Because First Heritage in Newport Beach did.

I had known one was coming, but thought it would be Riverside or SB.  I also thought it would be last Friday.

Ok, well it turns out that their REO for sale homes says it all.

It gets better.  The senior management of this bank consists of two families, the Lambs and the Dorris’.  How in the heck did the OCC approve this. 

Jeebus.  This really is the privatization of profits and the socialization of losses.

EvaLSeraphim - 25 July 2008 07:03 PM

Because First Heritage in Newport Beach did.

I had known one was coming, but thought it would be Riverside or SB.  I also thought it would be last Friday.

I’m not surprised at all, it was just a matter of time.  This is the CA subsidiary of 1st National Bank of Arizona and I used to work at 1st National Bank of Nevada which was their other subsidiary (privately held).  The parent bank has essentially stopped lending because they are undercapitalized and need hundreds of millions in equity.

From the 6 months that I spent at 1st NBON I could tell it was a matter of time before all 3 banks went under.  I mean, they provided so much land and residential lending loans that should have been made by hard money lenders and not a bank

The answer to your question is “not yet,“ but WaMu stock fell 4.7% to close at $3.84 today. It was at 5-something at the beginning of the week, I think.

On Bloomberg.com there was an article that quotes an analyst who says about WaMu, “We won’t use the phrase `run’ on the bank, but we would be remiss if we did not observe that many creditors have quietly been pulling funds from the bank.“

I just looked at the online CD rates for WaMu and they have raised the 12-month APY from 4% to 4.25% in the last few days. Looking for more deposits, perhaps?

I think it’s just a matter of time before the FDIC steps in.

Anon. - 25 July 2008 08:16 PM

The answer to your question is “not yet,“ but WaMu stock fell 4.7% to close at $3.84 today. It was at 5-something at the beginning of the week, I think.

On Bloomberg.com there was an article that quotes an analyst who says about WaMu, “We won’t use the phrase `run’ on the bank, but we would be remiss if we did not observe that many creditors have quietly been pulling funds from the bank.“

I just looked at the online CD rates for WaMu and they have raised the 12-month APY from 4% to 4.25% in the last few days. Looking for more deposits, perhaps?

I think it’s just a matter of time before the FDIC steps in.

I agree, WAMU is on the clock…we should set up a pool on which month the Feds step in and talk over.

usctrojanman29 - 25 July 2008 08:25 PM

we should set up a pool on which month the Feds step in and talk over.

Month?  Well, since there are 4 business days left in July…I pick July.

Nah, August or Sept., because it would take that long to hire
enuf regulators to have at least one person to close the doors
at each branch.  Over at Calculated Risk, some one said they had
on the order of 3500-4000 branches.  Does FDIC have that many
total employees?

Daedalus - 26 July 2008 12:55 AM

usctrojanman29 - 25 July 2008 08:25 PM

we should set up a pool on which month the Feds step in and talk over.

Month?  Well, since there are 4 business days left in July…I pick July.

But remember, they do this on Fridays and the next Friday is August 1st.

lawyerliz - 26 July 2008 04:05 AM

Nah, August or Sept., because it would take that long to hire
enuf regulators to have at least one person to close the doors
at each branch.  Over at Calculated Risk, some one said they had
on the order of 3500-4000 branches.  Does FDIC have that many
total employees?

They could always hire temp employees.  I didn’t realize that WAMU had that many branches.

WaMu has 45,000 employees.

How could a temp have the chutzpah to walk into a bank and say, ok
I am closing you now?  We are not talking about answering the phone
and taking messages here.

The bigger concern with WaMu`s potential failing is not does the FDIC have enough people?
Does it have enough cash reserves ? WaMu is the largest Savings and Loan in the country.
The potential exposure to the FDIC could make it impossible for them to do
anything after WaMu without going to the Fed for more cash.
They have reserves of 52 Billion covering Several Trillion in deposits in the Nations
Total Banking system.
If all of this happens the unwinding will be significant.
God help us if this perfect storm happens…......

Of course I agree Bitserv.

The way I see it there are 2 choices:

1.  The FDIC fails.  Results too terrible to comtemplate.

2.  The FDIC is stuffed with money.  Inflation on a scale not seen
since the 70s and 80s ensues.  A kinder, gentler default.  This is
dreadful, but not as dreadful as 1.

Is anybody willing to accept the consequences of 1?  Anybody
think 1 is better than 2 and willing to be precise in why?

bltserv - 26 July 2008 01:55 PM

The bigger concern with WaMu`s potential failing is not does the FDIC have enough people?
Does it have enough cash reserves ? WaMu is the largest Savings and Loan in the country.
The potential exposure to the FDIC could make it impossible for them to do
anything after WaMu without going to the Fed for more cash.
They have reserves of 52 Billion covering Several Trillion in deposits in the Nations
Total Banking system.
If all of this happens the unwinding will be significant.
God help us if this perfect storm happens…......

The FDIC will run out of cash.

And it is not going to be that big a deal to most.

You said it. They will go to the Federal Reserve for more cash.  The FDIC is a branch of the Federal Reserve.

Will this cause an increase in the money supply or monetary inflation.  Yeah, but so what?  The Fed has been doing that since 1913.

awgee - 26 July 2008 02:14 PM

Will this cause an increase in the money supply or monetary inflation.  Yeah, but so what?  The Fed has been doing that since 1913.

Yep. This is business as usual for the Federal Reserve.

My WaMu CD, held in a deferred comp acct., doesn’t mature until 9/30…..so I’m stuck in it.  Hoping for the best.

