forwoodenboats

WaMu Borrower Purposely Defaults, Gets Foreclosed On, Sues

It always amazes me how people will sell their integrity for a few thousand bucks. Granted, lots of hard working people who pride themselves on never being late on a payment can suddenly find themselves flat broke, especially if they live paycheck to paycheck as many of us do most of our lives.
The ones who are taking advantage of the system, the 'me too's anytime they hear of a handout should be made to pay restitution plus 100% fine in addition, to help out some honest, productive family that really needs the help.
I don't have enough fingers and toes to count all the people I've met who considered credit card bankruptcies a right - one girl my brother couldn't seem to shake ran up over $200K and never paid back a dime, and my ex chiropracter strongly suggested I default on the credit cards I used to fund much of a couple years of college not long ago (algebra really sucks in your late 40s if you never took it before!), but I was wearing a grin he'll never understand when I paid off the last one.
He said that he and all his friends default, often twice, and they all had good jobs and weren't hurting for money.
They considered it a right, he said, and so should I.
I also had a right to never put another penny in his pocket, and never did, other than that visit's check.....you know he would have been the 1st one to come after me if I cancelled it!

WaMu and More: Uninsured Depositors Begging for Trouble

I agree the author of this sensationalist "piece" of work is trying to create a run on the bank.
Otherwise he would have posted the rest of the article he was qouting, rather than cherry picking the worst part, knowing that most people don't bother reading past the headlines, much less follow the link to see if there is any data that might balance out the article and Shedlock's anonymous joker "AJ".
The rest of the story;

<i>``As we stated publicly months ago, WaMu funds all of its business through its banking operations and does not rely on commercial paper,'' the company said in an e-mailed response.

Cash Infusion

Chief Executive Officer Kerry Killinger has said the $7 billion cash infusion led by TPG Inc., coupled with plans to save $1 billion annually by trimming the mortgage business, gives the lender enough money to ride out the U.S. housing slump. The decline in federal funds purchased on WaMu's balance sheet may be the result of the company using cash to prefund short-term maturities and not creditors withdrawing money, which suggests it didn't need to borrow in the Fed Funds market, WaMu said.

WaMu slid 62 cents, or 13 percent, to $4.03 at 4 p.m. in New York Stock Exchange composite trading. The stock fell 20 percent yesterday and has lost 90 percent of its value in the past year.

Some 335 million WaMu shares changed hands, more than eight times the daily average over the past year, according to Bloomberg data. The stock has moved at least 10 percent nine times in the past three weeks.

Credit-Default Swaps

Credit-default swap sellers demanded 14 percentage points upfront and 5 percentage points a year to protect WaMu bonds from default for five years, up from 7.3 percentage points a year yesterday, according to CMA Datavision.

That means it would cost $1.4 million initially and $500,000 a year to protect $10 million in bonds. Yesterday, that would have cost $730,000 a year without an upfront payment. Protection sellers start demanding upfront payments when the risk of an imminent default increases.

Credit-default swaps were conceived to protect bondholders against default, and pay the buyer face value in exchange for the underlying securities or the cash equivalent should the company fail to adhere to its debt agreements.

Analysts at Piper Jaffray Cos., Merrill Lynch & Co. and Friedman Billings Ramsey Group Inc. said after WaMu's earnings report that it may need to raise more cash. According to a clause in the TPG agreement, if WaMu raises more than $500 million in equity at less than $8.75 a share within 18 months, it must compensate TPG for the difference.

Standard & Poor's said WaMu has the liquidity to meet obligations without raising more funds through 2012. Analysts at Lehman Brothers Holdings Inc. and UBS AG also said the company should have enough capital.

To contact the reporter on this story: Ari Levy in San Francisco at [e-mail]

Last Updated: July 24, 2008 17:34 EDT </i>