December 10, 2007

FLASH: Right on schedule, toxic-loan king WaMu melts down, on verge of failure, announces massive write-off, office closures and layoffs



HP'ers knew this toxic lender was on its way to insolvency for some time, along with Countrywide, IndyMac, First Fed and many more. They called them "liar's loans" for a reason folks. The mortgage fraud self-enrichment paper promoted and endorsed by the on-their-way-to-jail bank execs at WaMu and more just simply ain't gettin' paid back. And now they and their shareholders, near-junk bond holders and account holders will pay the price.

Memo to WaMu account holders and bond holders - GET YOUR MONEY OUT OF THIS BANK AS FAST AS YOU CAN. WAMU IS THE US's NORTHERN ROCK. And we're still just getting started.

(yes, I'm still short WaMu via July 08 puts. I don't see how it survives)

Mortgage Crisis Forces Big Cuts at WaMu - Mortgage Problems Force WaMu to Close Offices, Slash Over 3,100 Jobs and Drop Subprime Loans

Washington Mutual Inc., the nation's largest savings and loan, said Monday problems in the mortgage and credit markets are forcing it to close offices, slash over 3,100 jobs, and set aside far more than expected for loan losses in its fourth quarter. The company also said it was slashing its dividend 73 percent.

53 comments:

keith said...

x
x
x

Know your FDIC limits everyone

http://www.fdic.gov/deposit/deposits/insuringdeposits/

Anonymous said...

There has been talk lately of the troubles of savings and loan company Washington Mutual. People have been using the B-word a lot: Bankruptcy. Can Washington Mutual really tank and go bankrupt? This afternoon, shares of Washington Mutual aka WaMu were down 16.7 percent, going from $24.23 to $20.19 after they announced in it’s annual investor presentation that they had underestimated future credit losses. These issues seem to have spawned from investigations on their mortgage issuing practices. Washington Mutual has been maimed by mortgage delinquencies and defaults, particularly from subprime loans offered to customer with poor credit history. So how bad is it really? Let me put this a bit more in perspective: Shares of WaMu have fallen a stunning 51.2% since June 21st before the subprime ruckus hit, and 43.7% over the past month. Banking with WaMu has me feeling a bit apprehensive. I love you FDIC!

http://www.sighborg.com/washington-mutual-in-trouble/

Anonymous said...

Bye Bye, Wa Mu.

You deserve everything that is coming to you...

DUCK & Cover....

Sick and Dying America

Malcolm said...

Keith:

While looking at the yahoo finance page for WaMu, I started looking at their major holders.

That got me curious, because I kept seeing the same names popping up as owners of all of these dog stocks.

For example:

Capital Research And Management Company.

These are some of their holdings as of 9/30/07

WaMu $4.5 billion
Citi $10.7 Billion
CFC $0.91 Billion
MTG $0.32 Billion
AIG $5.04 billion

Total hanging in the wind: $21.576 Billion

Have you ever done the math on who gets burned when the fire goes up the next rung on the ladder?

Anonymous said...

On a related note the Mortgage Lender Implode-o-meter is celebrating it's 200th implosion today. Hurry, it won't stay at 200 for long:

http://ml-implode.com/

Anonymous said...

HELLLLLOOOOOOOOOOOOOOOOOOOOO!!!!!!!!!!!!!!!!!!!!!!!!!!!

Who's been saying "WaMu is a $2 stock waiting to happen"?????

Well, guess what's coming before long?????

Why? Because how many folks in WaMu's pay option loan products are "paying the minimum", soon to hit the ceiling on the deferred balance and thereby forced into a higher monthly payment? Says here this all comes RIGHT AFTER the current CEO gets kicked out.

pension fund manager said...

People ridiculed us when we said there would be bank failures. They laughed when we said Toll, CFC, and WAMU were going down. Keith, people should move all their pension money into guaranteed accounts, like yesterday. Their pension fund managers can't be trusted. I should know.

Anonymous said...

If banks start failing FDIC won't have enough money to cover all the losses, buy US Treasuries instead.

Anonymous said...

Can anyone recommend any alternatives to Washington Mutual???

Ceo of housin panic said...

