Survivors of the Great Depression speak about the bailout and life in general today.

9/27/2008 06:34:00 PM

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wall Of course everyone is talking about the 1929 Stock Market crash, and the depression that ensued over the next 10 or so years and that we are on a track that will result in a depression greater than the Great Depression. My parents happened to have grown up during the depression. Their lifestyle over the years continued to reflect that fact, and I was lucky enough to learn many of their tricks, which today I am using to help make it along. Many people who are 30 years or younger, respectfully, have no clue as to what life is like doing without, or having to make do. It's not your fault, it's really my generation's, Generation X's, fault. The 80s, 90s and 00s have been filled with excess, and the immediate gratification mentality. But now, they may have to learn from their and my elders on how to "make do".

Looking across the Internet, one of the new hot topics is talking to those who are survivors of the Great Depression, albiet, there aren't many today. I think great wisdom can be learned from them, in what many call their "simple ways of thinking".

From Colorado's Channel 9 News: In the video 9News talks with four residents of a retirement community about the Great Depression who lived through the times. They recall their parent struggles. "Just tried to make a living as hard as they could," said Bertie Spear. "You didn't have anything and maybe you scrounged for food on the table."

All of the residents recall newspaper articles and radio reports of Americans in larger cities standing in line for the basic necessities. Some witnessed the despair first-hand. "I saw them waiting in line for rations or some kind of food," said Jodie Spear. "I saw them actually beg at the grocery store to write credit a little longer to take something to eat to their children."

In the video below, the four talk about living conservatively and that mentality brought their families through the Depression. They believe today's generation of Americans has forgotten how to survive the basics. "I feel sorry for them. I don't think they could ever learn to live like we did when we were younger," said Jodie Spear.

On the subject of financial bailouts for failed companies that handled bad mortgages, Bertie Spear questioned why some people would agree to a mortgage that was beyond their budget. "Why would they have the mortgage if they couldn't afford it?" she asked. "They buy on credit cards and max them out. And they can't pay for them. There you are, in bakruptcy."

The Spears and their friends advise everyone to learn to live on less. "Pinch that penny," said Bertie Spear. "Don't spend more than you take in," said Hansen.

In the video there is a statement.  A statement which I know growing up I heard quite often from my own parents.  And their actions, mentality and lifestyle reflected upon that statement.  That statement is "If something happened tomorrow, I'm not going to starve to death" when a man is asked about having money out of the bank.  Basically, be prepared.  That is a mentality that my parents instilled in me.  Be prepared.  Whether it be a small stockpile of food, a few dollars outside of the bank, or simply candles, an oil lantern, and blankets nearby just incase the electric goes out in the middle of the winter.

The other lesson from the video is in the statement of "Don't spend more than you take in."  Basically, don't buy on credit.  If you can't pay cash for it, then you don't need it.  As for a house or a car?  Well, you save your money up until you can make a down-payment of nearly half the price, so your payments are within reason.  Or you save up enough so you can pay cash.  My parents always paid for their new vehicles in cash, and the houses they purchased.  They saved their money until they pay it all at one time.  New furniture was paid for with cash.  Bills were paid for with cash (well, checks, but the same thing).  Clothing was paid for with cash.  Food was paid for with cash.  If they went out to eat, it was paid for in cash.  Everything was paid for via cash, and never credit.  They also did not like the idea of owing anyone any money.

Now I am sure many of you who are younger than I are saying, "But I'll have to wait FOREVER FOR IT!"  Yep, that's true, but you don't risk loosing it.  You have to settle for what you can afford, and no more.  That is just the way it is, get use to it.  All good things come to those who wait... Now... Moving on......

The most shocking thing about this video isn't what Spears and their friends say in the video. Its what the reporter states at the end of the video and the tone of her voice and the look on her face. "A really interesting perspective" in regards to what Spears and their friends have to say.  Interesting?!?!  Living frugally and within your means is an interesting perspective... okay................ And she seems to say it in a tone as if saying "Aww those sweet old people living in the past."... Yea okay............... time for the video.


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SE U.S. Still Suffering from Short Supplies of Fuel.

9/27/2008 05:48:00 PM

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Weeks after Hurricane Ike shut down Gulf Coast refineries and dried up interstate pipelines, some panicked drivers are still waiting in long lines to top off their tanks at the few stations with fuel.

Four refineries remain shut down after Gustav struck the Louisiana coast on Sept. 1 and Ike made landfall in southeast Texas on Sept. 13.  Five plants are restarting, and nine are running at reduced rates.

Southeast Gas Prices

At least 46 million barrels of motor-fuel output was lost between Aug. 30 and Sept. 19, according to the U.S. Energy Department.  Pipelines capable of carrying about 4.9 million barrels a day of gasoline and distillate fuels were shut down or running below capacity.  Alpharetta, Georgia-based Colonial Pipeline Co., the world's largest operator of petroleum-products conduits, continues to ship fuel at reduced rates, spokesman Steve Baker said.  The company's main lines stretching from the Gulf Coast to New York Harbor have been slowed since Sept. 1.

The gas shortage has hit hardest in Atlanta, GA, Nashville, TN and the Carolinas, including the Charlotte area and the mountain towns to the west.  When gas is found, there are long lines to wait in, with up to 45-60 minute wait times  There are also limits on how much gas you can purchase, usually 10 gallons.  And sometimes, the pumps stop just as you pull up to fuel up. Or you get to watch some cutting in line, and basically a brawl ensue.


Clear back on September 4th, the EPA waived clean air requirements for Georgia fuel.  Then on September 11th, an additional waver was issued allowing Georgia and eight other SE states to begin selling "winter transition fuel" earlier than usual.

On September 15, a wavier was issued allowing fuel trucks more hours to deliver fuel and to carry larger loads of fuel to gas stations across the state.

September 22, 2008 Tuesday
Another waver was grated on clean fuel requirements through October 12.

On Tuesday afternoon at a 20-pump QuickTrip station just north of Atlanta, the lines were about 40 cars deep.  It was the only spot in the area with gas to sell, and police said they had been called in often to referee spats over cutting in line.

In Cobb County, motorists waited on a gas truck.  David Craig work up early to look for a way to fill his tank before work.  "Trying to get to Stone Mountain for a job, and we're already two hours late," he said.  But he ended up sitting in line at a station where the pumps never turned on.  "We waited an hour there and we seen this tanker here so we came here and waited a half hour.  Now we finally have gas, so I've been going through this since about five this morning," Craig added.

At a Shell gasoline station this Saturday morning in Atlanta's Midtown district, about 25 drivers waited for a chance to pump what's become a rare commodity.  The line clogged a side street, causing backups on Peachtree, the city's main thoroughfare.

"We got about 12 or 13 cars outside right now," said Randy Akins, assistant manager of the Shell station on Peachtree Street.  "It's crazy.  It's been like this since 6 a.m.  We'll probably be out by lunchtime at this rate.  I don't know when we're going to get more."

