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  #1  
Old September 17th, 2008, 03:36 PM
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Question Washington Mutual (WaMu) next to tank?

Looks like Washington Mutual (WaMu) is about to tank next. Not sure, but read on and decide for yourself.

Quote:
Why WaMu Has Hung On Longer Than Lehman Or Bear

NEW YORK -(Dow Jones)- If Washington Mutual Inc. (WM) were a troubled investment bank instead of a large and loss-riddled West Coast thrift, it would have closed its doors months ago.
After all, Lehman Brothers Holdings Inc. (LEH) and Bear Stearns Cos. slid from viable to insolvent in a matter of days as their stock prices plunged. Merrill Lynch & Co. (MER) had to move quickly last weekend, selling itself to Bank of America Corp. (BAC) to prevent a similar fate.
Washington Mutual's stock, in comparison, has sat at basement-level prices for months even as the thrift continues to do business, report earnings, and even give indications that things may be getting better. On Wednesday afternoon, the stock sold for $2.14, down 7.8%, a decline of 65% so far this year.
WaMu could be bought any time. JPMorgan Chase & Co. (JPM) continues to headline the list of suitors.
But WaMu's ability so far to stay independent despite its vanishing stock price reflects its ability to tap funds - including, most significantly, retail deposits - that the disappearing securities firms didn't have access to.
Lehman's and Bear Stearns' days were numbered once the investment banks' shares began to tank amid growing market chatter that had them melting down quickly.
By contrast, the slowly unfolding troubles at WaMu - which ousted its long- time Chief Executive Kerry Killinger only 10 days ago, after months of seeing its shares slide - show just how resilient traditional banks can be when markets go south.
Investors now realize that an investment bank's financial health is tied directly to how many active customers and clients that bank has. But investment- banking customers' accounts aren't insured by the government - and when Lehman's, Bear's and even Merrill's trading partners started heading for the exits, more quickly followed to avoid losing their assets.
Customers at retail banks like WaMu, however, aren't so quick to head for the door, as the government's Federal Deposit Insurance Corp. insures all deposits up to $100,000. For most bank customers, therefore, a traditional bank failure is more inconvenience than catastrophe.
"The average retail deposit" - from, say, a checking- or savings-account customer - "is much less sensitive" to a firm becoming uncreditworthy by ratings agencies' standards, says Jaime Peters, an analyst atMorningstar Inc. (MORN) While investment-banking customers must judge how likely a firm is to fail, and therefore pay close attention when ratings agencies like Standard & Poors or Moody's Investors Service downgrade a firm's creditworthiness, retail banking customers are far more insulated.
"While Lehamn was losing customers left and right" after being downgraded, says Peters, "any downgrade for WaMu doesn't normally cost them much in terms of customers."
Washington Mutual has seen a modest loss in deposits in the last few months - from $149.5 billion at the end of June to $143 billion at the end of August - but the company said in a statement last week that its level of retail deposits is "essentially unchanged from year-end 2007."
Adding slack to WaMu's tight leash is the fact that WaMu has financing agreements in place that give it access to "approximately $50 billion of liquidity from reliable funding sources," the statement said.
What's more, that funding is more stable than some firms' as most of the debt's terms don't change if and when WaMu is downgraded - which it was last week by both Moody's and S&P.
WaMu pointed out that the downgrades had little impact on its current financial condition - in stark contrast to the crisis facing American International Group Inc. (AIG), which was forced to post billions in collateral as soon as it faced a ratings downgrade.
WaMu's unsecured debt isn't "subject to ratings-based financial covenants that would result in acceleration or early maturity events or defaults," the company said. "The company does not expect the impact of S&P's actions on borrowings, collateral or margin requirements to be material."
But WaMu must nonetheless take stock of its brand's reputation - especially when the daily drumbeat of financial news continues to focus much attention on WaMu's future, and the fact that its shares trade at levels normally assigned to firms at risk of failing.
Should retail customers begin steadily heading for the exits, WaMu will find it harder to sit tight.
-By Marshall Eckblad, Dow Jones Newswires; 201-938-4306; marshall.eckblad@ dowjones.com



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  #2  
Old September 17th, 2008, 03:39 PM
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Re: Washington Mutual (WaMu) next to tank?

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Originally Posted by echarcha View Post
Looks like Washington Mutual (WaMu) is about to tank next. Not sure, but read on and decide for yourself.
very likely.
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Old September 17th, 2008, 04:03 PM
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Re: Washington Mutual (WaMu) next to tank?

i have a credit card from WaMu... what should I do? use it to the max or dont bother?...
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Old September 17th, 2008, 08:44 PM
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Re: Washington Mutual (WaMu) next to tank?

WACHOVIA is also facing major losses. I just got an email from my friend he was just recently laid off from his job at wachovia along with the VP. Project cut downs!
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Old September 17th, 2008, 08:50 PM
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Re: Washington Mutual (WaMu) next to tank?

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Originally Posted by sarv_shaktimaan View Post
i have a credit card from WaMu... what should I do? use it to the max or dont bother?...
Don't default. I am not sure of exact rules, but Feds can be worse than WaMu. WaMu may hurt your credit history, at the most. But Feds have keys to big house.

Last edited by Ravi; September 17th, 2008 at 08:54 PM.
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Old September 17th, 2008, 10:03 PM
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Re: Washington Mutual (WaMu) next to tank?

Quote:
Originally Posted by sarv_shaktimaan View Post
i have a credit card from WaMu... what should I do? use it to the max or dont bother?...
Baba shakti... the Feds can put you in the big house with big Bubba You dont want that

Quote:
Originally Posted by iamsecular View Post
WACHOVIA is also facing major losses. I just got an email from my friend he was just recently laid off from his job at wachovia along with the VP. Project cut downs!
Was your friend secular too? If yes, that friend needs to protest against layoffs as being non-secular
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Old September 17th, 2008, 10:11 PM
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Re: Washington Mutual (WaMu) next to tank?

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Originally Posted by echarcha View Post
Baba shakti... the Feds can put you in the big house with big Bubba You dont want that



Was your friend secular too? If yes, that friend needs to protest against layoffs as being non-secular
He is a chinese. Do u have a problem with that? Be a little braod and open minded.
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Old September 17th, 2008, 10:18 PM
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Re: Washington Mutual (WaMu) next to tank?

Quote:
Originally Posted by iamsecular View Post
He is a chinese. Do u have a problem with that? Be a little braod and open minded.
of course mr.secular you are rite. I'll try to be more broad minded and will try to get cha pai to get broad minded too happy
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