Now would be a good time to get out of WaMu

NEW -> Contingent Buyer Assistance Program
[quote author="graphrix" date=1222174786][quote author="awgee" date=1222155335]That is when Howard Hughes got his start.



And this will be a bit harder to verify, but at the time Jesse Livermore was making a fortune short selling, which happened to be illegal. JP Morgan went to Jesse and asked him to stop.</blockquote>


From what history I know of, short selling was perfectly legal in 1929. It was condemned by Hoover, however the uptick rule wasn't even implemented until 1938.

</blockquote>


Just spent a half hour searching for a reference showing that shorting was illegal in 1929, and could not find anything, and my research seems to show just the opposite. I can't even find my original source which I just read a few days ago, but will keep looking. I even read it a few times thinking I must be misreading it or that it refered to naked shorting, but came away with the impression that shorting was illegal in 1929. Anyways, it seems you are right.




/




Did some more searching. I had the year wrong. Here is the original reference:




<em>?Short selling in 1907, although commonly done, was illegal. JP Morgan knew that unless the major short sellers could be neutralized the crash of 1907 would have broken the nation "</em>

from James Sinclair




/




And I ran accross this account of the Morgan to Livermore communication:

<a href="http://www.guardian.co.uk/business/2008/sep/19/marketturmoil.regulators">Morgan to Livermore</a>
 
If the last two days are an accurate indication, it would appear the ban on short selling has not helped the financial stocks a whole heck of alot.
 
[quote author="usctrojanman29" date=1221631517][quote author="OCCOBRA" date=1221621630]All my money is at WAMU and there it will stay. WAMU Federal does not bother me. They have been the best bank ever and hopefully they will weather the storm JP Morgan is looking to acquire them. It was sad to see people running INDY MAC and there was no reason for it unless you where not fully protected. I am sure the people who are not protected at WAMU have already made changes.</blockquote>
My friend and co-worker withdrew all of his funds from WaMu earlier today (over $50k but under $100k). He wasn't comfortable with having his money over there. He'll be placing most of those funds into his Charles Schwab account.</blockquote>


Good for you if you don't feel comfortable but I really doubt what a lot of people are saying on this board about not getting your money now and the bank will freeze! If that got out to the media that even 1 penny that was protected by the FDIC was not being payed out on time or checks where not clearing i don't care what bank your are with the massive run on all the banks will sink even the most strongest banks and you will have bigger things to worry about such as no job, no house, no credit cards and no money. Just look at the run on Mutual funds and the FEDS insured them to calm the market and stopped the run. Look adding fear that your going to loose all your money that is protected at WAMU by the FDIC is not doing anyone any good. Ameribank just went under and the checks are clearing and it is business as usual for them with the feds running the bank until they can find a buyer or give your money back. For me to run all over town taking money out of this bank and put it in that bank is a big waste of time based on rumors or fear. Yes i know Moody's rated them and "E" (Who Knew they had an E?) but the feds are working with 6 major banks over last weekend and are bending the rules to find someone to take over WAMU. The reason the FEDS have not taken over WAMU is the Markets would go ape sh#t and the FDIC would need about 145 billion more from congress to do it. I can see if you just don't feel right about having your money in WAMU then pull it out by all means but do your homework on where your going to put it.



But before you take your money out you may want to hit this link and see all the bad loans and the latest news on other banks in trouble.



http://bankimplode.com/



Take care and still enjoying WAMU Federal.
 
[quote author="awgee" date=1222253037]If the last two days are an accurate indication, it would appear the ban on short selling has not helped the financial stocks a whole heck of alot.</blockquote>


Nope, not one bit. In fact I made a little profit off some puts [strike]shity[/strike] Citi today because of it. Banning short sales is a myth, a myth that Hoover was wrong on, and a myth that Cox is wrong on. People will still find a way to sell shares, they just sell and they go down as more people sell the shares, not when people wish to sell them at a lower price by borrowing them. Of course if Buffett comes in to buy an [strike]investment bank[/strike] bank holding company like Goldman, then you are screwed if you had puts on them.
 
<strong><span style="font-size: 14px;">Goldman Gets Buffet Aid of 7.5 Million Dollars.

