Washington Mutual bites the dust
These days every time I turnaround, I see one more bank going down. But this one affected me. Seattle based Washington Mutual collapsed today. Being a Seattle-ite and a loyal WAMU customer, I felt sad hearing these news. I always had a good experience with my local WAMU branch and they provided terrific customer service, something that I have not experienced at Bank of America. I am sure the mood at the WAMU headquarters in Seattle was very somber today. My heart goes out to its employees and stockholders. The stocks went from 40$ to 16 cents in a matter of months.
A few excerpts from the news,
Seattle-based WaMu, which was founded in 1889, is the largest bank to fail by far in the country’s history. Its $307 billion in assets eclipse the $40 billion of Continental Illinois National Bank, which failed in 1984, and the $32 billion of IndyMac, which the government seized in July. The Federal Deposit Insurance Corp. seized WaMu on Thursday, and then sold the thrift’s banking assets to JPMorgan Chase & Co. for $1.9 billion.
Washington Mutual did a lot of mortgage lending in California and Florida — which are both states that have had a lot of foreclosures. The Office of Thrift Supervision, which regulates the banks, said Washington Mutual had lost more than $6 billion in the last three quarters,” he says.
After the recent ramp-up in the chaos in the financial markets, customers pulled out about $16 billion worth of deposits, which were 9 percent of Washington Mutual’s deposits as of June 30.
16 billion dollars worth of deposits pulled out in a week is what I think caused WAMU to pull down its curtains finally.
Again if you are a customer of WAMU and have money in the account, there is no need to worry since upto 100K USD are insured by FDIC and anything above that will be insured by JP Morgan. To read more about FDIC insurance, read my earlier post, What happens to your money if your bank fails
While the bank went down, its CEO Alan Fishman could walk away with more than $18 million in salary, bonuses and severance after less than three weeks on the job, according to the terms of his employment agreement. Fishman had a base annual salary of $1 million, which translates to $19,230 per week. So during his three weeks on the job, he would receive a base pay of about $60,000 before taxes.
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