First it was Bear Stearns. Then it was IndyMac. And now, ladies and gentlemen of the left, I give you Washington Mutual Bank, the nation's largest savings and loan (according to Wiki] :
HEADLINE: Fears Grow Over Washington Mutual Collapse (San Francisco Chronicle)
"They are a company with fundamental problems that is getting the worst of the brunt of the market," said Jaime Peters, an analyst with Morningstar in Chicago. "That is scary because finance is all about confidence. "
...
While WaMu has appeared troubled for months - its shares have plunged more 90 percent over the past year - recent events have brought it to the forefront of Wall Street's concerns. Since Monday, the stock price has been halved. On Wednesday it closed at $2.32 a share, down 98 cents or 30 percent.
WaMu's retained mortgage portfolio is heavily tied to payment option ARMs, those poisonous creatures that allow borrowers to pay less than even the interest due. They also have a ton of what those in the industry call "no-doc", or what the press calls "liars loans". Neither product has been saleable in the securitized market for months.
On top of all of that, they (finally) kicked CEO Kerry Killinger, something they should have done ages ago.
CNBC's 'Fast Money' Trader Karen Finerman:
Finerman explained that WaMu's debt is trading for 50 cents on the dollar, and that tells you there's real fear in the market about this company.
At this time last year, their stock was trading well over $30.00 a share. Today? (AP):
WaMu shares dove 98 cents, or 29.7 percent, to close at $2.32 -- a 17-year low. Shares hit as low as $2.30 earlier in the session.
As a former employee (a while back) with a lot of friends who are still there, this is both sad and scary news. I finally took the step today of canceling my direct deposit into WaMu and will be relocating to a credit union this week. I've put it off a long time, because whether or not it makes sense, I really did like working there. But the choices that senior management has made over the last several years has not only stolen shareholder equity, but also cost thousands of employees, some of whom had been with the bank for decades, their jobs. I'm all done. And I think in the coming days, a lot of others will be, too.