Mortgage Meltdown: Washington Mutual to close 190 offices

[Newsjock]

Source: San Francisco Chronicle

Washington Mutual Inc., the nation's largest savings and loan, said Monday that problems in the mortgage and credit markets are forcing it to close offices, lay off more than 3,000 workers and set aside up to $1.6 billion for loan losses in its fourth quarter.

Additionally, the company slashed its quarterly dividend 73 percent and said it plans a $2.5 billion offering of convertible preferred stock. Washington Mutual has not yet priced the offering, but increasing the total number of company shares will dilute their value for existing stockholders. In after-hours trading, shares fell $1.73, or nearly 9 percent, to $18.15 following the company's announcement.

... The savings and loan will now get out of the subprime mortgage business entirely.

The company said it will close about 190 of its 335 home loan centers and sales offices, shut down nine call centers, and eliminate 2,600 home loan workers and 550 corporate and support jobs.

Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/12/10/BUB6TRQ84.DTL&tsp=1

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Additional coverage from Seattle P-I here:
http://seattlepi.nwsource.com/business/342956_wamu11.html

[davidinalameda]

1. all I can say is wow

but I wonder how much the top management's golden parachutes will cost when they're "fired"

[whistle]

2. Is this good or bad? Who pays the bail out obligations now?

[TrogL]

3. What part of "fucking disaster" don't you understand?

I've never, ever heard of a financial institution laying off a single employee, never mind closing almost half their branches.

[whistle]

9. The savings and loans institutions did it following the Reagan meltdown

...in the fall of 1987. That was certainly bad for many investors and retirement plans and 401K plans which were thought to be very secure. Then Alan Greenspan came into the scene yelling, "Hold everything. I have a plan". So, Greenspan became Chairman of the Federal Reserve, introduced financial derivatives and SIVs which everyone in congress following that thought was the great creative scheme that would carry capitalism through to the end of the next millennium. Here we are 20 years later, only one generation later, the 50 generations everyone believed in a worse mess than perhaps anyone has witnessed in last 150 years, and nobody even dares suggest where the bottom may be.

So, I think I understand a "fucking disaster" when I see one. I can still ask questions regarding what might happen to Washington Mutual which by the way, before Reagan's 1987 meltdown was known as Washington Mutual Savings and Loan, Inc.

[boricua79]

12. hey trogL, cool it...

you can make your point without making the other people feel attacked or dumb.

This is a complicated issue and many of us are trying to understand the roots and consequences of this economic development.

[whistle]

17. Thanks, I really thought I was under freeper attack

...or a backlash from someone who was under major stress as in being scammed by hedge funds

[Rageneau]

4. Some day in the future this might be an important date in history.

The first non-ignorable sign of the impending cataclysm.

[PSPS]

5. This is of particular import

Back in the day, almost every mortgage, at least in the Northwest, ended up eventually being portfolioed to Washington Mutual. They probably had the largest number of mortgages of any private institution.

To see WAMU do this means we've gotten into heretofore unchartered and very serious territory.

[whistle]

10. Maybe something very different was happening with WAMU because

...in 2001 there were problems with WAMU already and didn't some hedge fund group get their fingers into that company?

So I would still be curious to know just what kinds of financial manipulations, tax dodges and write offs are really buried deep inside the books of WAMU. This may actually be the "ENRON" of mortgage banks we are seeing unraveling here.

[Gormy Cuss]

11. WAMU expanded rapidly (in NorCal at least) in the past decade.

They also seemed to be marketing themselves as the big bank for little customers and that would tie in to having a large subprime loan portfolio.

Closing two thirds of its branches suggests to me that there's a major loss on the books.

[bhikkhu]

6. and WAMU was one of the conservative lenders, in my experience

In 2005 we took out a second mortgage on our house to purchase a commercial property. WAMU, which holds our first, turned us down based on an inadequate income to debt ratio. Admirable! Another local bank approved us easily, however, as they required no verification of income - we could write down whatever income figure we felt comfortable with, the loan officer told us.

[iaviate1]

7. They must have changed.

After a car accident, I became a HR borrower and they just gave me a $2000 unsecured credit line with no interest for 6 months.

[fasttense]

8. Don't worry, the idiots are in charge.

Oh wait that was suppose to be don't worry, be happy. I found this little gem on AOL and they didn't even have it under the financial section on the home page, but under the top news stories. AOL and the AP are pushing this BS every chance they get.

Housing Market on Verge of Stabilizing?
By ALAN ZIBEL,AP
Posted: 2007-12-10 17:25:14
Filed Under: Business News
WASHINGTON (Dec. 10) - Bucking conventional wisdom, a trade group for real estate agents on Monday said the battered housing market is on the verge of stabilizing and inched-up its outlook for 2007 and 2008 home sales.

http://news.aol.com/business/story/_a/housing-market-on-verge-of-stabilizing/20071210165309990001?ncid=NWS00010000000001

[Javaman]

13. The queens of hearts is doing her best. LOL nt

[whistle]

18. As in UK Queen?

[Javaman]

19. No as in Alice in Wonderland. LOL nt

[closeupready]

15. I saw this story yesterday, and wondered, does no one know what a conflict of interest is anymore?

Gee, a trade group for real estate agents anticipates that the housing market is going to get better! What a surprise.

[tom_paine]

14. And those Lie-berals say the economy isn't doing the greatest it ever has!

:sarcasm: :puke:

[Parche]

16. Dumbest Name Out There

What the hell were they thinking when they call themselves.....WA MU?
That is one of the most stupidest names out there.......and their
commercials are so annoying.....:hi:

[Robb]

20. You know, when the bar down the street closed, no one had to pay their tab

Sadly, I don't expect any such luck with my own WaMu mortgage. ;)

[pipoman]

21. We like to watch HGTV

occasionally. There is a program on there which follows home buyers from the shopping phase through the closing. The first time I saw it was last summer. The buyer bought a $500k home, they got a 90% mortgage, a 10% second mortgage, interest only payments on both for the first 5 years!! :wtf: Over the next few months we watched several more times, every time it was the same story!!

Anyone who couldn't see this train wreck coming just simply wasn't looking.

Back in the 1980's when I was in the real estate business, a buyer had to be completely golden to get a 90% mortgage and 80% was the standard. Now the other 20% (or 10%) had to be your own money. It couldn't be gifted to you and you couldn't borrow it. They made sure it was yours by tracking your bank account backward to see your periodic deposits. The only way around this was to have the money in your account for 1 year prior to the purchase.

The point is, the terms of these loans which are going tits up are made to have a 25-30% default rate. It was an attempt to boost the economy.

Time to "pay the piper".