I just bought 10000 shares of wamu today.This companies balance sheet is tits.The stock should be tradeing at 40 based on forward earinings estimates.Get some balls and buy some stock minions.

Anonymous said...

No! This can't be happening, this is the U...S..OF...Freaking A! We are a nation of laws!

Anonymous said...

bank of america freezing up mutual funds and not allowing redemptions?????

what is this? could B o A be next?

k.w. - southern ca. said...

Keep in mind it is not just subprime borrowers, but the entire mortgage sector that has resulted in this national problem.

Some in the higher mortgage tiers (Alt-A, "AAA") also bought into loans beyond their means, so the problem with foreclosures will come in waves - into higher income brackets as well.

As more wealthy individuals get hit with the mortgage crisis, we'll begin to see just how far reaching this problem will be across banking institutions.

your dream come true said...

WaMu =

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A-merican
M-ortgage
U-nit

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3-Bedroom, 2-bath
Now Only $689,000 w/free Hot Tub!

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Purchase this unique home in the next week and receive $10,000 CASH at closing! This New Home purchase will be your best investment ever!

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Shakster said...

OH Crap! I got $49.58 in a checking account over there.You know I really did like them for checking ,and savings service.Going with a local Credit Union now.:-( Credit Union is a good one Though.

We All Freaking Doomed said...

I closed my account at WaMu a week ago. The clerk had to call over the manager for this reason. When he asked why I was closing my account I told him that I was concerned about WaMu's real estate loan exposure.

He tried to offer reasons why WaMu would be fine, and that my account was FDIC insured, etc, etc.

I told him I didn't trust the government's insurance, etc, etc, took my money and left.

Anonymous said...

This is what killed the banks in the 1930’s. The banking system collapsed not because of bad bank investments (no denying that there were plenty), they collapsed when depositors lost faith in the bank. Those first in line got their money, those last in line, got an education. The FDIC insurance stops the prospect of a bank run and keeps the depositors’ savings intact. These Fund Pools are not banks and are not insured by the FDIC.

http://greatdepression2006.blogspot.com/

Anonymous said...

$1 billion in negative amortization booked as income the past few years. They will have to restate all of that plus write those loans off as losses. This isn't going to be pretty. Imagine just a few weeks ago the CEO was talking about increasing the dividend. He should go to prison.

Anonymous said...

When is Citibank going to go belly up?

I'm thinking of shorting after the fed-cut induced rally tomorrow. May- June?

Thoughts?

happy homeowner in the stix said...

Well, there goes my free checking for life! ;)

Princess Mononoke said...

Can anyone say Avalanche... Nobody believed me in my environment (family, friends, colleagues, prospective clients, etc.) AT ALL last year and most significantly this year. The banks et al can NO longer contained the avalanche!

I'm NOT in any way boasting about my premonitions... in fact I wish this weren't really happening! Everybody will soon be like fish out of water.

Anonymous said...

The sky is falling.... blah, blah, blah, blah, blah. Keith, you sound like a broken record. People like you are hoping that the economy collapses.

You guys are pathetic. For over thirty years, folks like you have predicted the end of the financial world as we know it and what has happened in the past thirty years? If people followed your advice for the past thirty years by hoarding gold and canned beans where would they be? Once again people like you are hoping for an economic disaster and once again you will be WRONG!

eric in vegas said...

"after they announced in it’s annual investor presentation that they had underestimated future credit losses"

Bull shit.

Princess Mononoke said...

The Wall Street Journal
December 10, 2007; Page A1
>>The U.S. mortgage crisis looks manageable compared with the savings-and-loan crisis of the 1980s and the tech-stock crash of 2000-02. But the housing debacle could yet take years to work out, thanks to the sheer complexity of it.

UNBELIEVABLE!!! Manageable??? The S&L crisis was a drive in the park compared to this fiasco!

Bill in AZ said...

I love how these events coincide with FOMC meetings.

Lost Cause said...

Burn Baby Burn.

Anonymous said...

All Bets off on Wamu

Perhaps the most important part of Washington Mutual’s warning today was the line, “While difficult to predict, the company also currently expects quarterly loan loss provisions through the end of 2008 to remain elevated, generally consistent with its expectation for the first quarter of 2008.”

