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| 30 Yr Fix |
6.37% |
0.02% |
| 15 Yr Fix |
5.91% |
-0.01% |
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5.82% |
0.04% |
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4.47% |
-0.05% |
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5.00% |
-0.25% |
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Washington Mutual Announces Major Layoffs and Closings
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Years and years ago when the aerospace industry was in a tailspin and Washington-based
Boeing was particularly hard hit with cancelled contracts and layoffs someone
paid to have a billboard erected on a busy highway that said:
WILL THE LAST PERSON TO LEAVE SEATTLE PLEASE TURN OUT THE LIGHTS
Just can't imagine why that memory surfaced last night as yet another financial
institution, this one the nation's largest savings and loan, announced that
it too was more massively wounded by its recent enthusiasm for subprime lending
than it had previously admitted.
Late Monday, after the market closed of course, Washington Mutual
announced that, in an attempt to raise cash, it will conduct a $2.5 billion
convertible preferred stock offering. It will also close 190
of its 336 loan centers and sales offices, lay off more than
3,000 employees and set aside up to $1.6 billion for loan losses in the fourth
quarter.
The company also announced that it was getting out of the subprime business entirely
and would close the division that markets its mortgage-backed securities, relying
instead on third-party brokers.
And it is slashing its dividend 73 percent, from $.56 to $.15
for the quarter.
In September WaMu admitted to some potential problems when it announced it was
laying off 1,000 employees and curtailing much of its subprime lending. However,
as recently as November spokespersons were saying the company had no plans to
reevaluate its dividend until after the first of the year.
In the latest round of job cuts 2,600 positions will be eliminated from the home
loan category and 550 will come from corporate and support positions. The company
hopes that the job reductions and office closings will eliminate $500 million
in non-interest expenses.
The company also said that during the first quarter of 2008 it expects loan
losses to total $1.8 billion to $2 billion and that its losses will
continue to remain high throughout the whole of next year.
In a Form 8-K filing with the Securities and Exchange Commission WaMu said that,
from its announced public offering, it intends to contribute up to $1.0 billion
of the proceeds to Washington Mutual Bank, its principal bank subsidiary, as additional
capital and retain the remaining net proceeds for general corporate purposes.
According to The Wall Street Journal, WaMu's portfolio has the most exposure
to risky loans of any of the top five mortgage lenders. 29% of its 2006 loans
are in the high-cost category, mostly subprime, and 15% are backed by homes
other than the owner's primary residence. Mortgages on second homes and speculative
properties are considered more vulnerable to default.
The proposed stock offering came only hours after European mega-bank UBS
AG, also battered in the subprime market, said it would sell $11.5 billion in
stock to the Government of Singapore Investment Corporation and an unidentified
investor in the Middle east. This was only the latest in cash infusions from
investors intended to shore up troubled financial institutions. Citigroup recently
received $7.5 billion from Abu Dhabi investors in return for 4.9 percent of
its value and both Freddie Mac and Fannie Mae have planned or implemented huge
stock sales.
The Associated Press said that, while WaMu's offering has not been priced,
the company is hardly sitting in the catbird seat when it comes to dictating terms.
Citigroup will be giving its Abu Dhabi investors an 11 percent annual yield and
Freddie Mac's new stock has a fixed dividend of 8.375 percent - nearly
2 points higher than a previous sale of preferred stock in September.
WaMu closed out the trading day at $19.88, up $.85. In overnight trading the stock
lost 10 percent on the Frankfort Market.
Several investor services including Moody's and Fitch downgraded
rates for WaMu. Moody's said their action was "based on its view that credit
losses from WaMu's mortgage operations will be noticeably higher than previously
estimated" and that the company might not return to profitability until 2010.
Within hours of the announcement of cuts and cash raising analysts were speculating
that WaMu might be sold.
One wonders who may be left to buy it.
