Good morning all: I came back from vacation on Monday to see that Washington Mutual's stock had dropped 35% in one day. It's now trading in the 3's which is down from over $40/share. Of course they say they're safe but who knows these days. Wa.Mu. has had a rough ride the last year along with several other banks. I read yesterday that federal regulators expect as many as 90 more banks to fail over the next year or so. Every bank claims they're safe because of their customer deposits but here's the rub. The FDIC (federal institution that guarantees your deposits) only insures your money up to $100,000. Granted, most of us don't have that kind of cash hanging around. But if you have above that amount are you going to keep it at the failing institution or put it somewhere else? This is the problem Indymac had as customers sensed it was failing. Customers made a run on the bank and withdrew all their money. Expect other banks to be taken over by the Feds. for this very reason. There are so many smaller to medium-sized banks whose stock is trading in the $1-5 range.
With WaMu. I expect a sale or merger. And there will probably be others as well. The alternative would be total failure. The next couple of years should be interesting for sure. It won't necessarily help our business because credit will probably remain tight until this all gets sorted out. I'm curious as always on your opinions. To me, this has been an interesting ride. Not necessarily one I would have wished for but probably necessary to clean up all the garbage. Have a great day!
Paul
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One of the easiest to understand summaries I have seen about the situation. Thanks for posting. As a WAMU customer, mustadmit that I am guilty of pulling out a lot of my saving on Monday when I saw the news. Sad, because I have always been happy with their personal banking services. If it comes down to it, I hope your prediction of merger happens before dissolving the business.