Losses and write-offs are going up, and not by a small amount. Yet when I suggested as much several weeks ago, in an effort by one good source to extrapolate the Wells Fargo charge to WaMu, you would have thought I had just walked out of a creative writing — not financial reporting — class.

For a refresher, here’s what I wrote:

From one of my really bright sources — the same one who first brought my attention to the Etrade’s real estate debacle: “Wells Fargo just took a $1.4 billion charge on $11.9 billion of home equity exposure. That’s a 12% cumulative loss rate! If you used that as a read across for Washington Mutual’s $59 billion home equity book it would imply a charge of $7 billion!! Total reserves are $1.9 billion. Oh my…”

Updated and to set the record straight and cut through the short-hand above (sorry for that): While it may appear that this is an apples to oranges comparison, Wells is considered a much higher quality home-equity lender. These numbers used by the analyst assume that much of Wamu’s home equity portfolio could be comparable to the $11.9 billion that Wells Fargo identified as its “highest risk” loans. Also, I have several comments posted below, as well, in response to readers.

Now hear this: If you read the press release closely, the company said quarterly loan losses next year will be “consistent with the first quarter of 2008.” For the first quarter, the company said the provision will be in the range of $1.8 to $2 billion. That totals $7.2 billion to $8 billion, or pretty much what my source above was predicting. And that’s assuming that the company has it all figured out. (See my story from today for detail.) It was just four weeks ago, after all, that UBS was saying it would have no mortgage-related writeoffs. Now WaMu, in effect, is saying all bets are off.

http://blogs.marketwatch.com/greenberg/2007/12/all-bets-off-on-wamu/

Frank@Scottsdale-Sucks.com said...

They have a big call center campus near my office in Irvine and I've noticed that it's been vacant and never moved into and it appears it's going to stay that way.

Anonymous said...

Typical American Joe Six-Pack NASCAR Fan is too stupid to read anything else but the beer can label and too lazy to cook anything else but Ramen..

The posted below should give you chills up your soine, but no, another day another Football Game. America is sickening and disgusting and we deserve it all as a fat, lazy dishonest group.


Anonymous said...
This is what killed the banks in the 1930’s. The banking system collapsed not because of bad bank investments (no denying that there were plenty), they collapsed when depositors lost faith in the bank. Those first in line got their money, those last in line, got an education.

READ THE ABOVE 100 times out loud until you can recite it rote.

Anonymous said...

"You guys are pathetic. For over thirty years, folks like you have predicted the end of the financial world as we know it and what has happened in the past thirty years? If people followed your advice for the past thirty years by hoarding gold and canned beans where would they be? Once again people like you are hoping for an economic disaster and once again you will be WRONG!"

You mean that there is no mortgage crisis? There is no housing crash? And that there really are WMDs in Iraq? Dumbass!

Anonymous said...

WaMu: layoffs, losses — and worst isn't over

By Drew DeSilver

Seattle Times business reporter

PREV of NEXT

Enlarge this photo



Related

* Archive | WaMu dividend in danger?
* Archive | Sunday Buzz | WaMu's woes put leaders on hot seat
* Archive | WaMu has stake in risky, sub-prime arena
* Archive | WaMu pounded again

The deep, dark well that Washington Mutual finds itself in just gets deeper and darker, and the climb out looks harder and harder.

Seattle-based WaMu, one of the nation's largest home lenders, announced a major restructuring of its mortgage-related businesses Monday and all but wrote off 2008 as a lost cause. Any meaningful recovery from the housing and mortgage meltdowns now seems a long ways off.

http://seattletimes.nwsource.com/html/businesstechnology/2004064745_wamu11.html

keith said...

Even as the REALTORS say home sales and prices will be up next year, WaMu in their release said mortgage lending will be DOWN 40% OR $1 TRILLION

I guess Yun missed that one. Or maybe he thinks people will just pay cash for homes.

http://tinyurl.com/3amz5j

WaMu: Mortgage Market Originations Will Be Cut by 40%

There will be $1 trillion fewer mortgages originated in 2008 compared to 2007, according to Washington Mutual.

