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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: stomper who wrote (151474)	9/28/2008 1:40:35 AM
From: Asymmetric	Respond to of 306849

Stomper, Good article: Message 24999811 Here's another on WAMU if you haven't seen it already: Washington Mutual Lists $8 Billion Debt in Bankruptcy (Update1) By Jef Feeley and Steven Church / Bloomberg Sept 27, 2008 Washington Mutual, a holding company for the savings and loan that became the biggest U.S. bank to fail, listed more than $8 billion in debt in its bankruptcy filing in Wilmington, Delaware. WaMu, the 119-year-old Seattle-based thrift, sought Chapter 11 protection in U.S. Bankruptcy Court late yesterday, according to court records. The filing covered the bank's holding company and its WMI Investment Corp. unit. WaMu's banking subsidiary was seized Sept. 25 by U.S. government regulators after customers withdrew $16.7 billion over 10 days. ``The expectation is we may see more banks being forced to take this route,' said Kevin Mangan, a Wilmington bankruptcy lawyer with Womble Caryle Sandridge & Rice who isn't involved in the case. WaMu is the latest victim of the credit crunch, which forced New York-based Lehman Brothers Holdings Inc. and IndyMac Bancorp Inc. into bankruptcy, drove Merrill Lynch & Co. to sell itself to Bank of America Corp. and brought about the Federal Reserve- financed purchase of Bear Stearns Cos. by JPMorgan Chase & Co. Wachovia Corp. fell in late trading yesterday amid media reports that losses tied to mortgage loans may force a merger with Citigroup Inc., Wells Fargo & Co. or Banco Santander SA. JPMorgan Chase & Co. became the biggest U.S. bank by deposits when it bought WaMu's branches with a $1.9 billion payment to the Federal Deposit Insurance Corp. this week. WaMu also listed more than $32 billion in assets in its bankruptcy filing. 98 Percent Washington Mutual had fallen 98 percent over the past year on losses tied to subprime lending before trading was halted on news of the FDIC seizure. The company was one of the financial firms the U.S. Securities and Exchange Commission protected from short selling this month as part of an effort to stabilize equity markets. WaMu's bank had $188 billion in deposits. The savings and loan itself may not seek bankruptcy protection under federal law. The Bank of New York Mellon Corp., trustee for more than $6.4 billion owed to bondholders, is the only creditor noted on the bankruptcy filing's list of WaMu's 20 largest unsecured creditors. WaMu's debt ranks it among the largest U.S. bankruptcies by indebtedness. Lehman's bankruptcy filing earlier this month is the largest, with $613 billion in debt. The Chapter 11 petition by New York-based Lehman, once the fourth-largest U.S. investment bank, was 15 times larger by debt than any other bankruptcy case. WorldCom Inc., the telecommunications firm that filed for protection in 2002 after accounting malfeasance was disclosed, listed $41 billion in debt in what's now the second-largest Chapter 11 case. Wachovia Losses Fears of mounting losses on Wachovia's $122 billion in option adjustable-rate mortgages helped push the Charlotte, North Carolina-based company's shares down by 64 percent this year. Citigroup, Wells Fargo and Santander are in talks with the bank, the Wall Street Journal reported yesterday. ``Unfortunately, we are going to see a meaningful number of additional insolvencies' among banks, said Ronald Greenspan, a senior managing director with FTI Consulting Inc. Greenspan has represented creditors in bankruptcies of the biggest subprime mortgage companies, including New Century Financial Corp. WaMu's court filings don't reflect the company's entire debt because many liabilities are spread out among its various units, many of which haven't sought court protection, Greenspan added. 119 Years Later WaMu began as the Washington National Building Loan & Investment Association on Sept. 25, 1889, 119 years to the day before its failure. A fire had engulfed downtown Seattle and residents needed a safe place to put their money, according to the bank's history posted on its Web site. Like others at now-struggling financial institutions, WaMu pushed at the height of the housing boom into riskier loans to less creditworthy buyers. The bank was the second-biggest provider of payment-option adjustable-rate mortgages, behind Wachovia, with $54 billion held in its portfolio in the first quarter, according to Inside Mortgage Finance. Option ARMS let borrowers skip part of their payment and add that sum to the principal, so that when housing prices fall, as they have since 2006, borrowers might end up owing more than the residence is worth. WaMu's bankruptcy case was assigned to U.S. Bankruptcy Judge Mary F. Walrath. The case is In Re Washington Mutual Inc., 08-12229, U.S. Bankruptcy Court for the District of Delaware (Wilmington).