When desperate motorists do find gas stations with fuel they are often forced to wait in long, slow moving lines.  Many have waited so long, that their tanks go dry before they can get to a pump.  One driver at a QuickTrip gas station on Cobb Parkway in Cobb County said he waited for 45 minutes and ran out of gas while in line.

QuickTrip Corp., which runs more than 111 gasoline stations in the Atlanta area, said it shut down fuel pumps at about half its stores and is struggling to keep fuel flowing at those it's keeping on.  Company spokesman Mike Thornburgh said "Don't ask me for a projection [of when fuel is available] because I don't know.  We're scrambling just to try to find fuel."

Plastic grocery bags covered the handles of gas pumps today at some stations in Gwinnett County, northeast of Atlanta.  The overhead sign at QuickTrip in Norcross, Georgia, had blank squares where the price usually hangs.

Another QuickTrip, about two miles away off Interstate 85, was jammed with cars trying to squeeze into lines at pumps that were each at least two deep with drivers waiting to fill up.  There was no premium or mid-grade gas, only regular unleaded.  Tractor trailers were three deep waiting for diesel on the back side of the station.

Meanwhile, the state of Georgia has subpoenaed sales records from 130 gas stations after complaints of price gouging.  One station charged nearly $9 a gallon for regular.



Governor Phil Bredesen said Friday afternoon that the pipeline to Nashville, which had been full only sporadically since Hurricane Ike hit Texas, was running at top capacity.  But that did not seem to stop the run on gas over the weekend.

Fuel supplies in Nashville are up to about 70 percent of capacity from 30 percent earlier this week, Randy Bly regional spokesman for AAA stated.

The Tennessee Petroleum Council said it could take another week or two before the supply returns to normal. 

While gas is in short supply, reports of gas theft are increasing.  On Thursday, Julie Pace was parked outside Governor's Square Mall in Clarksville she noticed someone underneath her vehicle.  The two men claimed they tried to fix a leak beneath her vehicle, but Clarksville police took them to jail for trying to steal gas.



Four out of five stations in Charlotte are empty, according to AAA.  Cities further north and closer to the coast supplemented their fuel supplies with shipments by barge, AAA said.

Drivers camped out overnight in the hope that a shipment of gas would arrive at a station in Charlotte, NC, WSOC-TV reported.  Other drivers felt trapped at home, fearing that their

gas tanks would run dry on the way to or from work.  "This is it; I'm stuck," Shana Roseborough told WSOC.  "I can't go get my child, I can't go get my husband, I can't provide for my family.

The News & Observer of Raleigh reported that Alan Hirsch with Governor Mike Easley's office said the terminal in Spartainburg, S.C., that serves western North Carolina was being refilled Thursday.  Hirsch said the Charlotte terminal was expected to be refilled Friday.

On Friday night, in Northwest Meckelnburg known as "tank town", where oil from the gulf arrives by a pipeline, there were a lot of tankers filling up and heading out.  Even the Federal Motor Carriers Association allowed an "emergency declaration wavier of hours of service requirement" extension that lets truck drivers to work overtime delivering the fuel to the retail outlets.  However, it was reported that gas seemed harder to find than earlier in the day.

But Saturday morning, gas was still difficult to find in Charlotte, and when it was found, there were long lines.  Police had already responded to several gas stations to help with the traffic situation and resolve disputes between customers.  Even the WBTV's news team reported they were having trouble finding gas.  And one of their photographers had to diver to Mooresville to fill up.

Aaron Angel, finally found a station with gas after searching for the past two days.  Unfortunately, while he was in line, Angel ran out.  He had to get help from someone to push his car up the hill.

Another driver stated "I've been to four places, this was the shortest line.  I didn't quite make it.  And I'm stuck at Park Road Shopping Center."  He had to put gas in a 10-gallon can and take it to his car.

Tensions are still running high around the gas stations.  A look at some police reports shows reports of intimidation, assault and theft.  One driver got punched out.  Some stores have resorted to hiring private security to keep things in order.

"It's been pretty easy going and then I have stuff like this," said security guard Lofton as a man driving a Maserati cut in line in.  "That's not fair.  Everybody else has been waiting.  Just because you got a nice car don't jump in front of everybody."

And gas theft is up in Charlotte also.  "It's messed up the entire gas tank, and it's going to be $3,000 to replace," Faison Covington stated after a couple of men tried to steal gas out of Covington's car by punching a hole in the gas tank.


City officials in Asheville have closed the civic center, parks and offices because of the gas shortage.

Police were also monitoring stations that do have gas after reports of fights at pumps between drivers accusing each other of cutting in line.  "It's been a nightmare for everybody," one driver, who found gas, told TV station WHNS.

At one gas station a driver stated that this was the fifth gas station they had been to looking for gas.  There was a purchase limit of 10 gallons.

Some gas station were planning to be closed on Sunday, to make sure there is gas at the start of the workweek.  "I can't catch up, and that's part of the reason we're closin' on Sunday is so that we can get to the point where it will take more than three hours to sell everything we have," a Kounty Line gas station manager stated.


Fort Mill police were busy on Friday directing traffic around one of the few local gas station that has gas to sell.  Cars were lined up 15 to 20 deep around the pumps at PJ's Citgo on Spratt Street.  At around 3 p.m. workers at PJ's said they had about 900 gallons left.

At Love's truck stop on Sutton Road in Fort MIll, more than 30 cars and commercial 18-wheelers were stacked up at around 6:30a. 

In Indian Land, the Gate Petroleum station received a half-tanker of gas, workers there said.  The station typically receives a full tanker three times a day; one each in the morning and at midday and another in late evening.  The tanker quickly attracted customers, and the station was out of gas by 9 a.m.

John Walton at Cobblestone Creek Market and Texaco station in Indian Land said he's been out of gas since Tuesday.  He hopes a tanker will arrive sometime today, but added "I couldn't say when."


Here's one that you haven't heard much about.  There are a few shortages still in Dallas however, they are usually not more than 24 hours at any particular station. 

Even at a major truck stop, the Flying J at I-20 and Bonnie View had no premium unleaded.

Yesterday, Friday, both gas stations around DFW airport were reported to be out of gas at 3:00 pm.


FOX Carolinas
NBC4, Washington DC
Atlanta Journal Constitution
WSB-TV, Atlanta, GA
11Alive, Atlanta, GA
FOX5, Atlanta, GA
WBTV, Charlotte, NC
WCNC, Charlotte, NC
ABC13, Asheville, NC
Fort Mill Times, NC
D Magazine, Dallas, TX

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WaMu files bankruptcy petition in Delaware.

9/27/2008 03:09:00 PM

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large_wamu Now I am sure you are saying WHAT?  I thought JPMorgan Chase just bought WaMu.  Well they did however, JPMorgan did not purchase WaMu's holding company of Washington Mutual, Inc.  And Washington Mutual, Inc. has filed a petition for Chapter 11 bankruptcy protection from creditors in U.S. bankruptcy court in Delaware.

In the voluntary petition filed late Friday, the company listed assets of $32.9 billion, and debts of $8.2 billion, putting it in the top 10 largest U.S. bankruptcy cases ever filed.

