Elistan

It's good to be the Fishman.

http://www.nytimes.com/2008/09/26/business/26wamu.html

[QUOTE]But the seizure and the deal with JPMorgan came as a shock to Washington Mutual

CrazyCracker82

I was planning on it man

SteveUCI

I think what he's referring to is the fact that as a WaMu customer, you are lucky that:

a) you are lucky that another bank took over the whole enchilada after FDIC shut them down (just about seamless transition for you), and

b) if FDIC did NOT find another bank to take over WaMu's banking operations, there likely would have been mass hysteria and a further run on the remaining deposits (even though controlled by FDIC, many people feel nervous about having their funds in a bank that the FDIC is trying to shutter in the medium-term) thus making it *potentially* difficult to access your money when you need it, and

c) if FDIC did NOT find another bank to take over WaMu's banking operations, then it would immediately be turning around and crying to the Treasury for additional funds and I don't know how that works but the whole financial system is in serious trouble right now to the point where FDIC may not be able to keep up with its age-old promise of reimbursing every penny of insured deposits at some point.

The fact that WaMu failed early on and that it was bought by another bank was the perfect scenario from the customer's perspective, but it could have gone a different way.

From the investor's perspective, however, once again there's far less reason to ever hold stock in a bank that isn't nationalized or a Friend of Hank's, and potentially serious implications as these failed banks trigger credit default events which ripple throughout the system in a highly-leveraged manner.

Also, those high CD rates are usually indicative of desperation to build capital.... they are usually too good to be true and should be taken as a warning sign, not as a good deal.

Bottom line is, nothing is "0 threat" right now.

AssassinJN

I am going to have to say I disagree with this somewhat. While it is a way that banks try to get money in hard times, wamu has been one of the banks that has been offering CD's in the top percentile for many years before this housing crisis started.

Otherwise I agree.