WaMu Says It's `Well Capitalized' After Share Slump

15 years ago

http://www.bloomberg.com/apps/news?pid=20601087&sid=aSx0z01vzYQY&refer=worldwide

<_snip_>
July 14 (Bloomberg) -- Washington Mutual Inc., after dropping the most since its initial public offering in 1983, said it is ``well capitalized'' with more than $40 billion in liquidity and $150 billion in retail deposits.

This is like watching a horror flick... the Cinematic style typically has the victims killed off in exact order of which mentions, denies or confronts the idea of "death" in what sequence!

WHEN will the public affairs departments learn that these "All Is Well" announcements are *ALWAYS* the bad luck precursers to actual failure!?!?!!!

Dave Donhoff

Leverage Planner

Here is a link that might be useful: WaMu Says It's `Well Capitalized' After Share Slump

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Comments (10)

triciae
15 years ago
LOL, Dave.

It's not the Public Affairs Department...it's the Legal Department! :) All scripted by corporate counsel.

I agree with the horror film analogy. All-in-all, it was an ugly day. Wachovia is looking a little peaked today also...closed @ 9.84. Ouch.

Remember the 'good 'ole days' last summer when all I was worried about was Thornburg? Larry Goldstone sold his soul for that equity partner. I hope they can rebuild the company...it's going to be a long haul.

/tricia
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disneyrsh
15 years ago
So Dave, does that mean it's a bad idea to get a mortgage with WaMu in the coming months? We've always had our mortgages with Wells Fargo but after an unpleasant experience with an incometent boob named "Amber" as our last loan officer, our next loan will be with someone else. We had read that WaMu was highly rated by customers with home loans. Now I hear this news and I'm just like, huh, how do you find a good mortgage company???
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dave_donhoff
Original Author
15 years ago
Disney,
It might be a bit risky to put your timing anticipations on WaMu... and if they go bellynorth there's no certainty of how the servicing will be transfered (but that's a minor risk... an annoyance at worst.)

I won't outright throw mud at WaMu at this point... but would be hardpressed to point to a strong alternative, save for perhaps Chase (JP Morgan) who the gov't has already blessed as "defended" in order to have bought Bear Stearns on behalf of the taxpayers.

Cheers,
Dave Donhoff
Leverage Planner
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Nancy in Mich
15 years ago
No, this is too Slooooow Mo to be a horror flick. People on this site were telling us about horrific times a-coming in the mortgage business about two years ago. Am I not right? Everything they predicted has happened. Prices are falling, confidence in the mortgage market is nonexistent, sellers can't sell without finding buyers who are no credit risk, and buyers are waiting to see how far the prices will fall.

In a horror flick they use timing to build and release tension. This real-life collapse is happening over an extended period of time. The tension keeps building and the end is not in sight.

I am watching it happen and wishing I had trusted in the doomsayers from this forum. But when do you trust doomsayers? If I had it in me to be afraid of the future, my Michigan Militia father and his crackpot conspiracy theories would have had me bunker-ed down 15 years ago.

Did anybody here move their savings and investments in order to prepare for the collapse we are now watching?
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gamecock43
15 years ago
My entire first house down payment savings are in WaMu. They got me with their commercials and high interest rates. I am TRYING to get online and print out my bank statement to keep in case I need proof I have my entire life in that bank. However, I've forgotten my login/password, and the system where they send me a temp password is down...in the event I cant get that info, they will have it? Info like this doesnt get lost-right?
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clemrick
15 years ago
Ok, I will admit I almost failed my Financial Institutions class in the spring, but one thing I did understand is for banks, deposits are LIABILITIES, they aren't assets. So what this press release said is that they have $110 billion more in LIABILITIES than they have in liquid assets.

Doesn't that mean they have to close if there is the tiniest run on the bank????????
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chisue
15 years ago
Nancy -- Yes, we did make some defensive moves in September, selling four of the mutual funds in our portfolio that looked most vulnerable and putting some cash into 1-Yr CD's with apy's of 5.65% -- Hah-hah, at Countrywide! -- but under the $100K limit. Of course the fund profits and CD earnings boosted our 2007 income taxes -- ya' can't win.

A neighbor cashed out completely 18 months ago. He missed some interim market gains, but now he looks reeelly smart.

Question rises: What DO you invest in now? Real Estate? (gulp) We should all get together and cherry pick one of these failed banks, assuming the good stuff while the taxpayer eats the bad debts -- and possibly pays for some years of room and board for bank officers in a Federal Country Club.
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brickeyee
15 years ago
"...taxpayer eats the bad debts..."

The FDIC 'eats the bad debts if the bank fails holding the note.
The FDIC is a government run 'bank insurance' company.
Every FDIC insured bank pays annually into the fund.
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triciae
15 years ago
clemrick,

Here's a snippet from WaMu's press release...

"...``well capitalized'' with more than $40 billion in liquidity and $150 billion in retail deposits.

The company's tangible equity to tangible assets ratio is 7.8 percent as of June 30,..."

Their statement is basically worthless goop...

1.) The $40B in liquidity means they have some cash plus available lines of credit that equal that amount. The lines of credit can vanish if the bank's position deteriorates enough to scare the providers of those lines of credit.

2.) $150B in deposits just means that they have a large retail deposit base. So what. You're right...those deposits can be withdrawn with 'some' restrictions on CDs, etc. Anyway, this part of the statement really doesn't mean much.

3.) Asset ratio of 7.8%...frankly, I'm surprised to read it's that much. And, it doesn't address whether the ratio includes contingent liabilities. Contingent liabilities, such as guarantees on the mortgage securitizations they sold to the Street, could be huge & not accounted for in the 7.8%. Their statement does not tell us?

The statement was released to calm the masses.

gamecock43,

Your funds under $100K 'should' be OK. Do banks make accounting mistakes & lose information? Sure they do. Is it likely? Probably not. But, if I were you...I'd continue trying to get a print out of your statement. It's always a very good idea to know where your money's residing, right?

Nancy,

I moved funds out of a Money Market account this past Saturday & moved them to a safer institution's 15-month, 4.00 APY CD.

Many money market funds own the GSEs. Since I don't know exactly how deep the problems are...better safe than sorry type of thing plus the rate was good for short-term funds.

/tricia
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chisue
15 years ago
brickeye -- Thanks for clearing that up for me.
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WaMu Says It's `Well Capitalized' After Share Slump

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WaMu Says It's `Well Capitalized' After Share Slump

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