</span>

</strong>



<a href="http://www.bloomberg.com/apps/news?pid=20601103&sid=adovzoIMOXYA&refer=us">You mean like this ?</a>



You weren't kidding when you advised me not to bet against GS !
 
[quote author="graphrix" date=1222264282][quote author="awgee" date=1222253037]If the last two days are an accurate indication, it would appear the ban on short selling has not helped the financial stocks a whole heck of alot.</blockquote>


Nope, not one bit. In fact I made a little profit off some puts [strike]shity[/strike] Citi today because of it. Banning short sales is a myth, a myth that Hoover was wrong on, and a myth that Cox is wrong on. People will still find a way to sell shares, they just sell and they go down as more people sell the shares, not when people wish to sell them at a lower price by borrowing them. Of course if Buffett comes in to buy an [strike]investment bank[/strike] bank holding company like Goldman, then you are screwed if you had puts on them.</blockquote>


I disagree. Watching the markets you can see markets are behaving very differently. Not necessarily better, but differently.



Also, shorting, although possible, has become MUCH riskier and onerous. The spreads on puts are now extra-large. On Goldman the puts have a 8% spread. That means, the minute you buy a put you are 8% in the hole.



At current prices, if you buy an at-the-money put for October you will need GS to drop at least 9-10% within a month just to break even.



Trying to implement a synthetic short with options will also set you back 3 or 4% even for short holding periods.
 
[quote author="muzie" date=1222317374][quote author="graphrix" date=1222264282][quote author="awgee" date=1222253037]If the last two days are an accurate indication, it would appear the ban on short selling has not helped the financial stocks a whole heck of alot.</blockquote>


Nope, not one bit. In fact I made a little profit off some puts [strike]shity[/strike] Citi today because of it. Banning short sales is a myth, a myth that Hoover was wrong on, and a myth that Cox is wrong on. People will still find a way to sell shares, they just sell and they go down as more people sell the shares, not when people wish to sell them at a lower price by borrowing them. Of course if Buffett comes in to buy an [strike]investment bank[/strike] bank holding company like Goldman, then you are screwed if you had puts on them.</blockquote>


I disagree. Watching the markets you can see markets are behaving very differently. Not necessarily better, but differently.



Also, shorting, although possible, has become MUCH riskier and onerous. The spreads on puts are now extra-large. On Goldman the puts have a 8% spread. That means, the minute you buy a put you are 8% in the hole.



At current prices, if you buy an at-the-money put for October you will need GS to drop at least 9-10% within a month just to break even.



Trying to implement a synthetic short with options will also set you back 3 or 4% even for short holding periods.</blockquote>


Are you saying financial stocks would be lower than they are now?



That is possible. I guess we will find out when the short ban ends.
 
Well they WERE lower to day before the announcement.



I think the short rule has had far more impact on markets than the bailout is. It's the same thing that happened July 16th (and somehow I got suckered in it twice :-( ).



The short rule put a gun to the head of many heavily short hedge funds. Many would have margin calls as a result of the action and were forced to cover, bringing up prices even higher.



I did NOT expect the short rule rally to deflate so fast - now the market is slowly deflating. I guess that's better than a crash, though the end result is the same. I exited all my shorts too early :-(.





Thinking all the banks will just shoot downward after the short ban seems a bit too obvious to me. Many have been burned and many will be hesitant to just dive right in. If there's a war on shorts going on, then it'll just escalate. Next time, ALL shorts will be banned. Then perhaps another rate cut. Then, lord knows what they can come up with.
 
Wow, my Dad just called to tell me.....they swooped in right after the banks closed today.....so there wouldn't be a run on WAMU.



We'll see what tomorrow brings though....I guess I'll have a JP Morgan CD maturing on 9/30. Crap....I almost made it.



RIP Wamu.
 
Well there we have it. The death of Wamu.



"JPMorgan Chase acquired the banking operations of Washington Mutual Bank in a transaction facilitated by the Federal Deposit Insurance Corporation. All depositors are fully protected and there will be no cost to the Deposit Insurance Fund....



JPMorgan Chase acquired the assets, assumed the qualified financial contracts and made a payment of $1.9 billion. Claims by equity, subordinated and senior debt holders were not acquired.



