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The problem with WaMu is their business model is now obsolete. They positioned themselves as a niche lender, opportunistically expanding the pool of mortgage candidates to a new, riskier class of buyers. They pushed Option ARMS to stated income, low-down and subprime buyers and made out like bandits in hot potato markets like California and Washington.
Now, the party's over and the risky buyers are in trouble. WaMu's loan portfolio is high risk, their assets are declining and their customers are walking. Their day in the sun has come... and gone... unless they get a cash infusion and a viable new business model.
Everybody pulling their money would only cause a run and that would finish them off. There are many other banks in similar straits.
They may possibly go under. They have confirmed liquidity of $50 billion but the amount of bad paper is unknown so the $50 billion doesn't mean anything. The number of Alt-A loans on their portfolio is quite huge and the risk that a good portion of these will default is also high, why do you think their shares have dropped 95% from peak? Their portfolio is crap, that is why.
The problem with WaMu is their business model is now obsolete. They positioned themselves as a niche lender, opportunistically expanding the pool of mortgage candidates to a new, riskier class of buyers. They pushed Option ARMS to stated income, low-down and subprime buyers and made out like bandits in hot potato markets like California and Washington.
Now, the party's over and the risky buyers are in trouble. WaMu's loan portfolio is high risk, their assets are declining and their customers are walking. Their day in the sun has come... and gone... unless they get a cash infusion and a viable new business model.
Exactly... they operated a huge sub-prime division that was one of the largest and most "aggressive" on standards. They did loans that no one else would touch, perhaps not even New Cetury. I never did a loan with either of them, knowing that based on their standards I would just have an upset client calling me about foreclosure within 6 months.
They also have the huge Option ARM portfoilo on the Alt-A or "prime" side which is an even bigger unknown. They pushed the envelope, like CountryWide, IndyMac and Wachovia, to fuel high growth and quick "profits" on the books. Now the true risk in that portfolio is being shown and all that negative amortization booked as "profit" will have to be written down.
Adding to that, their marketing plan to bring in money was to offer higher savings rates, more service and free checking and other products to all. Sure it brings in customers, but high service and free features are a drain on the bottom line. You can try to make up for it in volume or with lower margins for a while... but you can not sustain them when the profits vanish. I expect "free checks for life" means for the next 1-2 years that WAMU might have left in their life.
Where should we put our money instead? Frightening.
I had checking and savings accounts with WaMu for over 20 years. My original bank was bought by WaMu back in 1999. I noticed from that point that the customer service got steadily worse. The last few times I called their toll-free customer service number, I discovered that the phone reps at the other end were actually located in the Philippines!
I've since closed my WaMu accounts and put my money into my local credit union. MUCH better customer service than WaMu. The only thing I regret is that I didn't do it sooner! So, this is something you might want to look into.
I have a wamu account and im pulling out my money because i had a friend that i had coffee with the other day that just got laid off, he worked on wallstreet and said that wamu savings account is insured, but the checking isn't but it doesn't mean you won't get your money, you just might have to wait in a long line if it does happen, for along time with everyonelse.
I have a wamu account and im pulling out my money because i had a friend that i had coffee with the other day that just got laid off, he worked on wallstreet and said that wamu savings account is insured, but the checking isn't but it doesn't mean you won't get your money, you just might have to wait in a long line if it does happen, for along time with everyonelse.
no wonder your friend got laid off, he is an idiot.
all accounts are FDIC protected to $100k.
go ahead, please take your pitiful $120 from WAMU. They have $143BILLION more where that came from.
I have a wamu account and im pulling out my money because i had a friend that i had coffee with the other day that just got laid off, he worked on wallstreet and said that wamu savings account is insured, but the checking isn't but it doesn't mean you won't get your money, you just might have to wait in a long line if it does happen, for along time with everyonelse.
FDIC insures both your savings and checking accounts up to $100K.
Please educate yourself.
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More WaMu Woes on Friday