In its announcement today, WaMu supplied news that it is in need of billions more in capital and that its losses will be greater than expected because of a crashing mortgage security market. This in many ways is not different from the news supplied by Citi, UBS, and others.

But WaMu also included a bombshell, it has put a number on what it believes will happen to the mortgage market. In its press release, WaMu says:

WaMu remains committed to providing mortgage products to its customers. However, the mortgage market is undergoing a fundamental shift due to credit dislocation and a prolonged period of reduced capital markets liquidity. As a result, WaMu expects national mortgage originations to shrink to $1.5 trillion in 2008, down about 40 percent from an estimated $2.4 trillion this year.

Anonymous said...

H&R Block just melted down too

H&R Block 2Q Loss Soars on Mortgage Meltdown; Final Results Delayed Until Friday

KANSAS CITY, Mo. (AP) -- H&R Block Inc., the nation's largest tax preparer, said in a preliminary earnings report Tuesday that it expected a huge second-quarter loss as it continued to wrestle with its disintegrating mortgage arm.

ADVERTISEMENT
In a securities filing, the company said it was submitting its quarterly report late, citing a decision earlier this fall to change accounting firms. The company was scheduled to file late Monday.

But it said it expected a net loss of $502.3 million, or $1.55 per share, for the quarter ending Oct. 31, compared with a loss of $156.5 million, or 49 cents per share, during the same period a year ago.

Ed said...

And right on cue, the futures markets are up once again this morning. Yesterday UBS announces $10B losses, and dow was up 100.

One of these days I will wake up and realize it was all one fucked up dream.

Jeff in Florida said...

WaMu holds by (Non Toxic) Mortgage (6% Fixed - 30 Years). If they do go Bankrupt, does anyone know what would happen to my Tax and Insurance Escrow Account?
I checked with my county and they did pay my year end 2007 taxes, but my Insurance is due within the next couple of months.

Anonymous said...

The noose is tightening:

U.S.A.'s SECOND LARGEST BANK, BANK OF AMERICA, FROZE ITS
COLUMBIA STRATEGIC CASH PORTFOLIO, which two weeks ago had $33
billion in net asset value, but is now down to $12 billion. Its
losses largely stemmed from short-term debt sold by SIVs which
went bad. This fund was an "enhanced cash fund" which sold itsassets to wealthy individuals and institutions as an alternative
to money-market funds. {In toto}, Bloomberg reports, these types
of funds hold (or held) about $850 billion in assets in the U.S.
This BOA Columbia fund was the biggest of its kind.

Anonymous said...

Ed said...
And right on cue, the futures markets are up once again this morning. Yesterday UBS announces $10B losses, and dow was up 100.

One of these days I will wake up and realize it was all one fucked up dream.

December 11, 2007 1:30 PM

================================
The markets are up because these guys arent satisfied with a 20 megaton explosion. They want to set off a 100 megaton explosion.
They are clinically insane!
In short there is no other answer. The financial and monetary system should have been put through a bankruptcy re organization 20 years ago. Instead they just kept rolling it over until now when it is likely to roll over anything standing.
Like I said, the answer to their actions is theyre clinically insane.

MarkIFC said...

WAIT WAIT!!
This can't be!
It was the Mortgage Brokers who made these loans; not the banks.

WAIT A MINUTE! Your telling me a giant bank like WAMU had boiler rooms?

WAMU pushed those Option ARM toxic loans like it was crack. Why? Because the profit on those was much higher than a normal 30 year fixed.

Mammoth said...

Here's a rerun of something I posted at the beginning of last month:

"As the 6:30 a.m. ferry was coming into downtown Seattle on the morning of Oct. 31st, we all saw that WaMu’s headquarters building’s lights were out, except for windows lit to form a picture of a Jack-o-Lantern on the side of the building.

I noticed that one of the triangular-shaped eyes appeared dimmer than the other. Apparently, WaMu does indeed have a black eye."
------------
The Jack-o-Lantern may be gone, but the black eye remains.
HAHAHA!!!

happygolucky said...

When is Citibank going to go belly up?

I hope it does as maybe I won't need to pay them any more of my grad school loans!

nnj said...

