OJO Zafado

WaMu Shareholders Left Out in the Cold, Again

What about the bond holders? All we hear is how the management screwed their shareholders. These deadbeats at WM were lining their pockets at the expense of the bottom line to the point where the ability to meet their good faith debt obligations became in doubt! They should have cut their dividend AND Exec compensation over a year ago when New Century went under! This deal has created a small windfall for bond holders who thought they were buying investment grade debt. Now they have 90% of their ivestment recovered. Some of this reorganization of SEC & other regulatory agencies should involve providing the debt holders a say in the operation of a company. Debt holders should have a member on these boards of directors to have a look see at whether these company's financials are as sound as their ratings.It is not just the regular "Joe" shareholder that has lost his money. By the time this deal came about most of the shareholders were just stock market speculators. We are not going to cry for those shareholders too much. They allow these abuses by lack of activisim. They understand they have more risk going into the investment. Where are the "Perp Walks"? There has been so little cooking of books in these financials that they are all innocent and there are no usual suspects? As far as dilution goes there is plenty of it at most all banks. WB has floated out 4 new preference issuances to the tune of $7 billion in the last year. The latest is a 10 year call, near 8% yielding adj rate. Their shareholders are last in line for a dividend & will most likely get cut. As soon as C got their Arab cash infusion they floated out their "F" at a near 8% as well. There have been dozens of these across the industry. In times of credit disruption like this no poorly managed industry is going to get funding on the cheap without a proper risk premium. This is bad news for the common shareholders expecting even decent dividends. Too bad for them if they did not or do not understand their risk.