Washington Mutual has been seized by the FDIC. JPMorgan will take over the branchs and deposits.
I got a rather unfortunately titled News Letter from Wamu today:
Subject: WaMu News | The holidays start today.
Normally, the biggest banking failure in history would be a pretty big deal. These days it’s just another story.
Trying to bail them out while the FDIC still has money left.
So it’s only US investment banks that are having problems is it?
Wamu’s internet banking is still working and it appears they haven’t crammed all the cash into a suitcase and headed off to Barbados.
From Calculated Risk quoting the FDIC:
calculatedrisk.blogspot.com/2008 … rance.html
So the equity, subordinate and senior debt holders have carried the can? As it should be, but expect to see ripples.
What’s interesting about this is the discounts Wells Fargo applied to Wamu’s marks to market. CNBC reporting that JPM has applied a 23% discount to WMU’s 60 billion$ existing home equity loan portfolio.
I shudder to think what Irish banks’ marks to market look like.
Mish (I think it is) has been banging on about how HELOCs are basically worthless as home values have fallen below the LTV level to cover them. As they are second lien mortgages, they have no recourse (they can’t forclose, as there is no equity to cover them). A 23% discount sounds wildly optimistic!
HELOCtype loans were also popular here in Ireland right? Isnt that the same as a top up mortgage. I know plenty of people who took out top up mortgages to buy holidays, luxury cars etc.
As far as I can see those people will not be eligible for any more debt until theyve cleared those loans, or brought their LTVs down considerably. And since the valuations on their property is down, their LTV essentially stays the same even as they pay down their mortgages.
Please correct me if Im wrong, as I dont know a lot about mortgages, not having ever needed one.
Yup, that’s about the size of it. In Ireland, mostly people don’t get second mortgages (unless they are solicitors) as far as I can see. Mostly they refinance the whole lot and take some cash out or top-up their existing mortgage. So normally there is only one lender involved. Not that it makes the situation any better - having bought in 2000 and topped up a couple of times, you could be negative equity now. Still, the beamer looks great and you had the plasma tv before they were cheap.
Good. Glad that is over. Now I can deposit some cash in my a/c. I’ve been holding off for the last month until the FDIC moved.
I was in the branch in the WaMu Tower at 4’th/University in Seattle about 8 weeks ago. The atmosphere was pretty grim. I did a lot of banking last year in the Tower branch as it was closest to my place of work. At the beginning of the year the atmosphere was still pretty upbeat but by the summer it was obvious that they where in a death spiral. Lots of very strained and worried faces in the lobbies at lunch time.
Thats what happens when you are a late entrant to a California property bubble. WaMu is not the first out of state S&L to get crushed in a Cal property crash. Same thing happened back in the 80’s too.
Go to CR for links…