The billions are so common it's not even exciting anymore. Just another day in the office for financials.

It is almost a joke how so many financials fell for this mess. You would think these professional and experts would have known better. I think the only financial that didn't get exposed was Vanguard.

I am going on line now to a job posting site to see what the credentials are for getting these finance jobs.

Anonymous said...

"People ridiculed us when we said there would be bank failures."

And lets hope all these sheeple who doubted us LOOSE all of their investments, and life savings.

Sheep, the typical American.

Anonymous said...

CONFIDENCE is GONE in ALL US Banks !!!

Protect yourself, because no one else can, or will.

Anonymous said...

ther analyst comments on Washington Mutual:

Fox Pitt: "Conversations with the company lead us to believe that the subprime and home equity books of business continue to deteriorate at an alarming rate and the company is beginning to see deterioration in its "prime" books of business, as well."

Citigroup: "WM's desperate measures, incl. dilutive capital and mortgage restructuring, reflect a poorly managed business & excessive exposure to subprime & 2nd lien Home Equity."

Friedman Billings Ramsey: "This will not be the first nor last recapitalization for mortgage related stocks."

http://www.cnbc.com/id/22199990

Anonymous said...

Once again people like you are hoping for an economic disaster and once again you will be WRONG!

Hmmm, hellooooo??? Look around you, troll. The collapse is already happening. You're like Kudlow, trying to convince yourself by repetition. You, sir, are in denial. But again, you could just be a shill, which I suspect.

happy homeowner in the stix said...

And lets hope all these sheeple who doubted us LOOSE all of their investments, and life savings.

Uh, dude.....maybe people would pay more attention to you if you could actually spell words correctly and use proper grammar?

Ya think, LOOSER?

Ahh, never mind.....I just hope to God that you don't work anywhere near legal document preparation, dispensing prescription medication, etc.

Frank@Scottsdale-Sucks.com said...

Uh, dude.....maybe people would pay more attention to you if you could actually spell words correctly and use proper grammar?

LOL sounds like a typical sour-grapes college grad to me.

The most intelligent and successful people I know have terrible grammar and spelling; they utilize $30k a year proofreaders to correct it.

happy homeowner in the stix said...

Frank, in the real world (ie. the other 49 states), professionals have to use correct terminology.

Otherwise, someone might think they were products of the public education system in Orange County, California.

Princess Mononoke said...

Anonymous said...
>>Sheep, the typical American.
December 11, 2007 5:20 PM

Sheeple are all over the world... I also suspect they have sheeple in outer space too! ;)

Princess Mononoke said...

>>The U.S. mortgage crisis looks manageable compared with the savings-and-loan crisis of the 1980s
December 11, 2007 7:26 AM

So then why aren't "they" f#$king MANAGING it?????????????

Sorry, after thought! They meaning the MSMs say the silliest things.

Anonymous said...

Jeff in FLA:

WAMU's portfolio, unfortunately, is chock a block full of Option ARM and Neg Am loans.

They also had a habit, like Countrywide, of giving people who could in no way afford it first, the mortgage, and then followed it up with a Home Equity loan a few months later.

We're talking 600K loans to people who make 80K/year, followed up by a 200K HELOC.

Seattle is one of the top in thenation for bad Neg Am and pay option loans and I suppose WAMU, being home bred, is part of the reason.

Look into your escrow account. There are people who have been screwed in the chaos that follows their escrow holder going down. Things can get confusing and payments don't get mailed, etc.

LauraVella said...

nnj said:"It is almost a joke how so many financials fell for this mess. You would think these professional and experts would have known better. I think the only financial that didn't get exposed was Vanguard."

I agree 100& nnj. People think WAMU and Wells Fargo are somehow immune to this mess- because I guess, they are so popular. These banks will be in plenty of trouble and I won't be surprised if they start to close down branches on the higher cost locations to save money.

Also agree that Vanguard is a steller mutual fund company.

HOUSE2008 said...

"The most intelligent and successful people I know have terrible grammar and spelling; they utilize $30k a year proofreaders to correct it."

Very true! Just look at Hollywood. Proves you don't need an education to suckseed.