WaMu's Downfall: No Safeguards

I have accounts with WaMu (WM) and am happy that JPMorgan (JPM) has taken them over. JPM's James Dimon has the respect of many investors and Wall Street, and thankfully, my deposits are safe at WaMu.

I just read this article in a legal magazine about WaMu, and it's no wonder the bank collapsed. Take a look at this story, where WaMu gave 43 loans (25 million dollars) to one couple, revealing a complete lack of safeguards or risk controls.

If the Fed is correct--that it is buying undervalued securities that will eventually increase in value when the real estate market stabilizes--then JPM would be a good buy. In effect, JPM has partnered with the Fed in its new debt issuance and stands to gain or lose like the Fed. I had considered buying JPM stock, but the stock increased 11% today. It looks like I missed the boat.

Comments

[Peter Lynch:]

>>>I have accounts with WaMu (WM) and am happy that JPMorgan (JPM) has taken them over. JPM's James Dimon has the respect of many investors and Wall Street, and thankfully, my deposits are safe at WaMu.<<<

Your accounts are safe, no matter which banks you use, as long as they are FDIC insured and under the limit. A couple, with a little planning, can have accounts totaled up to $600,000 insured in one bank.

If you have millions of dollars in savings, checking and CD accounts in one bank (I don't care if your bank is JP Morgan, Citi, BOA, US Bancorp, or your local credit union), you need to spread that money around or buy yourself some treasury bills.

2008 Sep 28 01:34 PM