ArnoldCountry

Who's to Blame for IndyMac's Failure?

Next one looks like Washington Mutual... I recently read this analysis which scared the heck out of me:

HOW CLOSE IS WAMU TO THE BRINK?

Here is a write-up I found on the internet at walltreetexaminer.com about Washington Mutual.

"In order to get a better idea of the likelihood that ...(this) leading mortgage lender... will “go under”, I thought it would be a good idea to dig into their last 10-K annual report filing to obtain information on what is their total exposure in higher risk loan categories. As you read through this post, keep this quote in mind: The option ARM is “like the neutron bomb,” says George McCarthy, a housing economist at New York’s Ford Foundation. “It’s going to kill all the people but leave the houses standing.”

"Let’s start with Washington Mutual’s portfolio, shall we?

Option ARMs $63.4 billion

Loans with combined loan-to-value over 80% (and no insurance) $7.5 billion

Home equity loans and home equity lines of credit $15.6 billion

Interest-only loans $11.7 billion

Total exposure: $98.2 billion

You can find all these numbers on page 79 of their last annual report.

Tangible equity: $14.4 billion (Source: Yahoo Finance)

"Therefore, it would only take a write-down of 15 percent on their higher risk loans for Washington Mutual to be completely wiped out. (14.4B / 98.2B).

"Also, keep in mind that 1/2 of their total loan portfolio is in California (ground central for the US real estate meltdown—the highest risk region of the country)."

Considering the closure of Indymac Bank and its Option ARM clobbering them, it looks to me that WAMU is next.

IndyMac Bancorp Failure: Sen. Schumer vs. OTS

Thank God Senator Schuemer is not part of the intellegence committee... he would be quite helpful to the cause of terrorism. "Loose lips sink ships." An old WWII saying... Indymac Bank is sitting on the bottom of the ocean.

I thought legislators were to legislate. If he did not like what the OTS and FDIC were doing, float a bill.