WaMu Fails – Bigger News Than You May Think

Posted on September 25th, 2008 in Daily Mortgage/Housing News - The Real Story, Mr Mortgage's Personal Opinions/Research

Given that I have written about WaMu enough for one lifetime over the past two years, I will leave tonight’s actual event alone.

However, I will say that I feel the real news here is that WaMu was not on the FDIC’s ‘Problem Institutions’ list recently released, judging by the amount of assets within said insitutions.  If WaMu was not on the list, why even have one?

Lastly, there is the strong possibility of a major REO and note dump, which will add a large amount of inventory to an already pounded market in the West Coast.  According to our data, I estimate they sit atop $10bb in foreclosed properties and twice that amount of non-performing notes. They will be very lucky to get half of that amount through liquidation.   -Best Mr Mortgage

Perhaps its time to re-read my post on July 27th to see how amazing it actually was she made it this long.

WaMu: Liquidity Options Running Low (87)
Posted on July 27, 2008 3:18 PM

15 Responses to “WaMu Fails – Bigger News Than You May Think”

  1. Mr. M,

    Just a quick question: As a thrift, not a bank, would the FDIC problem list have been relevant to WaMu? Are only banks on that list? What about other types of financial institutions?

    Please note that even if S&L’s don’t show up on that list, this doesn’t change the importance of Mr. M’s observation, since it could mean that there are a bunch of other potentially failing thrifts out there that we don’t know about and are not on the list.

    Thanks

  2. I have a feeling it is not a coincidence this happened on what the FDIC thought was the eve of the bailout legislation going thru. This will get second billing to the bailout package drama but this is an absolutely huge story. It is amazing to say that they tried to “sneak thru” the largest bank failure in U.S. history.

    From where I sit, I do think that getting JPM Chase to take the deposits is a good deal so that the FDIC fund is not drained all at once, but probably prolongs the problem for other elements at WaMu.

    Who’s next?

  3. There’s so much crap going on right now that WaMu barely got noticed. Or the $25B “Loan” for the car makers. What a poop storm there’s been inthe last 4 weeks! I guess nows the time to ask for stuff while it’s going crazy. 2009 should be an all-time record for houses preforming cliff diving competitions.

  4. They couldn’t possibly put WAMU on that list. If the aggregate asset size of the “troubled banks list” suddenly went from 60 billion to 360 billion, everyone would know WAMU was on it, and there would be an immediate run on the bank. As it was, once the CEO started shopping the company, they lost 15 billion in about a week and a half.

    With no bailout in sight, they had to pull the trigger today and not wait for Friday.

  5. Financial crisis/quotes timeline

    Financial crisis timeline

    July 12th, 2007
    “This is far and away the strongest global economy I’ve seen in my business lifetime.”
    — Henry Paulson (US Treasury Secretary)

    April 20th, 2007
    “I don’t see (subprime mortgage market troubles) imposing a serious problem. I think it’s going to be largely contained.”
    — Henry Paulson (US Treasury Secretary)

    May 17th, 2007
    “Given the fundamental factors in place that should support the demand for housing, we believe the effect of the troubles in the subprime sector on the broader housing market will likely be limited,”
    — Ben Bernanke (Chairman of the Federal Reserve)

    August 1st, 2007
    “The market has focused on this. There’s a wake-up call, and there’s an adjustment to this repricing of risk, but I see the underlying economy as being very healthy,”
    — Henry Paulson (US Treasury Secretary)

    February 28th, 2008
    “I’m seeing a series of ideas suggested involving major government intervention in the housing market, and these things are usually presented or sold as a way of helping homeowners stay in their homes. Then when you look at them more carefully what they really amount to is a bailout for financial institutions or Wall Street.”
    — Henry Paulson (US Treasury Secretary)

    March 16th, 2008
    “We’ve got strong financial institutions . . . Our markets are the envy of the world. They’re resilient, they’re…innovative, they’re flexible. I think we move very quickly to address situations in this country, and, as I said, our financial institutions are strong.”
    — Henry Paulson (US Treasury Secretary)

    May 7th, 2008
    “The worst is likely to be behind us,”
    — Henry Paulson (US Treasury Secretary)

