What is the future for Washington Mutual bank?
I have a CD account at Washington Mutual bank, and I hear the rumors that WaMu is going bankrupt and taking all the money they have with them. Since I have 8 more months until I can access my CD acct. money without a penalty, what do I do?
- Net Advisor™Lv 71 decade agoFavorite Answer
Your CD is fine as long as you have... what?
UNDER $100k in it.
Banks are not permitted to go BK. They can be seized by the gov (FDIC) if the FDIC feel they are insolvent - which WAMU is, in my opinion.
WM has been on my "BK Watch List" since Nov 2007, and have been short the stock and long the puts many times since.
I know I just said they can't go BK (per my watch list), but I don't have a "Seizure" list. :P
If WM's stock keeps on it's current 20%+ a day loss, I give them no more than 7-10 days before the gov takes them over. It will mostly likely happen on a Friday night right before or after the bank closes, and Wall Street is home and can't trade on the news.
If this does happen the stock will trade for pennies, and possibly be worthless over time.
Shall we watch and see?
The following is part of an article from Reuters:
(I don't have a link since it was from my Institutional Wire Service.)
"WaMu came under further pressure on Wednesday (09-24-2008) when Standard & Poor's slashed its credit rating deep into "junk" territory.
The thrift replaced its chief executive this month after suffering losses totaling $6.3 billion over the previous three quarters.
It has projected $19 billion in mortgage-related losses through 2011, but analysts have said credit losses could reach $30 billion.
Complicating the sale process is what to do with the thrift's $227 billion book of real estate loans, more than half of which consists of home equity loans, option adjustable-rate mortgages, and subprime mortgages.
It was not immediately clear how much of WaMu's troubled loans might be eligible for Washington's $700 billion financial industry bailout program.
WaMu has a significant presence in California and Florida, two of the states hardest hit by the nation's housing crisis. But its 2,239-branch network could appeal to many lenders looking to expand in retail banking, especially in the western United States and the New York City area.
WaMu ended August with $143 billion in retail deposits -- roughly triple the size of the entire Federal Deposit Insurance Corp fund that backs customer deposits. It has also said it expects to end the quarter with a "well-capitalized" status well in excess of federal minimums."
See. WM is gone now. Guess it wasn't going to take 7-10 days to be taken over by the Feds as I said on 09-25-08, and had been stating such risk since Nov 2007 (see post history).
JPM acquired the assets of WM. WM's stock has been halted. The bank will have a new name "JP Morgan Chase (JPM)." Deposits and loans are under JPM's custody now.
However, as for the corporation itself, now that they are no longer a functioning entity, the are 99.99999% chance will file for bankruptcy.
I am still concerned with WB, NCC, and regional banks in general. I hope WB doesn't fall under, but they have been on my "Concerned List."
I don't want to put WB on my "BK Watch List" because since 2001, all but one of the companies that I put on this list went BK within a year. The one exemption was Rite Aide who is still on the list, and whose stock is trading recently under $1.00Source(s): 09-26-2008 WaMu is largest U.S. bank failure http://www.reuters.com/article/newsOne/idUSTRE48P0...
- LGLv 61 decade ago
All Banks and Savings and Loans are insured by the Federal Deposit Insurance corporation, F.D.I.C.
If any bank that is insured is insolvent, the Federal Reserve will step in and run the bank during an interim period. Your money remains safe and you are still able to access it. Though there might be a day or two delay after a "seizure".
According to business news reports, WaMu is probably in negotiations with a number of buyers. The Federal Reserve is probably involved in the negotiations too, though they won't tell us.
The idea is to have WaMu sold and absorbed by a larger more capitalized (they have more cash) bank. The depositor will not even notice the change, everything will probably stay the same.
The long-term outlook for WaMu will probably include closing branches and cost-cutting after a sale.
Remember each of your accounts is Federally insured up to $100,000. If you have more than $100,000 in a single account, you might want to consider moving some of it to another account.
- recycle bLv 71 decade ago
JP Morgan Chase Bank now has you money. In 8 months the new owners will allow you to access your money without a penalty.
If you have any questions go to the JP Morgan office on Monday.
Do not go today Friday since there are long lines to get in.
Your account is insured by the FDIC. But, the insurance is not necessary right now since JP Morgan Bank stepped in WM's shoes.
By the way the terms of your CD remain the same. The interest rate you are getting will not change.
- cryptoxmitLv 61 decade ago
There is no immediate risk to WaMu in the next few months and there is time for the government bailout plan to take shape. Potential buyers likely want to see what exactly would remain on WaMu's books.
The fact that you are insured and the government has keen interest in this bank ... should ease your discomfort
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- Sharon TLv 71 decade ago
Just relax. Your money is insured. If WaMu merges with another bank, the sign may change but it will be business as usual for you.
- RangerLv 71 decade ago
You can pay a penalty and withdraw the money now, or you can leave it in.
Wa Mu is a federal deposit insurance corp. customer, so your account is insured up to $100,000.
FDIC will take over Wa Mu and find a buyer for it. Your account with switch from Wa Mu to what ever bank takes over Wa Mu.
- itsjunglepatLv 61 decade ago
Well there we have it, it's been seized by the gov't and JPMorgan Chase is buying assets.
""For bank customers, it will be a seamless transition. There will be no interruption in services and bank customers should expect business as usual come Friday morning."