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September 17, 2008

Economy – Washington Mutual To Be Auctioned? Is Your Money Safe?

 Washington Mutual, the struggling savings and loan, has been working on several efforts to save itself, including a potential sale.

Among the potential bidders that Goldman has talked to are Wells Fargo, JPMorgan Chase and HSBC. But no buyers may materialize. That could force the government to place Washington Mutual into conservatorship, like IndyMac, or find a bridge-bank solution, which was extended to thrifts in the new housing regulations.

Citigroup is also considering an offer, but would likely be able to buy Washington Mutual only if it emerged from a receivership, according to a person close to the situation. JPMorgan is maintaining its posture that it will not bid unless it receives government support.

The announcement comes as the bank, which has suffered badly from losses on mortgages it had made, continues to stumble. Shares in Washington Mutual fell nearly 10 percent on Wednesday to $2.09; they have plunged 94 percent over the last 12 months. This week alone, investors have been frightened by Standard & Poor’s cutting of the bank’s debt rating to junk.

TPG, the private equity firm that led a $7 billion cash injection into Washington Mutual in April, said Wednesday afternoon that it would waive its right to be compensated if the bank sold more shares to raise capital. “Our goal is to maximize the bank’s flexibility in this difficult market environment,” TPG said in a statement.

While the bank has a strong deposit base, the uncertainty of the markets and the increasingly poor housing market have increased concerns about Washington Mutual’s outlook.

Since the FDIC doesn’t release the names of banks that are in trouble, but you can check the health of your own bank. Check out bankrate.com. This site will have a safe & sound rating system that can help you get a picture of your bank’s health.

If you want more detailed information about your bank’s financials, you can go to ambest.com.

Some signs to look for:

Pay attention to massive job layoffs or cutback in services at your bank.

1.    If your bank doesn’t accept new loan submissions that’s a HUGE red flag.

2.    If you start to see generous CD yields advertised – that could be a sign that the bank is in trouble so it’s trying to entice people to keep their money at the bank and get new deposits. 

Are your deposits insured?  Find out by going to: http://www.fdic.gov/deposit/deposits/index.html

 

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6 Comments »

  1. My money is safe. I could never trust a company whose slogan is “Woo Hoo!”

    Comment by Kurt — September 18, 2008 @ 10:43 am | Reply

  2. Yes, more wonderful news. Maybe America needs to shut down and close its doors. One thing for sure, if McCain gets elected, it will happen.

    Comment by Bruce — September 18, 2008 @ 1:09 pm | Reply

  3. LMAO – Kurt that’s very funny!

    Woo hoo!

    Comment by Paulette — September 18, 2008 @ 1:42 pm | Reply

  4. I used to bank there before I moved (nearly) everything to my credit union. I still have a small amount of money at WaMu, that needs to come out ASAP.

    Comment by deannaizme — September 18, 2008 @ 4:45 pm | Reply

  5. Deanna – I have a checking acct with them – but there isn’t enough money in that acct to cause me to panic.

    The best way to save money these days is by purchasing T-Bills. The govt guarantees them. You don’t make a lot of interest but at least your money is safe.

    This is a sad situation.

    Bank of America is scary to be right now because it has so much on it’s shoulders since buying Lehman earlier this week.

    Scary.

    Comment by Paulette — September 18, 2008 @ 5:18 pm | Reply


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