We have a new number "one" that has joined the list of growing bank failures.   Indy Mac was 32 Billion in Assets and WAMU is about 325 Billion in Assets.  I wonder if a new website like "implode o meter" that kept track of mortgage lenders that failed will begin to keep track of banks that fail.   The Federal Deposit Insurance Corp. seized Washington Mutual Inc., one of the country's biggest banks, and then sold the Seattle-based thrift's banking assets to JPMorgan Chase & Co. for $1.9 billion. Because of WaMu's heavy mortgage-related losses and other risky debt, JPMorgan will write down the thrift's loan portfolio by roughly $31 billion--a figure that could change if the federal bailout plan is enacted and JPMorgan opts into it.

What can kill a bank.   A run on the bank.  If any of you have seen the movie classic, "It's A Wonderful Life"  it depicts the situation that happened to WAMU. Customers withdrew $16.7 billion in a 10-day period following the bankruptcy of Lehman Brothers, leaving WaMu "with insufficient liquidity to meet its obligations," its regulators determined.   If you want to see the article and the video, here is the link.

http://finance.yahoo.com/tech-ticker/article/73415/Run-on-Bank-Helped-Kill-WaMu-But-Your-Money-Is-Safe?tickers=WM,JPM,XLF,WB,%5EDJI,%5EGSPC

Our markets continue to tread water as we await the outcome of the bailout discussion occurring in Washington.   Do we have a "deal or no deal".  No deal means maybe no debate.  You have to love our political process.  An alternative to the $700 billion Wall Street bailout plan has been proposed by conservative Republicans; and the core of the new proposal is an insurance program for mortgage-backed securities that would require banks, financial firms and other investors holding such securities to pay a premium for government backing. Higher-risk assets would incur higher premiums, but Treasury Secretary Henry Paulson Jr. and others insist the plan is not feasible. Brookings Institution banking and finance expert Robert Litan says investors are not eager to purchase mortgage securities, and valuing them is a challenge; this means the goal of establishing a market for these securities would be difficult to achieve.  So we await the outcome and hope people put party affiliations aside and make good decisions. 

Our bond market has opened with slightly better pricing. As you can imagine, the markets are in a hold mode until a clear direction emerges with the bailout discussions in Washington. Two economic news items have been released, but next week economic releases may be more market movers dependent upon a bailout provisions worked out over the weekend.  30 year fixed rate loans are better by .125% in price.   10 year yield is 3.79, oil is down $3.00 to $105 and gold is up slightly to $890.  The economic releases were GDP that shows a growth rate if 2.8% which was lower than expected.  And Consumer sentiment came in 70.3 from the previous month of 73.1.  A predictable drop given the events that are occurring in our financial markets.

For those branches operating in California, ten new real estate and mortgage finance laws were enacted.   To keep yourself up to speed, here is two different articles. http://www.mercurynews.com/green/ci_10560313                               

 http://www.marketwatch.com/news/story/california-association-realtorsr-praises-governor/story.aspx?guid=%7B12CA23C6-BE40-468B-AD98-8C0D0F637EFA%7D&dist=hppr   

Let me leave you with this parting thought as you try to enjoy this weekend given all this market hand wringing.   Always tell the truth.  Always.  White lies can always catch up to you eventually.  Have a good weekend. 

At Penn State University, there were four sophomores taking chemistry and all of them had an "A" so far. These four friends were so confident that, the weekend before finals, they decided to visit some friends and have a big party. They had a great time but, after all the hearty partying, they slept all day Sunday and didn't make it back to Penn State until early Monday morning.
Rather than taking the final then, they decided that after the final they would explain to their professor why they missed it. They said that they visited friends but on the way back they had a flat tire. As a result, they missed the final. The professor agreed they could make up the final the next day. The guys were excited and relieved. They studied that night for the exam.
The next day the Professor placed them in separate rooms and gave them a test booklet. They quickly answered the first problem worth 5 points. Cool, they thought! Each one in separate rooms, thinking this was going to be easy.... then they turned the page. On the second page was written....

For 95 points: Which tire? _________