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Comments (17)
| HOLY COW, people! Doesn't anybody with any common sense SEE what is going on in this country? With bank closings, our economy is slowly crumbling and slowly being taken over by Arab nations and other nations who now have the money to bail us out. This country will become a third world nation before we know it. Please visit the American Solutions web site and sign the petitions to save this country! |
|
| Above Posted By:
Anonymous
| Tue, 15 Jul 2008 11:59:45 EST |
| Susan, you must be as rightwing as they come. "Its all their fault" is your mantra. Get your head out of the sand and look around, your not the only one on the planet |
|
| Above Posted By:
Dave Watts
| Mon, 14 Jul 2008 10:06:53 EST |
| WAMU has been the worst company to deal with. Every year they send me threatening form letters regarding my windstorm coverage, even though I have had the same coverage for 8 years. I update their website, they still send me form letters. You call them, and their reps are incompetent. This is the way they treat their good customers, being that I am one of the fortunate to be able to make my payments on time (so far) and have never let my insurance lapse. They seem to be quite mismanaged in my opinion, and I plan to never do any further business with them, once my mortgage is paid off. |
|
| Above Posted By:
TR
| Fri, 20 Jun 2008 08:24:58 EST |
| Ive been working for WAMU Wholesale for three years When i heard that we were closing up shop, i could'nt of been more happier. Time to close the door on this chapter and move on. |
|
| Above Posted By:
John
| Thu, 8 May 2008 12:28:13 EST |
| Wamu was in such a rush to close its doors in the layoffs and was so sneaky about it, that many loan officers ended up keeping the company laptops given to them. "There was no place to return them". In light of the layoff, no severence, and no notice given, I'd say it serves them right. |
|
| Above Posted By:
ex loan officer
| Wed, 2 Jan 2008 08:06:33 EST |
| As one of the employees that was laid off this week, I am largely dissapointed in the handling of the situation. No warning, no severence, don't let the door hit you on the way out, and Merry Christmas. I will never utilize any of their financial products or consider working for them again in the future. Time to move on, gladly. |
|
| Above Posted By:
L
| Fri, 14 Dec 2007 16:40:40 EST |
| WaMu was a terrible company to work for and they deserve all of the misfortune that befalls them. I pity those who are employeed by them, they are the one who will suffer. |
|
| Above Posted By:
Jack Russell
| Wed, 12 Dec 2007 20:33:20 EST |
| On the news (not Fox) last week, they reported that 97% of
mortgage holders were making their payments on time....They did not specify A paper vs B paper, it was all inclusive. |
|
| Above Posted By:
Chuck
| Tue, 11 Dec 2007 19:52:17 EST |
| "I have heard the Muslims are buying up Citibank, is this true?" Wow, Susan, "the Muslims", well thanks for atleast capitalizing the M. "the Muslims" only purchased a small amount Susan. This is what it is, economies have globalized. entrepenuership has flourished. We have been spoiled that last few years. Once every 10 years, we need a cleansing ('87, '97, 2007). |
|
| Above Posted By:
Anonymous
| Tue, 11 Dec 2007 18:13:22 EST |
| Yeah right Dave..."finiancial realignment"...that's a fantasy outlook. Reality check reveals that this is a planned implosion.
The world bankers (i.e. new world order) have this as part of the plan (with $ drainage in iraq) to take America down a few pegs to line up with the rest of the world. They can't control people when they have wealth (and guns) so they let us get fat, dumb and happy with credit out the wazoo, then they pull the plug...pop the balloon, whatever you want to call it. |
|
| Above Posted By:
Anonymous
| Tue, 11 Dec 2007 13:37:47 EST |
| Yeah, righta "cleanse." That's the ticket! A great "opportunity" for disaster capitalists. |
|
| Above Posted By:
Jim
| Tue, 11 Dec 2007 13:00:00 EST |
| This is not about subprime, this is about option arms. Most of WAMU's business is option arms with AAA credit clients. |
|
| Above Posted By:
Private
| Tue, 11 Dec 2007 12:59:30 EST |
| This is a terrible thing. More people unemployed. Who benefits from this? |
|
| Above Posted By:
Anonymous
| Tue, 11 Dec 2007 11:26:33 EST |
| If they're so strapped for cash, why won't they accept my terms of giving them what I can on my mortgage. If I can't cough up to their terms, they're willing to foreclose...how stupid can this be? I'm willing to pay my original monthly amount if they'll just move my missed payments to the end of the load...ya know - work with me - like they say??
You're better off renting...Why should I pay $450,000 for a house I bought for $192,000 - unless you've been brainwashed. We've been duped people! |
|
| Above Posted By:
Tom
| Tue, 11 Dec 2007 11:25:46 EST |
| get their heads out of the sandlook around at what is going on around the rest of the world, it is happening here too. Look at history when the Muslims had all of the middle east the europe in the 1400s Finally rullers started kicking them out of their countriesthat is the only 'nice' way to get rid of thembut that was before they had nukes. Editor: please let the author of this article atleast see thisedit some for the rest of clueless society. Thank you for letting speak the truth. |
|
| Above Posted By:
susan
| Tue, 11 Dec 2007 10:54:40 EST |
| There is supposed to be a Global Order (why ithe Big Guys in the US would sell us down the river I dont know) I have heard the Muslims are buying up Citibank, is this true? Well, I can see how they will be able to take over this Country as well just like they are ooozing into all the rest of the globe and doing so with with our money we pay them for their filthy oil.
When Obama gets in office get ready for Sheria law.
When will we Americans (not the gov.)got to next comment
|
|
| Above Posted By:
susan
| Tue, 11 Dec 2007 10:48:25 EST |
| While this may seem like a "terrible thing," I believe we should view it as a "cleanse." It's part of the financial realignment taking place in the US - I see great opportunities rising for those smart enough to recognize them. "Good things come to those who wait." |
|
| Above Posted By:
Dave Lucas
| Tue, 11 Dec 2007 10:27:43 EST |
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