    May 16th, 2008
    “In my judgment, we are closer to the end of the market turmoil than the beginning,”
    “I have great, great confidence in our capital markets and financial instituations”
    — Henry Paulson (US Treasury Secretary)

    May 19th, 2008
    “Our policy in this administration is that laws shouldn’t bail out lenders, laws shouldn’t help out speculators,”
    — George Bush

    July 11th, 2008
    Indymac seized by federal regulators

    July 15th, 2008
    “I think the system is basicaly sound, I truly do.”
    –George Bush

    July 20th, 2008
    “it’s a safe banking system, a sound banking system. Our regulators are on top of it. This is a very manageable situation.”
    — Henry Paulson (US Treasury Secretary)

    September 7th, 2008
    Fannie Mae and Freddie Mac taken over by federal regulators.

    September 7th, 2008
    “Nothing about our actions today in any way reflects a changed view of the housing correction or of the strength of other U.S. financial institutions.”
    — Henry Paulson (US Treasury Secretary)

    September 15th, 2008
    Lehman Brothers files for bankruptcy

    September 16th, 2008
    Government takes over AIG (American International Group)

    September 19th, 2008
    Government bans short selling

    September 19th, 2008
    “We must now take further, decisive action to fundamentally and comprehensively address the root cause of our financial system’s stresses,”
    “We’re talking hundreds of billions. This needs to be big enough to make a real difference and get at the heart of the problem,”
    — Henry Paulson (US Treasury Secretary)

    September 20th, 2008
    Bush asks congress for $700 billion to avert catastrophic, economic meltdown.

    September 25th, 2008
    Washington Mutual seized by federal regulators

  6. What happens to all of Wamu’s toxic assests since JPM didnt take them? The FDIC going to handle them?

  7. Thanks MM for calling another one months ago. Dingo, thanks for the postings. Now, what do you do with these liers? Can we impeach yet, deliberatly misleading the country into another disaster? I mean they knew how bad it was and were writing up the bailer in July. Who are these people? I bet tomorrow will be a scary day. What a week!

  8. Andy Xie, an independent economist and former Morgan Stanley chief economist, said that Greenspan’s lax monetary policy led other central banks to keep monetary policy equally loose to prevent appreciation of their currencies.

    “Through the currency market Greenspan was effectively setting monetary policy for the world. Not only the U.S., the whole world should blame him for the catastrophe today,” he added.

    from nice article here:
    http://www.koreatimes.co.kr/www/news/biz/2008/09/238_31633.html

  9. That is great!!!! When does the fire sale begin????

  10. Mr Mortgage,
    WAMU WAS on the list. There are two lists; one that they make public with the 90 banks or whatever, and the other that is secret and includes practically all banks including WAMU, CITI, BoA, Wachovia, and even Chase.
    All banks are insolvent. That is why they need the bailout money to capitalize themselves. Loans will not work, they need gift money from us, grants.
    Seriously, every moron knew that WAMU is going to fail, I’m still shocked that Downey Savings is still alive and trading at $5 a share…If Wamu went down, DSL is 90% made of the toxic option arm stuff…

  11. Also lost in the shuffle (besides the 25 billion for GM)is the rapidly rising unemployment rate – unemployed people don’t buy houses. . .I really think housing won’t hit bottom till 2010. There isn’t a day that some huge announcement doesn’t come off the press – today it is HSBC laying off thousands.

  12. We need a revolution. Who’s with me?

  13. Lastly, there is the strong possibility of a major REO and note dump, which will add a large amount of inventory to an already pounded market in the West Coast. According to our data, I estimate they sit atop $10bb in foreclosed properties and twice that amount of non-performing notes. They will be very lucky to get half of that amount through liquidation.

    Hahah, nice try Mr Mortgage, of course they’ll liquidate these things at close to original value, because Mr. Government is going to buy them up! Three cheers for socialized losses!

  14. DINGO – Thanks for the list. What is alarming is the situation gets worse, and worse all the way down – AND – we all know this crisis isn’t done yet.

    Getting Hammered Today: NCC, WB,
    Look at the trend on the Credit Card Companies: AXP, COF, MA, V

  15. AND … The election is too DUMB to call!

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