Bank of New York Mellon, as a trustee for debtholders, was listed as the company's largest creditor.

Washington Mutual, Inc's subsidiary, WMI Investment Corp, also filed for bankruptcy protection, Washington Mutual said in a statement.

The Chapter 11 bankruptcy petition, filed September 26, wasn't immediately available due to Web site maintenance.  The Web site was expected to be operating again on September 27, around noon, Eastern time.

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Do you oppose or support the $700 billion bailout of the bankers? Try $1.8 TRILLION.

9/27/2008 01:30:00 PM

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Got an extra $17,000 laying around to give to the banks and Wall Street.  Congress thinks you do.  If you aren't in debt yet, you will soon be thanks to them.

Proposed Treasury Department Legislation $700 billion +
Bear Stearns Financing $29  billion
Fannie Mae and Freddie Mac Nationalization $200 billion
AIG Loan and Nationalization $85 billion
Federal Housing Administration Housing Rescue Bill $300 billion
Mortgage community Grants $4 billion
JP Morgan Chase Repayments $87 billion
Loans to Banks via Fed's Term Auction Facility $200 billion+
Loans from Depression-era Exchange Stabilization Fund $50 billion
Purchases of Mortgage Securities by Fannie Mae and Freddie Mac $144 billion
Discount Window Loans to Financial Institutions UNSPECIFIED

Numbers via Reuters

Here are further details of actions, proposals and amounts:

  - Up to $700 billion to buy assets from struggling institutions.  The plan is aimed at sopping up residential and commercial mortgages from financial institutions but gives Treasury broad latitutde.

  -  Up to $50 billion from the Great Depression-era Exchange Stabilization Fund to guarantee principal in money market mutual funds to provide the same confidence that consumers have in federally insured bank deposits.

  -  The Fed committed to make unspecified discount window loans to financial institutions to finance the purchase of assets from money market funds to aid redemptions.

  -  At least $10 billion in Treasury direct purchases of mortgage-backed securities in September.  In doubling the program on Friday, the Treasury said it may purchase even more in the months ahead.

  -  Up to $144 billion in additional MBS purchases by Fannie Mae and Freddie Mac.  The Treasury announced they would increase purchases up to the newly expanded investment portfolio limits of $850 billion each.  On July 30, 2008, the Fannie portfolio stood at $758.1 BILLION with Freddie's at $798.2 BILLION.

  -  $85 billion loan for AIG, which would give the Federal government at 79.9 percent stake and avoid a bankruptcy filing for the insurer.  AIG management will be dismissed.

  -  At least $87 billion in repayments to JPMorgan Chase for providing financing to underpin trades with the units of bankrupt investment bank Lehman Brothers.  Paulson said over the weekend he was adamant that public funds not be used to rescue the firm.

  -  $200 billion for Fannie Mae and Freddie Mac.  The Treasury will inject up to $100 billion into each institution by purchasing preferred stock to shore up their capital as needed.  The deal puts the two housing finance firms under government control.

  -  $300 billion for the Federal Housing Administration to refinance failing mortgage into new, reduced-principal loans with a federal guarantee, passed as part of a broad housing rescue bill.

  -  $4 billion in grants to local communities to help them buy and repair homes abandoned due to mortgage foreclosures.

  -  $29 billion in financing for JPMorgan Chase's government-brokered buyout of Bear Stearns in March.  The Fed agreed to take $30 billion in questionable Bear assets as collateral, making JPMorgan liable for the first $1 billion in losses, while agreeing to shoulder any further losses.

  - At least $200 billion of currently outstanding loans to banks issued through the Fed's Term Auction Facility, which was recently expanded to allow for longer loans of 84 days alongside the previous 28-day credits.


Now I happened across the following idea, which seems interesting and leaves a few thoughts to ponder............

The Birk Economic Recovery Plan

I'm against the $85,000,000,000.00 bailout of AIG.  Instead, I'm in favor of giving $85,000,000,000 to America in a We Deserve It Dividend.

To make the math simple, let's assume there are 200,000,000 bonafide U.S. Citizens 18+.  Our population is about 301,000,00 +/- counting every man, woman and child.  So 200,000,000 might be a fair stab at adults 18 and up.

So divide 200 million adults 18+ into $85 billion and that equals $425,000.00.

My plan is to give $425,000 to every person 18+ as a We Deserve It Dividend.

Of course, it would NOT be tax free.  So let's assume a tax rate of 30%.  Every individual 18+ has to pay $127,500.00 in taxes.  That sends $25,500,000,000 right back to Uncle Sam.

But it means that all American adults 18+ have $297,500.00 in their pockets, and married couples get $595,000.00.  What would you do with $297,500.00 to $595,000.00 in your family?

Pay off your mortgage - Housing Crisis Solved.
Repay College Loans - Boosts the new college grads.
Put away money for college - It'll be there.
Save in a bank - Create money to loan to entrepreneurs.
Buy a new car - Create jobs.
Invest in the market - Capital drives growth.
Pay for your parent's medical insurance - Health care improves
Enable Deadbeat Dads to come clean - Or else

Remember, this is for every adult U.S. citizen 19+ including the folks who lost their jobs at Lehman Brothers and every other company that is cutting back.  And of course, for those serving in our Armed Forces.

If we're going to re-distribute wealth let's really do it.  If we're going to do an $85 billion bailout, let's bail out every adult U.S. Citizen 18+!

As for AIG - liquidate it.
Sell off its parts.
Let American General go back to being American General.
Sell off the real estate
Let the private sector bargain hunters cut it up and clean it up.

Here's my rationale:  We deserve it and AIG doesn't.

Sure it's a crazy idea that can 'never work'.  But can you image the Coast-To-Coast block party?  How do you spell Economic Boom?

I trust my fellow adult Americans to know how to use the $85 billion We Deserve It Dividend more than the geniuses at AIG or in Washington DC.

And remember, The Birk plan only really costs $59.5 billion because $25.5 billion is returned instantly in taxes to Uncle Sam.

Ahhh... I feel so much better getting that off my chest.

Kindest personal regards.

PS:  Feel free to pass this along to your pals as it's either good for a laugh or a tear or a very sobering thought on how to best use $85 billion.

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And the next contestant is... Wachovia!

9/27/2008 03:55:00 AM

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539w Wachovia has become the latest to reach for a lifeline.  It seems that Wachovia is seeking potential alternatives should a bailout plan not pass quickly, or fail to provide enough help.

A spokeswoman for Wachovia, Christine Phillips-Brown, said:  "We are aggressively addressing our challenges and are working to strategically strengthen and manage capital and liquidity in this challenging environment."  The bank, she added, expects "that the Treasury plan under consideration by Congress is a constructive and important step toward restoring confidence and stability in our financial system."

Wachovia has a $122 billion portfolio of Pick-A-Payment mortgages loaded with adjustable interest-rate loans (ARMs) that allow borrowers to skip part of their monthly payments, much of which it inherited from its ill-timed acquisition of Golden West, the big California lender, at the end of the housing boom in 2006.

