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To: Larry S. who wrote (49971)	12/9/2003 1:21:04 PM
From: BWAC	Respond to of 53068

<company specific or a warning sign for the whole mortgage sector? whole banking sector?> All of the above. And more because of the highlighted print reason in my previous post. Mortgage/Refinance Lenders, Homebuilders, etc have all been enjoying amazing record profits as a direct result of the low interest rates. Anybody with any sense, and reasonable credit should have taken advantage of the low rates and got themsleves into a fantastic rate long ago. Who's left for these lending companies to incrementally service? Other than your normal house/loan turnover that isn't directly financing smart and specific driven. But yet people still have to have a place to live. I just think the pace slows back to a more normal rate. I guess the mortgage companies will do ok just living off the service fees that were built into the recent refi's. But the incremental growth should not continue. The Banks have been riding high on the Interest rate spread income. Borrowing from the Fed at 1%, Loaning it back out at choose your rate over 5%. As rates rise this spread will get squeezed. The easy Bank profits will go down. At least until they raise your customer fees again <ng> Or send another few thousand call center jobs to India. The profits of the Banks and Mortgage and Home Builders have been affected greatly by the interest rate policy. There has been some talk of the homebuilders PE expanding, thus room to rise. I don't think so. Its the exact same trap as everyone sitting around at a semiconductor cycle top talking about KLAC having a 12PE and being a bargain. But the WAMU warning about customers going more for adjustable rates is the bigger red flag. How big a house can I buy for my maximium affordable X intial payment amount is going to turn into the multi headed monster of loan defaults, falling house prices due to excess inventory for sale, increased "living by credit card", and who knows what else. In that environment I don't think the market can do well. And more importantly, the average family living on marginal wages, who got sucked in to this easy money interest rate trap, won't prosper either. The timetable is all in the hands of Greenspan. And how many times has he blindly and irresponsibly swung the economy from boom to bust in recent (10) years? Each time burying another young inexperienced family in rising interest debt loads or conversely burying another retiree living on fixed interest rates. At some point, and I don't know when, the easiest money ever made since 1999 will be by being Short (Or having Puts) on TLT, Homebuilders, Mortage companies, Credit Card lenders, and Banks. So no WaMu's news is not company specific. It is one of the initial signs of the coming end stage of the cancerous Greenspan policies.