid-2006 was valued by the stock market at nearly $44 billion (it's worth about $5 billion now), tumble so far so fast?
The answer, stripped of the lingo of high finance, is simple: WaMu loaned too much money to people who couldn't afford to pay it back.
(Excerpt) Read more at seattletimes.nwsource.com ...
They may have resources to weather the storm, but not mine. We moved away from them last Monday.
I still have my savings there - will be pulling them out based on the troubling indicators in this article.
We are right behind you..with saving, checkings etc.
I think sooner would be better than later.
If WAMU fails that will bankrupt FDIC...of FDIC will be bailed out by the Feds, but there may be a few days of panic and confusion that may render your savings "inaccessible" for a few days...which could lead to further panic...which could........
I get a little perverse pleasure from this whole thing. I wandered in there in ‘05, looking for a small loan secured with a CD, the safest possible loan a bank can make since they’re holding the collateral, and they sneered at me. Meanwhile they were busily handing out money to people with no Social Security numbers.
Serves ‘em right.
For what it’s worth;
To Our Valued Customers:
September 18, 2008
As WaMu’s new chief executive officer, I am writing to discuss the extraordinary economic environment for all banks in the United States and why you can count on us to continue to serve you safely and soundly.
When I was recently approached about the opportunity to lead this great company, I did my homework to satisfy myself that WaMu has the capital, the liquidity, and the business plan to serve your needs and protect your money through these challenging times.
Let me explain why I felt good about joining WaMu.
All financial institutions have been affected by the turmoil in the mortgage and financial markets, but WaMu is very different from the investment banks, such as Bear Stearns, Lehman Brothers and Merrill Lynch, that you may have read about. Those firms have very different and less stable sources of funding than we do. WaMu’s business is funded largely through the deposits that customers like you put with us. We also borrow billions of dollars from the Federal Home Loan Banks system. Most importantly, your deposits are insured to the limits established by the Federal Deposit Insurance Corporation (FDIC). (WaMu partners at your local WaMu store are happy to work with you to maximize your FDIC insurance coverage.)
Capital ratios describe the financial strength of a bank. Our ratios continue to be well in excess of the levels that government regulators require of “well capitalized” institutions. We also have an ample supply of funds on hand to meet your needs and the needs of our other customers and our day-to-day operations.
These strengths, combined with our tradition of superior products and services, are why we continue to welcome new customers every day.
I came to WaMu because I think it is a great bank with a strong franchise and a solid financial position. We take very seriously our role as the stewards of your hard-earned money. I want to personally thank you for your loyalty and the opportunity to serve your needs.
Sincerely,
Alan Fishman
Chief Executive Officer
I have a WaMu credit card...the balance is just a few hundred and will be paid off next month, but I do wonder what will happen to it.
Will I get a letter from Chase or Wells Fargo saying “welcome, we have taken over your Washington Mutual credit card account..?”
Another failed CEO who walks away with lined pockets....
“Will I get a letter from Chase or Wells Fargo saying “welcome, we have taken over your Washington Mutual credit card account..?””
Wouldn’t bother me especially if they drop the interest rate.
Don’t be surprised if the new FDIC bank called Goldman sachs gets the task to sweep up Wamu.
...something like that....that’s part of the credit swap game...
I know people that are pulling their money out. But I'm staying put for now. Just opened a new WAMU CD couple weeks ago. Also worried about a bankrupt FDIC. How inaccessible would our WAMU savings be? Even a few weeks wouldn't be bad, but a longer time would be scary.
Not only did the CEO lined his pockets even though the Wamu employees have a class action suit against the company since December 2007.
http://findarticles.com/p/articles/mi_m0EIN/is_2007_Dec_10/ai_n21149745
FDIC has never run out of funds before...
We are indeed treading in uncharted territory.
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