Of Wachovia's $122 billion in Pick-A-Pays, 5.78% are considered "nonperforming," or more than 90 days past due, as of this year's second quarter.   Another 5.2% of the portfolio is delinquent by less than 90 days.  As of last year's second quarter, only 1.03% of the Pick-A-Pay portfolio was classified as nonperforming.

Wachovia's $44 billion in traditional mortgages, by contrast, show a nonperforming rate of 0.98%, up from 0.35% in last year's second quarter.

Of the entire Pick-A-Pay portfolio, 58% of the outstanding balances are tied to properties in California, and another 10% are tied to homes in Florida - two states hardest hit by declines in home values.  In comparison, of WaMu's ARMs 62% were also in California and Florida.

"Wachovia has a real problem," said Len Blum of the investment bank Westwood Capital.  "Option ARMs are probably the worst mortgage products out there and Wachovia has a lot more of them than it has in tangible equity."

The bank's shares, which are down nearly 80 percent in the last year, plunged 27 percent Friday, to $10, as investors wondered about its health after the government's seizure of WaMu on Thursday.

In after-hours trading, Wachovia dropped another 15 percent, to $8.50, after The New York Times reported that New York-based Citigroup Inc. was in early talks to buy the bank.  The Wall Street Journal said bids may come from San Francisco-based Wells Fargo & Co. and Spain's Banco Santander SA.


Did you know that Wachovia will pay tens of millions of dollars for having "engaged in unsafe or unsound practices" in connection with telemarketing fraudsters, the U.S. Treasury announced back in April, 2008?  Without admitting or denying wrongdoing, the bank agreed to pay as much as $125 million in restitution to consumers who were harmed by scams perpetrated by five firms?  Wachovia would also pay nearly $9 million for consumer education programs and a $10 million civil penalty to the Treasury Department.

The Treasury Department said it believed thousands of consumers, many of whom were elderly, were harmed by teh millions of dollars in fraudulent transactions telemarketing scammers process through Wachovia.  The bank was not directly involved in the scams but made millions in processing fees with the transactions.

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President Bush warns of 'painful recession'

9/27/2008 03:24:00 AM

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bush001 Back in late February of 2008, President Bush said that the country is not headed into a recession and, despite expression concerning about slowing economic growth, rejected for now any additional stimulus efforts.   Bush did admit however, that the US economy is in a slowdown but continued to reject claims it is heading for a recession, opposing for now any economic aid other than the $150 billion tax rebate package that would take effect in the spring.  "I don't think we're headed to recession," Bush told reporters at the White House.  "But no question, we're in a slowdown."

"We'll see the effects of this pro-growth package," Bush told reporters at a White House conference on February 28th, 2008. "I know there's a lot of, here in Washington people are trying to - stimulus package two - and all that stuff. Why don't we let stimulus package one, which seemed like a good idea at the time, have a chance to kick in?" (ABC News)

Now, seven months later President Bus is warning of a 'painful recession'.  On Wednesday September 24th, 2008, he warned Americans and lawmakers reluctant to pass a $700 billion financial rescue plan that failing to act quickly that the United States faces a "long and painful recession" if Congress does not pass his massive financial rescue plan.   "Without immediate action by Congress, America could slip into a financial panic and a distressing scenario would unfold," he said from the White House East Room.  He said the goal of the plan is to buy up troubled and underpriced assets so that credit can start flowing again.  In stark language, he said "our entire economy is in danger."

As if it wasn't seven months ago......................

Now suddenly as the wealthy on Wall Street, and long time bankers are loosing their shirts, with possibilities of becoming regular Americans and no longer the super rich, Bush is pushing for a $700 billion financial rescue plan?  Since when does Bush EVER come on TV to talk about decisions that are going to be made that you, the average American, has no control over?

Now forgive me for not being one of those super smart, Wall Street banker type analysts, and just being Jane Doe Schmo American Woman, but how does bailing out banks because of bad loans help the average U.S. citizen?  Does it reduce unemployment?  No.  Does it increase wages?  Ummm.. no.  Will it reduce a loan's payment plan?  Ahh.. no.  Will it reduce interest... maybe, short term... maybe.  Will it reduce the cost of fuel?  Definitely not.

How does bailing out banks, investment companies, and insurance companies help the average U.S. citizen?  In my opinion, it doesn't.  All it does is allow for banks to start loaning themselves money again, and make loans available for the average individual, thus allowing you, Mr, Miss, or Mrs Average American, to only go more in debt. 

So how does that help someone who has lost their job due to the rising unemployment, or someone who has to choose between fuel for their vehicle to commute back and forth to work vs. the rising cost of food?  Or how does that help someone who has lost their entire investment portfolio because a bank overextended themselves?  Or how does that help the average homeowner who is basically ready to lose their house due to foreclosure?  Or how about someone who just lost their entire 401(k) because of these banks?

The only people I see benefiting from this bailout package are the banks, at the cost of the U.S. taxpayer.  Tell me, did your $600 stimulus check bail you out of financial trouble?

Am I missing something here, or am I just too stupid to see what is really happening.... or am I?  Because let me ask you this question.  If you can't pay your bills, because you got laid off, or you can't afford to pay your medical bills because you can only find two or three part time jobs and no full time jobs and are not offered health benefits, do you have the government coming to bail you out?  What profit do you see in bailing out these institutions, with the CEOs walking away with their bonuses, banks having their butts covered for overextending credit, while increasing your tax burden?  So, we the middle class of America pay to bail out the wealthy bankers?

And do you really think this plan of giving the banks $700 billion is going to stop a recession or depression?  And is there any guarantee that this funding, once given to banks, is not misused and ends up in someone's pocket?

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Bankruptcy filings up 29% from a year ago

9/27/2008 02:49:00 AM

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market_bankruptcy September 19, 2008 As the economy continues to struggle, one indicator, among a few, keeps rising nearly every month: bankruptcy filings. With continued job losses, medical payments and other financial pressures have pushed an increasing number of Americans to the courts in search of protection from creditors.

Bankruptcy filings surged 29% in the 12 months that ended June 30, according to government figures. Total filings rose to 967,831 from 751,056 a year earlier. Business filings jumped more than 41% to 33,822 from 23,889 in the year-ago period. Personal filings totaled 934,009 up 28% from last year.

Despite the tougher requirements, there is "a growing trend of U.S. consumers to seek bankruptcy as a way out of financial problems," said American Bankruptcy Institute (ABI) Executive Director Samuel Gerdano. The ABI expects filings to reach 1.2 million this year, as problems in the housing market have "reverberated throughout the economy," Jack Williams, an analyst with ABI stated.

The data also showed that filings for Chapter 7 rose 36% to 615,748 in the 12 months that ended June 30. Chapter 7 bankruptcy is designed to give individual debtors a "fresh start" by discharging many of their debts. Under Chapter 7 a filer's assets minus those exempted by his home state are liquidated and given to creditors first in line for repayment, while the rest of the debts are canceled.

