WaMu: The latest bank failure
 

Just an FYI...

Run on Bank Helped Kill WaMu, But Your Money Is Safe
Posted Sep 26, 2008 10:44am EDT by Aaron Task

In the biggest bank failure in U.S. history, the Federal Deposit Insurance Co. seized Washington Mutual's assets Thursday. The FDIC then quickly sold most of WaMu (that's assets and liabilities) to JPMorgan.

Simply put, WaMu was victimized by a classic "run on the bank." 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.

http://finance.yahoo.com/tech-ticker...;5EDJI,%5EGSPC

Who thinks Mary Poppins whenever they hear the term "run on the bank"?

Just me?

/banks in a local credit union.

This is a trip. DH and I bank with WaMu
*shaking my head*

I told you to move anything above $100k into a separate account, but did you listen? No!

Oh, wait? You weren't rocking six figures in your WaMu account? Oh - well, you're covered by the FDIC. Sweet!

I heard it on the radio today and was shocked. I was seriously about to go leave Wells Fargo and bank with WaMu. I guess not anymore :(

Boo that Chase bought it out.....i hate Chase!

The only reason people pulled their money out of WaMu was because they knew the bank was going to be federalized or go bankrupt. And though we all know savings accounts are supposed to be insured, there's no telling what would happen in a total banking collapse in this country. If we don't have money, we don't have money.

This is very sad for those of us in Seattle that grew up with WaMu as the hometown, community-oriented bank, and major employer. It was taken over by greedy executives who only cared about expansion and sleek marketing, and now it's all gone. Most of the branches here will be converted to Chase branches, but the WaMu skyscraper in Seattle is going to have to find a new tenant. And the community organizations that have benefited from so much in WaMu corporate and employee contributions over the years are going to have to seek new partners. Sad day in Seattle.

Yeah - that's very true, this was like the worst-kept secret in America over the last few weeks . . . the whole situation sucks, but this sort of rumor-mongering and news-by-whisper seems really bad to me. Isn't that the sort of thing that exacerbated the Great Depression?

*raises hand*

Mr. Dawes Jr: In 1773, an official of this bank unwisely loaned a large sum of money to finance a shipment of tea to the American colonies. Do you know what happened?
George W. Banks: Yes, sir, yes I think I do. As the ship lay anchored in Boston Harbor, a party the colonists dressed as red Indians boarded the vessel, behaved very rudely, and threw all the tea overboard. This made the tea unsuitable for drinking. Even for Americans.
Mr. Dawes Jr: Precisely. The loan was defaulted. Panic ensued within these walls. There was a run on the bank.
Mr. Dawes Sr.: From that time to this, sir, there has not been a run on this bank... UNTIL TODAY. A run, sir, caused by the disgraceful conduct of your son, do you deny it?

I always think of It's A Wonderful Life.

It wasn't just the "run on the bank" that killed WaMu.

WaMu also participated in the crappy mortgage business which helped spell out their demise.

Their latest CEO was ousted because of that

That's what they referenced when I heard it on the radio! lol.

So, I said in a previous post that I was shocked....but now I remember hearing on the news (CNN, I think) that WaMu was next. I didn't believe it at the time, and then AIG went down. Again they said WaMu would be the next, and now it has.

Weeks? Try months! WaMu is/was the nation's largest savings and loan bank, so when the mortgage crisis came to a head, it became pretty obvious what was going to happen to WaMu. The only strength it had still was its home banking/savings, which wasn't enough to outweigh all of the poor home lending decisions it made in recent years.

Oh yeah - and the new CEO will be receiving anywhere between $13-18 MILLION in severance pay for 3 wks of 'work' :rolleyes:

Honey, the first thing DH asked me was about FDIC (he wasn't too sure since he is from Canada).

I told him that we are insured up to $100K so we are safe...unless he has an account I don't know about...and if he did, he is a dead man! :D

The other accounts are elsewhere

People are... SMH

Damn. Just... damn.

I have a friend who works for WaMu. I hope he still has a job.

In the mortgage industry, this was no surprise. They were the pioneers of reverse mortgages, which impacted their reserve requirements. They were tres, tres risky!

The actual downfall was the run on deposits. Customers withdrew $15 BILLION dollars from WaMu in recent weeks. The FDIC did what it needed to...covered their ass. The losers are the shareholders.

As far as JPM/Chase is concerned, it's business as usual, but maybe not for their mortgage and commercial arm.

It seems to be that way. Apparently, wherever Chase holds a large stake in the commercial banking (like here in NYC, where in some neighborhoods, there's a Chase on each major corner), a majority of the WaMu branches are going to close.

I read that WaMu prided itself on making mortgages available to low-income customers. That's all well and good, but the mortgages have to be legit. If you make $25,000 a year, you have no business buying a $400K house. :mad:

JP Morgan is the firm my employer chose for us for our new retirement plan investment options. I hope this is a sign that they are doing ok and will continue to do ok.

Legislation requires they close in order to prevent monopolies. In WaMu's case, they don't have a majority overlap in major markets because JPM doesn't have a huge presence on the west coast.

JPM had a solid trust and fiduciary division. If I remember right, they kept Bank One's people senior management to run it. When I worked for B1, I had most of my investments there.

Jamie Dimon is building his empire. It was very well known in the media that his goal was to be BIGGER than Citi to get back at Sandy Weil for firing him. So, he succeeded in making JPM the second largest in the US behind BofA. Knowing Dimon's ego, he won't stop until he is the largest.

Wouldn't this make Chase a great long-term investment because of the growth that they will experience?

Well, I'm sorry I sold all of my stock in 2002. Yes, Chase is considered a good conservative long-term investment. You won't feel like you won the lottery, but you will receive a descent return.