"WaMu's balance sheet and the payment paid by JPMorgan Chase allowed a transaction in which neither the uninsured depositors nor the insurance fund absorbed any losses," Bair said.



Washington Mutual Bank also has a subsidiary, Washington Mutual FSB, Park City, Utah. They have combined assets of $307 billion and total deposits of $188 billion."



JPMorgan paid 1.9 billion for 188B$ in deposits. Not bad, depending on how bad the loans get.
 
[quote author="muzie" date=1222420055]Well there we have it. The death of Wamu.



"JPMorgan Chase acquired the banking operations of Washington Mutual Bank in a transaction facilitated by the Federal Deposit Insurance Corporation. All depositors are fully protected and there will be no cost to the Deposit Insurance Fund....



JPMorgan Chase acquired the assets, assumed the qualified financial contracts and made a payment of $1.9 billion. Claims by equity, subordinated and senior debt holders were not acquired.



"WaMu's balance sheet and the payment paid by JPMorgan Chase allowed a transaction in which neither the uninsured depositors nor the insurance fund absorbed any losses," Bair said.



Washington Mutual Bank also has a subsidiary, Washington Mutual FSB, Park City, Utah. They have combined assets of $307 billion and total deposits of $188 billion."



JPMorgan paid 1.9 billion for 188B$ in deposits. Not bad, depending on how bad the loans get.</blockquote>
Now that's interesting...the FDIC gets off scott free and the senior debt holders get a pile of dog crap. What about secured debt holders???
 
Are any of the WAMU accountholders here planning on bailing out and opening an account with other banks? Why/why not?



Just wanted to hear (in a manner of speaking--hmm--writing) the other members' opinions.
 
It's business as usual with me and my friends and we are leaving all our accounts alone. The name will change but thats about it. I personally do not want to waste my time and money getting new saving, CD's and checking account's, and new checks forget it. I think we are at the beginning of rash of bank closures due to bad Real Estate loans and by pulling your money out of one bank into another is just Russian Roulette. What caused WAMU to go under is over the last 10 days scared people took out over 16 Billion dollars and ran the bank. This will continue and no bank is safe from this irrational fear. So if you like the pain in the ass of pulling your money out of one bank arbitrarily based on rumor, fear and or speculation into another bank, well now is the time for you to start banking and feed your paranoia. Have a good time...
 
This is going to sound disingenious, since I'm the OP here, but I still have accounts at WaMu. I just made sure that I kept the money flowing out (paying bills early, etc.) so that the balance was low.



Long-term (aka within a year) I'll still open accounts somewhere else. They got bought by JPMorgan so it's all good, but JPM is the no. 1 derivatives player out there, so not exactly a risk-free bank. JPMorgan also did a 8B$ offering immediately as soon as they bought WaMu for 2B$... so it's kind of obvious they're not floating in seas of cash either.



Not to mention, JPMorgan's business model couldn't be more different from WaMu's, and I'm thinking that can't be good for the quality of service of WaMu as a bank (aka their IT infrastructure probably isn't even compatible). There's so synergy here, and it's not like the aquisition by JPMorgan was made to build a better business. I wouldn't be surprised to see large cost cutting that turns WaMu into a hodgepodge of a bank - there's better banks out there.
 
[quote author="punchenpie" date=1222482652]Are any of the WAMU accountholders here planning on bailing out and opening an account with other banks? Why/why not?



Just wanted to hear (in a manner of speaking--hmm--writing) the other members' opinions.</blockquote>


My money will stay at Wamu/Chase as long as rates are competitive. If they don't want my CD deposit at 4.25% and give me an out, I will just fire up with whatever bank is offering up the juiciest at the time.
 
We opened a new account, at SunTrust which is in viewing distance of our

WaMu branch. The bank officer said this morning there was something of a traffic

jam in WaMu's parking lot. This is on Merritt Island, Fla.
 
I don't see a reason to move. JPMorgan has decent equity so it doesn't seem particularly risky. They have some kind of special relationship with the Feds, too - there have been three times this year that the Feds have effectively hired a bank to clean up a big mess (Bear merger, Lehman unwind, and Wamu takeover) and they used JPM every time. So if JPM hits a rough spot I think they'll get special help.
 
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