The data also showed that filings for Chapter 13 rose 17% to 344,421 from 294,693 a year earlier. Chapter 13 bankruptcy is designed to give individual debtors time to pay back their debts.

The data also showed that filings for Chapter 11 rose more than 30% to 7,293. Chapter 11 bankruptcy, is aimed at assisting struggling corporations or partnerships.

Yet bankruptcy isn't a magical solution for many people. It won't give everyone the clean financial slate they envisioned. Not all types of debts can be discharged in bankruptcy proceedings. Debts such as child support, student loans, taxes, and alimony, along with criminal fines and restitution can not be discharged.

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Another One Bites The Dust..... Good Bye WaMu.

9/27/2008 01:01:00 AM

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Washington Mutual
119 years in business

JPM $48.24 +4.75
WM $0.16 -1.53

As of close 09/27/08

Washington Mutual - the second-largest savings and loan institution in the US,  - had suffered losses of 80 percent of their value since the beginning of the year, going from a 52-week high of $36.47 to a low of $1.69.  WaMu had offered "option" adjustable-rate mortgage (ARM) loans.  As the numbers of holders of WaMu's ARM loans in default began increasing in 2007 and 2008, losses had ballooned.  For its second quarter 2008, WaMu reported a $3 billion loss. 

For weeks, the Federal Reserve and the Treasury Department were nervous abut the fate of WaMu, among the worst-hit by the housing crisis, and pressed hard for the bank to sell itself.  WaMu publicly insisted that it could remain independent, but the giant thrift had quietly hired Goldman Sachs about two weeks ago to identify potential bidders.  But nobody could make the numbers work and several deadlines passed without anyone submitting a bid.

March, 2008

In March, 2008, on the same weekend that Dimon of JPMorgan Chase negotiated his daring takeover of Bear Stearns, he secretly dispatched members of his team to Seattle to meet with WaMu executives.  When JPMorgan Chase offered WaMu $8 a shore, largely in stock, the prior CEO, Killinger, balked at the deal and rejected it.  If the JPMorgan deal had gone through, WaMu's shareholders would have wound up with a stock in a very strong financial institution.  Instead, a month later, WaMu execs choose a different company.

April, 2008

WaMu sold Texas Pacific Group 176 million shares at $8.75 each - 26 percent below the stock's price the day of the deal; it also sold almost 20,000 preferred shares that can be converted into WaMu common stock at $8.75 each.  WaMu issued five-year warrants to the investors, allowing them to acquire 68.2 million shares of WaMu stock at $10.06 each.  The total shares issued to the TPG group, including those covered by the warrants and preferred stock, represented 50.2 percent of the company's shares out.

Under New York Stock Exchange rules, any issuance of stock that increases shares by more than 20 percent requires approval from existing shareholders.  But some WaMu shareholders call the vote a joke, saying that the deal was front-loaded with financial penalties that essentially forced them to approve it.

For example, if the transaction was not approved by June 30, WaMu would have had to pay a special dividend with an annual interest rate of 14 percent to the TPG investors.  If shareholders would not have approved the deal by March, 2009, more dividends would be paid at a rate of 15.5 percent.  By September 2009, the penalty rose to 17 percent.

And if shareholders would have rejected the deal, the price at which the warrants could be converted into common stock would decline every six months by 50 cents each, with a maximum drop of $2 a warrant.  That makes the warrants far more valuable to TPG and its friends, and a lot costlier to WaMu shareholders.

The deal was approved, and WaMu's shares continued to fall.  Shareholders wondered why their company's board and management didn't negotiate better terms or allow existing shareholders to buy additional equity at a discount.  They asked why the deal was constructed to force shareholders to approve.  Steve Abrecht, executive director of the S.E.I.U. Master Trust, a group of pension funds benefiting members of the Service Employees International Union; the trust owns WaMu shares.  "We feel that the board and the senior executives seem to have gone quickly to an option that preserved their positions instead of looking out for long-term shareholders."

June 2, 2008
Shareholders unhappy with the performance of the management and the board of directors pushed for changes to both.  At an annual shareholders meeting in April, some called for Killinger's resignation and they voted to split the jobs of chairman and chief executive, both of which Kerry K. Killinger held.  While the vote was advisory, the company did separate the titles.  Kerry K. Killinger, chairman and chief executive of WaMu, was stripped of his chairmanship.  Stephen Franks was named chairman.  According to WaMu, Frank replacing Killinger as chairman resulted from "listening to feedback from our shareholders."

WaMu also made some additional moves, including:  appointing Orin Smith, former Starbucks Corp. CEO as chairman of the finance committee; appointing Dallas Mayor Thomas Leppert to serve as chairman of the governance committee and appointing Regina Montoya as chair of the corporate relations committee.

June 18, 2008
WaMu announces that it had decided to stop offering two complex mortgages, including option ARMs.  WaMu had rode negative amortization loans to mortgage market prominence during the recent housing boom.  However, now they were discontinuing all negative amortizing loan product options, in an effort to refocus its lending operations on more traditional mortgage products.  The banks portfolio included some $57 billion in option ARM mortgages. 

June 30, 2008
WaMu announced James Corcoran, the president of its retail banking division, was being replaced with Stephen Rotella on an interim basis until a permanent successor is selected.

July, 2008
WaMu reported a $3 billion second-quarter loss - the biggest loss in its history - as it increased its loss reserves to more than $8 billion to cover bad loans.  During that second quarter, WaMu announced plans to exit the wholesale lending business and close all remaining standalone home loan center, resulting in 3,000 job losses.  The bank said it would instead focus its mortgage-originating efforts in its retail bank branches and Web site, and by expanding its call center operations.  WaMu announced an additional 1,200 job cuts in June bringing layoffs since December 2007 to more than 7,300.  There were also rumors that WaMu would be doing additional layoffs in September 2008.

On July 11, 2008 it was reported by the Puget Sound Business Journal (Seattle) that at the same time WaMu was laying off some employees, it was also trying to keep others offering retention bonuses to prevent some workers from jumping ship during its very public downturn.  WaMu did confirm that it is giving bonuses however, it declined to provide details about the amounts or how many employees have received them, saying it doesn't comment on employee compensation.  "On occasion, retention bonuses are provided on top of regular compensation to keep a critical employee engaged through a specified period of time," WaMu said in a statement.  It added that the bonuses are given "if an employee's function/business are shutting down or changing significantly and the employee is needed through the transition period."

September 8, 2008
Kerry K. Killinger was ousted as chief executive of WaMu by the board of directors.  Killinger had joined WaMu in 1982 when it acquired the brokerage firm Murphey Favre.  by 1988 he had risen to the job of president, and added the CEO's title in 1990, then named chairman in 1991.  Killinger departed the company under the terms of his contract, with no extra severance payment.  Killinger's annual pay had been estimated by various news sources at about $15 million.  "The board and Kerry mutually agreed that this was the right time for Kerry to leave the company," said spokesman Brad Russell in an e-mail to The Associated Press.

