Washington Mutual is the largest bank failure in U.S. history. Federal regulators took over Washington Mutual today and shut down the firm due to inadequate liquidity. According to the Wall Street Journal depositors had withdrawn $16.7 billion in assets since September 15th. The large withdrawals caused Wamu to drop below fdic minimum requirements. What does this mean for your deposits. Apparently the deposits of Wamu are secure and some $300 billion in assets were purchased by J.P. Morgan today. Under the brokered deal between the federal government and J.P. Morgan, customer deposits and bank branches would be transferred to J.P. Morgan. The Wall St. Journal reports that the FDIC insurance would not be used and that assets above $100k would still be liquid. Still many details need to be worked out, but it appears that Wamu branches will now be run by J.P. Morgan.
Do you think Wamu could have survived had the $700 billion bailout passed? If you are a Washington Mutual customer, what are you planning to do with your savings and checking accounts? The assets appear to be guaranteed by both J.P. Morgan and the FDIC. Would you move your assets to another firm or stay with J.P. Morgan?
{ 7 comments… read them below or add one }
It’s wild. Absolutely wild. I can’t even imagine that this happened.
What makes it even more amazing is these initial reports that McCain flew in and derailed the whole thing–despite the fact that he’s not even a member of any of the responsible committees. I really try and stay politically neutral, but that seems outrageous!
As far as WaMu goes, I haven’t been happy with the direction it’s been headed. When I first met it in California, they were very big on the whole free checking, free ATMs, no outside ATM fees and everything. But by the time they got here, to Texas, they have been building WaMus that look exactly like fast-food places. Especially in bad parts of town. It seems like they were looking for risky loans.
This financial crisis is hitting people hard. I’m foreclosing on a house. We owe $127,000 on it and it is now priced at $103,000 and we haven’t had any serious offers. Amazing stuff.
We put in an offer on a home owned by Wamu. It is a short sale since the investor owe more money on it than it is worth. I think the investors owed $305k, but brought it for $275k two years ago. Other homes on the block is approximately $235k in good condition. I doubt it if we will get any response from them even though our offer was higher than what an appraiser friend thinks the house is worth. Sure there is a lot of homes for sale, but the ones owned by banks or a short sale is unresponsive and the ones own by owners are still expecting too much. I think we might just wait another year to see how things go.
Hi Scott, First I’d like to say that I feel badly for these two commenters of yours. This whole housing and Wall Street going ons have hit some families so badly and you just feel their pain.
If I had money in Washington Mutual I’m not really sure what I would do, I do have a tendency to panic at certain times and this would probably be one of those times. I do have money in Wells Fargo and even called my financial advisor and asked her if she thought Wells Fargo was ok right now. She reassured me that Wells Fargo has been around for many years… yeah well so have some of these other banks. So I’m on the fence onthis one. Thanks for a great post and thanks for making us think about what we w ould do. Now may I ask YOU, what would you do?
I read this last week with sorrow and a vague concern you get for people you don’t know personally but face a uncertainty and a bit of “I’m grateful my bank hasn’t failed”. Wachovia failed this morning. Suddenly this post had much more signifiance.
@ Sol Home foreclosures are very real and it’s terrible to see homeowners that are not able to move properties quick enough. I hope you have a good realtor that is willing to market your property and compete with any short sales you might have in your neighborhood.
@ Asithi I have noticed in our neighborhood that real estate agents are not being responsive to email and answering questions as well. I’ve sent some emails asking for more info and also offering help to clear yard debris or move an old truck. We have one house for sale that has a junk trunk with a flat tire in the driveway. If you were driving by the curb appeal would score a big zero.
@ JJ I do have an account at Washington Mutual and I’ve been told my funds are safe. It is not much money, but I was still concerned that I would have access to the money through ATM or bank wire. All is ok.
@ Carol Yes, I think we should all review our bank accounts and institutions and make sure we have adequate FDIC insurance. If you are ok, you might want to check for your parents or grandparents. It’s surprising how many people hold cash or money market accounts in excess of $100,000. A quick check of Suzie Orman’s FDIC government website will reassure account holders.