Hey, I opened this thing on 8/24/07…when I called for maturity date, they said it was 9/30/08, which is over a month longer than the 12 month period I signed up for.  Is this unusual…for it to be a “13 month” CD instead of the 12 you sign up for?  The customer service person I spoke to was new and could only explain that it’s b/c 9/30 is the end of a quarter .... or something like that.

I’m only curious b/c I’d like this $$ out sooner than later.

Also, LL said “Over at Calculated Risk, some one said they had
on the order of 3500-4000 branches.  Does FDIC have that many
total employees?“

Couldn’t they tap IRS or FBI white collar types to assist ?  I’m sure a one week training class would do the trick.

Trooper - 26 July 2008 03:42 PM

My WaMu CD, held in a deferred comp acct., doesn’t mature until 9/30…..so I’m stuck in it.  Hoping for the best.

Hey, I opened this thing on 8/24/07…when I called for maturity date, they said it was 9/30/08, which is over a month longer than the 12 month period I signed up for.  Is this unusual…for it to be a “13 month” CD instead of the 12 you sign up for?  The customer service person I spoke to was new and could only explain that it’s b/c 9/30 is the end of a quarter .... or something like that.

I’m only curious b/c I’d like this $$ out sooner than later.

Also, LL said “Over at Calculated Risk, some one said they had
on the order of 3500-4000 branches.  Does FDIC have that many
total employees?“

Couldn’t they tap IRS or FBI white collar types to assist ?  I’m sure a one week training class would do the trick.

Troop, I’ve used a lot of different banks for CDs, and I’ve never heard of a 12-month CD maturing in 13 months. It’s always been exactly a year - exactly to the day. Can you find your original receipt? The maturity date should be on this form.  If you can’t find your receipt, ask the bank to find their receipt.

should we start up a pool as to who goes down first:  Downey or WaMu?

freedomCM - 26 July 2008 05:02 PM

should we start up a pool as to who goes down first:  Downey or WaMu?

Downey will go first, I’ll bet $100 on it.  I also think that Yineyard Bank will be right after Downey and then it will be WAMU’s turn.

usctrojanman29 - 25 July 2008 07:28 PM

I’m not surprised at all, it was just a matter of time.  This is the CA subsidiary of 1st National Bank of Arizona and I used to work at 1st National Bank of Nevada which was their other subsidiary (privately held).  The parent bank has essentially stopped lending because they are undercapitalized and need hundreds of millions in equity.

The Nevada subsidiary also failed this weekend. So that’s two banks for this weekend.

Maybe we could keep a scoreboard of failed banks throughout the year? These two are number 6 and 7 this year.

A scoreboard of the remaining FDIC reserve would be interesting as well. Indy Mac supposedly grabbed about 10% of the reserve. These two are much smaller, with 3.5B in assets vs. IndyMac’s 30. So maybe another 1-2% of the reserve? A few of these every week, and pretty soon you’re talking real money.

I do not know which will go next, but it should be Downey.  I do not understand how they are keeping their doors open.

Is it true that the only way the Feds can print more money or issue more IBDD’s is to sell more treasury bills? Would this mean that they will have to raise the T-Bill rates to issue the money to bail out the FDIC?

awgee - 26 July 2008 10:07 PM

I do not know which will go next, but it should be Downey.  I do not understand how they are keeping their doors open.

I agree. It will definitely be Downey. Did anyone actually read their latest 10Q? My gawd… the numbers were A W F U L! The one thing they point out as being a positive is the decrease in liabilities. Well duh! When you have huge drop in deposits then your liabilities drop. This company has been run by monkeys for years now, and it really shows in their numbers.

Buh bye Downey.

muzie - 26 July 2008 06:37 PM

A scoreboard of the remaining FDIC reserve would be interesting as well. Indy Mac supposedly grabbed about 10% of the reserve. These two are much smaller, with 3.5B in assets vs. IndyMac’s 30. So maybe another 1-2% of the reserve? A few of these every week, and pretty soon you’re talking real money.

I read that the two this weekend would cost the FDIC $862M.  What is the total FDIC reserve fund?  $60B?

freedomCM - 27 July 2008 12:56 PM

muzie - 26 July 2008 06:37 PM

A scoreboard of the remaining FDIC reserve would be interesting as well. Indy Mac supposedly grabbed about 10% of the reserve. These two are much smaller, with 3.5B in assets vs. IndyMac’s 30. So maybe another 1-2% of the reserve? A few of these every week, and pretty soon you’re talking real money.

I read that the two this weekend would cost the FDIC $862M.  What is the total FDIC reserve fund?  $60B?

It was $58 billion before Indymac and most of it is in treasuries which would have to be sold on the open market.

Failedagent - 27 July 2008 09:32 AM

Is it true that the only way the Feds can print more money or issue more IBDD’s is to sell more treasury bills? Would this mean that they will have to raise the T-Bill rates to issue the money to bail out the FDIC?

What are IBDDs?  The Fed can do whatever it wants and can print whatever it wants.  The Fed is accountable to no one.  It’s balance sheet is supposed to follow standard accounting, but if push comes to shove ...

WaMu won’t be next, they have to ramp up to do WaMu.

I think I read they have enough cash to last a while.

Meanwhile over at CR, somebody totalled up the unguaranteed
amounts and it was fairly stupendous.  Anything more than a
small business would be hard put to keep the amts under 100k
becuase of payroll and money for accounts payalbe etc.

You’ve got a mere million and you’re goinna have 10 accts at 10 different banks? 

A nightmare!!