Alan Fishman was named his successor.  Fishman was to be paid a bonus of $10 million, including a $2.5 million performance-based stock award, in addition to a $1 million base salary, and a $7.5 million sign-on bonus.  There was also an annual bonus of  365 percent of his base salary, or of $3.65 million.  The total salary and incentive package was worth more than $20 million through 2009.   "The board has great confidence in Alan's ability to lead WaMu and to return the company to profitability as quickly as possible," Chairman Stephen E. Frank said in a conference call with analysts on Sept. 8.  WaMu however, declined to comment on the pay package.

If Fishman stayed for the full year, he would receive a long-term incentive award of no less than $8 million, according to the SEC filing.  Fishman would also receive options to purchase 5 million shares of the company and 612,500 restricted shares, which would vest at an annual rate of 33.3 percent over three years.  The options would have a term of seven years and would vest on his service and company performance, although a quarter of those shares, or 1.25 million, would vest after one year regardless of performance.

If Fishman is fired or resigns as a result of "constructive termination" he would receive a golden parachute within 10 days, worth 2.5 times his current base salary and his annual bonus of the preceding year. 

In an interview with the AP, Fishman said his first three priorities are to review the balance sheet, review the income statement and review the brand.  He said it is too early to comment on whether the bank will pursue any asset sales.

At this time, WaMu had lost nearly 70 percent of its market value since the start of the year.  It had reported a $3 billion second-quarter-loss -- the biggest in its history -- as it boosted its reserves to more than $8 billion to cover losses.

Wednesday, September 10, 2008
Credit ratings agency Standard & Poor's lowered its outlook on WaMu to "Negative" from "Stable".

Monday, September 15, 2008
Standard & Poor cut WaMu's credit rating to junk.  This caused WaMu's stock to tumble, again, as Lehman filed for bankruptcy and Merrill Lynch & Co. agreed to sell itself to Bank of America Corp. for $50 billion.  S&P acknowledged that WaMu's deposit base is stable, saying in its statement about the downgrade yesterday that the company has enough liquidity to meet all fixed obligations through 2010.  "The bank is operating with adequate capital positions from a regulatory perspective and has demonstrated funding resilience as the deposit franchise has remained stable," S&P said.

Meanwhile, Bank of America's CEO Ken Lewis, dismissed any prospect that his bank is interested in acquiring WaMu during an interview with CNBC Monday, following the bank's press conference announcing its deal to purchase Merrill Lynch & Co.

Tuesday, September 16, 2008
WaMu responds to S&P's rating by saying that the "junk" is based on market conditions overall, not specifically on the bank's financial condition.  "It's important to note that S&P attributed its action to worsening market conditions, and not to any material change in the evaluation of Washington Mutual's financial condition," WaMu officials said in a statement.  The company added that it has minimal trading exposure to Lehman Brothers Holdings, which declared Chapter 11 bankruptcy over the weekend, and no trading exposure to beleaguered insurance company AIG.

Thursday, September 18, 2008
Various banks are saying they've seen an increase in customers pulling their money out of WaMu and bringing it to their institutions.

President Steve Rotella pleaded with employees not to join the "rumor cycle" and instead "get back to work."  In a message posted on the company's internal Web site and obtained by the Puget Sound Business Journal, Rotella acknowledged that "this is an incredibly difficult time for everyone here at WaMu.  Beyond that, what is occurring in our industry and the broad global economy is unprecedented."

"Hard as it is, it seems to me that we all have a choice - join the rumor cycle, speculate and buy into a cycle that is just creating more concerns or get back to work and focus on doing all we can for our customers, which is all we can do for the company, ourselves and our colleagues.

"My request is, let's take the latter path and control what we can control and don't succumb to the former."

He ended the letter with a thank you and instructed employees to "look for an update later today."

CEO Alan Fishman, released a letter to be handed out to customers with concerns.  The letter piggy-backs the letter written by Steve Rotella to customers earlier this week that also addresses anxious customers.  Fishman, who has been largely silent since he was brought on a week ago, wrote in his page-long letter:  "When I was recently approached about the opportunity to lead this great company, I did my homework to satisfy myself that WaMu has the capital, the liquidity and the business plan to serve your needs and protect your money through these challenging times."  Fishman went on to say:  "I came to WaMu because I think it is a great bank with a strong franchise and a solid financial position.  We take very seriously our role as the stewards of your hard-earned money."

Wednesday, September 24, 2008
WaMu had been making a big push over the past week to reassure customers, some of whom - according to one branch employee - have been withdrawing money from the bank in the Seattle area because of concerns about its safety.

Standard & Poor's downgraded WaMu's debt further into junk territory, cutting WaMu's credit rating again, citing the increased chance that the company might have to be split up to facilitate a sale.  The rating was made "due to the increased likelihood that a potential sale of the company may not involve the whole company, which increases the risk of default for holding company creditors," according to S&P.

WaMu insisted that it is well-capitalized and has adequate access to funding and noted in a written response, its deposit rating from S&P continued to be investment grade "and it is important to note that Standard & Poor's rating actions do not affect the safety of customer deposits, which are insured up to the limits allowed by the FDIC."

The government went behind WaMu's back to work privately with four potential bidders on a deal.  On Wednesday afternoon, the government solicited formal written bids. 

Thursday, September 25, 2008
On  Thursday morning it was reported that WaMu had approached several private-equity firms abut a potential takeover, according to a published report Thursday.  Carlyle Group LLC and Blackstone Group LP are among the firms considering a deal, the Wall Street Journal reported, citing unnamed sources.  The Wall Street Journal also reported that banks such as JPMorgan had diminished in recent days over reluctance to absorb problem loans on WaMu's books, citing again unnamed sources.

Also that morning, regulators notified James Dimon, chairman and chief executive of JPMorgan Chase, that he was the likely winner.  "We are building a company," Mr. Dimon said in a brief interview.  "We are kind of lucky to have this opportunity to do this.  We always had our eye on it."

Without depositors knowing it, the federal government seized Washington Mutual or WaMu,  Thursday night calling the bank, in its words, unsafe and unsound. Since September 15, 2007 WaMu customers had withdrawn $16.7 billion.  Regulators simultaneously brokered an emergency sale of virtually all of WaMu to JPMorgan Chase for $1.9 billion.  JP Morgan Chase them bought WaMu's deposits and branches stating JPMorgan saw "no price" at which it would have made a bid for the entire bank. 

The seizure and the deal with JPMorgan came as a shock to WaMu's board, which was kept completely in the dark:  the company's CEO, Alan H. Fishman, was in midair, flying from New York to Seattle at the time the deal was finally brokered, according to people briefed on the situation. 

Against all odds, WaMu shares continued to trade Friday.  That's because, while JPMorgan bought the company's baking subsidiary, it left behind the parent holding company - a shell containing little more than a passel of nonbanking subsidiaries.  The shares fell to 16 cents as 102 million changed hands Friday.  Among stockholders hit by WaMu's demise is the Washington State Investment Board, which said the collapse will cost pension and other types of funds it manages about $47 million, or 0.06 percent of its $78 billion in total assets under management.


