dcxavier

WaMu: Speculative Value Play

The most questionable area of the loan portfolio is the HELOC/seconds. They already write off more on the seconds than they do on all the primary loans, which include Option ARM's. Seconds take 100% of the loss before the primary loan loses one cent.

WM hasn't written down the value of the non-performing loans either. Banks have great flexibility about when to write down the value of the loans. There are numerous anecdotal reports about WaMu refusing short sales, I believe because it would force them to recognize a loss. By refusing an offer, they can keep the non performing loan at full value on the books.

Clueless KKK estimates that WM will lose $19B on mortgages, note that does not include upcoming billions in credit card losses which started last quarter. Compare delinquency rates and loss provisions with Capital One to see what I mean. So why don't they reserve the $19B? It would put the bank below minimum Tier 1 capital requirements if they did. One good puff of wind would topple this house of cards.