JPMorgan was only one of five potential acquirers.  Citigroup, Inc. elected not to bid for WaMu because presumed loan losses outweighed benefits from the deposits, said a person familiar with the situation.  Wells Fargo & Co., Banco Santander SA and Toronto-Dominion bank had expressed interest in buying all or parts of WaMu, said a person with knowledge of the process.

So JPMorgan for a mere $1.9 billion purchased WaMu's deposits and branches.  In a statement, JPMorgan Chase said it was not acquiring any senior unsecured debt, subordinated debt, and preferred stock of WaMu banks, or any assets or liabilities of the holding company, Washington Mutual, Inc.  JPMorgan Chase's chief executive, Jamie Dimon, said in a conference call, said the "only negative" related to the deal was "how to handle some of these bad assets."  He did not elaborate.

JPMorgan also assumed the obligation to pay pension benefits to WaMu's retirees, said Andrew Gray, a spokesman for the FDIC.  WaMu listed about 6,900 retirees on a 2006 IRS reporting form.  JPMorgan spokesman Kelly said Friday the bank is looking at all of WaMu's benefit plans, and declined to say if the bank would pay the benefits.  He called the issued a "very detailed question."  According to regulatory filings, only a fraction of the pension plan was funded with WaMu stock.

JPMorgan also assumed WaMu's 401(k) plans for current employees, said the FDIC's Gray.

Another bank bites the dust to the fallout of the subprime mortgage crisis, with about $307 - $310 billion in assets and about $188 billion in deposits.  This Thursday takeover was a unusual act on the behalf of the government, as seizures usually occur on Fridays to minimize disruptions.  The U.S. Government "needed to find a buyer for [Washington Mutual] because a takeover by the Federal Deposit Insurance Corporation would have dealt a crushing blow to the Government's deposit insurance fund," The New York Times reported on Thursday.  The FDIC reserves had already been hit by the failure of IndyMac, with its reserves totaling around $45.2 billion, down from $52.4 billion at the end of 2007.  By doing this action, this averts another potentially huge taxpayer bill for the rescue of a failing institution.


Return for WM

1 Month:  -95.53%
3 Month:  -96.85%
6 Month:  -98.61%
        YTD:  -98.82%
   1 Year:  -99.55%
   3 Year:  -99.60%
   5 Year:  -99.59%

As of closing 09/26/08


WaMu offered was is called Adjustable Rate Mortgages, or ARMs.  These ARMs offered lower rates during an initial fixed rate period, an initial fixed rate period of up to 10 years, and rate adjustments annually after the initial fixed period.  ARMs generally permit borrowers to lower their initial payments if they are willing to assume the risk of interest rate changes.  These ARMs are typically, but not always, less expensive than fixed-rate mortgages.  These ARMs were very, VERY popular during the housing boom a few years ago.  The only problem is that if the interest rate rises (which they have), then some consumers can not repay the loan, and thus the home is foreclosed.  If the bank can not sell the property quickly, and have many foreclosed homes, then the banks income drops, which is what happened to WaMu, among other things.

Additionally, WaMu pushed at the height of the housing boom into riskier loans to less creditworthy buyers.  Option ARMs let borrowers skip part of their payment and add that sum to the principal, so that when the housing prices fell, as they have since 2006, they might end up owing more than the residence is worth.

If a bank were to offer large volumes of mortgages at adjustable rates (which WaMu did), but to derive most of its funding from deposits (which WaMu did), the bank would have an asset-liability mismatch:  in this case, it would be running the risk that the interest income from its mortgage portfolio would be less than it needed to pay its depositors.  This is what happened to WaMu in the beginning, in addition to increased foreclosure on houses, and no one buying the homes.

All of this combined with S&Ps rating on WaMu to "junk" collapsed WaMu's credit rating, the stock price tumbled, and WaMu had no options for money other than to sell.   Facing $19 billion of losses on soured mortgage loans, the lender put itself up for sale last week.  But no one wanted them with their high liabilities, as there wasn't a picture of profit to be made, at least not anytime soon.

WaMu's ultimate demise happened fairly quickly when nervous depositors started pulling their cash out of WaMu in waves. Since September 15th, customers withdrew $16.7 billion from their WaMu accounts in a "Bank Run".

It was a downward spiral, federal regulators say they had to stop it.  As for WaMu shareholders, there is a good chance they could be wiped out.  Bondholders are likely to lose most of their money after the seizure.  TPG took a minority stake of $1.35 billion in WaMu in May, 2007, an infusion that has now been wiped out by the takeover of WaMu.  TPG lost its entire $1.35 billion investment in WaMu.  David Bonderman, billionaire investor, didn't even know it was happening.  Late Thursday evening, he got word of the bank's government takeover and selloff via headlines over Down Jones Newswires. 

TPG's investment in WaMu had temporarily relieved some of the pressure by allowing the thrift to raise more capital, thus making it more attractive to any potential buyers.  But the private equity firm's stake also diluted TPG's own holdings, a problem the firms say is relatively small compared to its other assets.  "While this loss is extremely disappointing, we are well diversified across platforms, geographies and sectors, and this investment represented a very small portion of our assets," said the statement from TPG.

JPMorgan said today it sold $10 billion offering of approximately 246.9 million shares of its common stock at $40.50 apiece to raise capital. JPMorgan used its own investment bank to value the mortgages, he said.  Underwriter J.P. Morgan Securities Inc. has a 30-day option to purchase approximately up to an additional 37 million shares to cover over-allotments.

JPMorgan stated it had 75 people involved in the transaction and "bid to win" because it wanted WaMu's assets, Dimon said on a conference call yesterday (Thursday). 

David Franklin, a health insurance agent in Los Angeles, knows his money is protected and that it's being transferred to JPMorgan.  Still, he was closing a $30,000 joint account today with his wife at WaMu and planning to transfer it to Wells Fargo & Co., where he has other deposits.  "It's the element of the unknown," said Franklin, 33, while standing in line at a WaMu branch in Beverly Hills.  "I'd just rather be safe than sorry."

"My parents are 83 and 85 years old and have gone through the depression.  They invested into bonds from Washington Mutual and now the broker is telling them that we might receive 25 cents on the dollar of our investment.  They cannot afford to lose their hard earned money.  To see a CEO who has been on the job 3 weeks that can walk out with $11m plus keep his 7.5m signing bonus makes me ill.  He can send my parents the $10,000 back if he has any conscious.  Plus they paid off all their debts and worked hard to own their house outright.  They saved that money over the years and to see greedy CEO's take their money is outrageous.  He should be ashamed."  - Bob and Glenna of IN

"We had $12,000 worth of WaMu stock at the beginning of the summer, as of today it is worth less than $100, JP Morgan may have bought WaMu out but this government bailout made our stocks worth nothing, what about us little guys WaMu executives, while you are cruising about in your pretty boats and luxury cars we are wondering why our hard earned cash is now worth nothing.  I am so sick and tired of us working class people paying the price for all this greed, we might be a demogracy (sic) but sometimes i wonder!  these big wigs would fit in well in come of the communist countries, perhaps as a part of this government bailout plan we should ship them all there!  where they can be as corrupt as they want - Vicky - Portland, OR

"JPMorgan Chase has 8.1 trillion dollars in credit derivatives - the largest of any bank in the international financial system.  (Office of the Comptroller of the Currency).  That means Morgan is in far more trouble than the banks it is "saving" and buying.  Unless you do it with more 'innovative accounting' that swindled us into this mess in the first place.  Morgan is going to fall too." - Laresstt of NE.

"I was an employee with WAMU for 7 years.  My accounts and mortgage are still with the bank.  My family's lives have been turned upside down, while the management made millions.  They knew what they were doing the entire time and deserve to go to jail.  I'm just glad my 401K had no WAMU stock.  I feel for those families who had their reitrement (sic) in WAMU stock. 0 Sam

"One former WaMu employee in Boston, who said he was laid off late last year, wondered Friday what will happen to about $650,000 he was to receive in deferred salary, which employees utilize for tax benefits.  The former employee, who asked that his name not be used, said he feared he was going to be "wiped out."  David Barr, an FDIC spokesman in Washington, D.C., said deferred compensation usually is treated as an unsecured claim.  As a result, WaMu employees with such compensation might be out of their money." - Seattle Times, "WaMu sale could mean job cuts - and maybe hires, too.

JPMorgan will make a $1.9 billion payment to the FDIC as part of the acquisition, which makes the company the biggest U.S. bank by deposits.  This gives them all of WaMu's deposits and branches.  JPMorgan won't acquire WaMu's liabilities, including claims by shareholders and subordinated and senior debt holders, the FDIC has said.

JPMorgan is taking on $176 billion in mortgage-related assets and writing down the value of it and other portfolios by about $31 million.  In other words, they are writing off about $31 million in bad loans.

JP Morgan Chse expects it will trim 15% of combined operating expenses.  The extent of job cuts aren't yet know, Charles Scharf, CEO of JPMorgan's retail bank, said today on a call with reporters.  The bank plans to consolidate about 10 percent of the overlapping branches in locations including Illinois, Texas and New York.

Branches will be added in California, Washington and Florida, among other states, and will have 5,400 offices with about $900 billion in deposits.  The branches and credit cards will carry the Chase brand and will be integrated by 2010, JPMorgan said.

WaMu was known for its no-thrills, no-fees, unconventional banking with a hip, modern, neighborly feel.  JPMorgan Chase, is known for being big and conservative.  Its advertising preaches value and security.  So which is better?  Modern and hip, or old and conventional?

For now, the WaMu signs will stay up, but within two years all remnants of Washington Mutual will be gone.

Customers can call a Washington Mutual banking representative at 1.800.788.7000 or the FDIC Call Center at 1.877.275.3342 with questions.  It has been reported however, that the WaMu customer service line does not offer access to any person.  Computerized access to accounts for balance and transaction inquiries are still possible, but nothing beyond that.

No Changes
If you had a WaMu account, you now have an account with JPMorgan Chase Bank.  All deposit accounts, including savings, checking, money market and retirement accounts and certificates of deposit, have been transferred to JPMorgan Chase Bank.  No depositor has lost any money, even it it was above FDIC insurance limits.  Direct deposits and Social Security checks will continue as normal.  Your debit card and bill-paying services will continue to work.  You can still use the checks you have now, and checks already written that did not clear before the institution closed will be honored if there are sufficient funds in the account.  Local branches will be open as usual.  All WaMu loans have been assumed by JPMorgan Chase Bank.  Payment amounts and due dates will not change, and automatic payments will still work.  Customers should continue to make checks out to Washington Mutual Bank.

Interest on deposits accrued through September 25, 2008, will be paid at the previously stated rate.  JPMorgan Chase Bank will be reviewing rates and will provide customers with information at a later date.


Fishman, who has been on the job for less than three weeks, is entitled to around $11.6 million in severance and can keep his $7.5 million signing bonus.  As of today, Fishman still retains his position as CEO of WaMu, according to JPMorgan Chase.

Fishman serves as the chief executive officer of WaMu.  Until 2007, he was president and chief operating officer of Sovereign Bank.  He joined Sovereign through its 2006 acquisition of Independence Community Bank, where he had been president and chief executive officer since 2001.  He held a variety of senior executive positions at Chemical Bank, a JPMorgan Chase predecessor and A.I.G. prior to Independence Community Bank.  From 1999 to 2000 he was CEO of ContiFinancial Corporation.

As with most bank takeovers, WaMu senior executives could be expected to be replaced by employees of JPMorgan Chase & Co.   Profiles of the rest of WaMu's execs.


In March, 2008, on the same weekend that Dimon of JPMorgan Chase negotiated his daring takeover of Bear Stearns, he secretly dispatched members of his team to Seattle to meet with WaMu executives.  When JPMorgan Chase offered WaMu $8 a shore, largely in stock, the prior CEO, Killinger, balked at the deal and rejected it.


If you owned stocks in WaMu, they are worthless.  Stockholders and investors are basically wiped out.  The U.S. Government saved the FDIC billions by taking over WaMu and selling it.  And the CEO of WaMu is set to take off with a $7.5 million sign-on bonus, and a $11.6 million cash severance package. 

The U.S. Government meanwhile, made $1.9 billion dollars for simply saying "WaMu, you're ours now, and we just sold you to JPMorgan."  So the government earns $1.9 billion dollars, while the shareholders/stockholder loose everything just to save the FDIC from spending money doing what they were invented for, and where some of your tax paying money goes.  Meanwhile, Alan Fishman walks away with more than $13 million in severance and bonus pay.  Oh an JP Morgan's stock rose about $5.00 a share today from $43.46 to $48.24, up 11%.  Have I missed anything?

WaMu is the latest casualty of a financial crisis that drove Lehman Brothers Holdings Inc. and IndyMac Bancorp out of business and led to the hastily arranged rescues of Merrill Lynch & Co. by Bank of America Corp. and Bear Stearns Cos., which was also absorbed by JP Morgan.  Those companies were all too big to fail to begin with... now they're mega banks.  

And then there is the governmental emergency measures to stabilize Goldman Sachs, Morgan Stanley and the American International Group.

In 2005 there were 0 bank failures.  In 2006 there were 0 bank failures.  In 2007 there were 7 bank failures.  So far in 2008, there have now been 13 bank failures.

Bloomberg quotes Risk Analytics Managing Director Christopher Walen, who forecasts that approximately 100 banks with assets of over $800 billion could fail by the end of 2009. 

Wachovia has just announced they are now looking for a buyer.

Are you scared yet?

...... Misery Index, who is now making a map where I have buried my cash in a bottle under a tree as I'd rather have what little money I have, than give it to a bank or investment company hoping to make $$ only to find out that I lose everything, with CEO's walking away with my hard earned cash.

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9/26/2008 07:25:00 PM

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