

WaMu Fails. First major comercial bank to go. - newt0311
http://online.wsj.com/article/SB122238415586576687.html?mod=special_page_campaign2008_mostpop

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kqr2
[http://www.nytimes.com/2008/09/26/business/26wamu.html?_r=2&...](http://www.nytimes.com/2008/09/26/business/26wamu.html?_r=2&hp&oref=slogin&oref=slogin)

The coolest part is that the CEO who has been on the job for LESS than 3 weeks
will get paid $19.1 million.

From the article:

The company’s new chief executive, 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. Mr. Fishman, who has been on the job for less
than three weeks, is eligible for $11.6 million in cash severance and will get
to keep his $7.5 million signing bonus

~~~
dcurtis
$7.5 million signing bonus? What kind of board of directors would approve such
a retarded amount?

The guy would have taken the CEO job without the bonus; it serves zero purpose
to the shareholders to give him $7.5 million.

Why don't companies base executive compensation on performance? Doesn't that
seem logical?

~~~
witten
It seems logical, but the problem with basing executive compensation on
company performance is that, in a public company, it just incentivizes the
executives to chase quarterly profits at the expense of medium- to long-term
goals. This means that executives will do anything they can to pump up
quarterly numbers, especially if they know that their tenure at the helm of
their company is fairly finite.

~~~
dhimes
In a public company, the pressure to chase quarterly profits exists anyway
because of the shareholders. If company A does something of questionable
morality or risk, but it nets their shareholders a lot of value, it gets hard
for the executives at company B to say 'no' to the strategy, even if they know
better.

My suspicion is that this is why some companies start out as good and are
later perceived as evil. The game changes once you have legal fiduciary
responsibilities to shareholders. It seems to me that it can get very hard to
defend your strategy of not maximizing profits when others around you are
raking it in.

~~~
lisp_padawan
indeed, corporations are in legal terms considered with legal equivalence to
an individual, and a public traded company is legally bound to maximise
shareholder profit, we have basically created a legal psychopath, they're (the
board, ceo etc) legally bound to do anything within the law to generate
profit/growth. As you say, hardly surprising that companies with mottos like
'do no evil' end up censoring bloggers in the PR of China.

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tptacek
You can call them the "first major commercial bank to go", as if they're the
ominous start of a trend --- and maybe they are, but weren't they also
basically one of the ringleaders of the mortgage valuation debacle?

Notice also (if you're a tea-leaf reader) that the WSJ and NYT stories on WaMu
didn't end with "raises new and troubling questions" about some other big
financial; WaMu was a festering infected band-aid waiting to be ripped off our
carcass, just like Lehman. Is there another big one? Wachovia is the next-most
exposed company, aren't they? And they're considered pretty strong.

------
apstuff
"Integrity is not a commodity. It’s the most rare and precious of personal
attributes. It is the core of a person’s and a company’s reputation." \-- Dick
Kovacevich, Chairman of Wells Fargo

Reuters: AIG's ex-CEO refuses $22 million severance payout. Have faith all.
The core of the United States will persist.

------
mattmaroon
I just opened up a savings account and a checking account there yesterday.
Hope the FDIC gives me my $10 back.

~~~
tlrobinson
My WaMu account currently has a whopping $4.84 in it ;)

But in all seriousness, the FDIC arranged for JP to buy WaMu's deposits so
they won't have to dip into (i.e. severely deplete) the FDIC insurance fund.
Your WaMu account will just end up a Chase account in a few weeks/months.

Just logged in my account and got this message:

<http://www.chase.com/welcomewamu/>

------
Shooter
I have a few WaMu accounts, and I just received several emails from them
offering me a higher APY (4%) and 'holiday savings starting now' right before
I clicked over to HN and saw this post. I've never gotten a promotional email
from WaMu before, and then I suddenly get four in one day?! At first I thought
it was a phishing scheme, but they're all legit emails.

It also seems like AIG has increased their advertising for certain business
units AFTER their recent plummet...

I shudder to think about taxpayer money being used for new marketing campaigns
to "bolster confidence."

~~~
dkokelley
I actually have their savings account that earns me 4% APY. When I got it I
earned 5%, and last month it was at only 3.75%. I'm planning on leaving it
there under JPMorgan's rule unless they offer me less.

From my reading (because I can't call it research yet), WaMu's fall was
triggered/multiplied by a lot of withdrawals from their customers because of
fears that this would happen (chicken/egg). In fact, $19 billion was
supposedly withdrawn over the past few weeks, which put them under their loan
ratio (banks must maintain a certain cash/loans ratio). Of course it now makes
sense that they offer such a great interest rate - they needed the money!

My concern now is what will happen to my interest rate?

~~~
jrockway
Chase's savings accounts are about 0.25% around here, so you'll probably get
that. I recommend moving to ING Direct or similar.

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gaika
Check more financial news at <http://www.newmogul.com/> , founded by nickb.

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steveplace
Just to let everyone know, Wells Fargo is the only bank in the U.S. that still
holds an "Aaa" rating.

~~~
LogicHoleFlaw
I just have to say... I love my credit union.

~~~
steveplace
Some credit unions are having issues as well.

------
thomasmallen
And if other banks look like they'll fold, expect the government to throw more
money at the problem than just FDIC insurance dough. A GOVERNMENT CANNOT
CONTROL THE FREE MARKET. IT WILL ALWAYS FAIL. It's like a drunk trying to stay
on the road who overcompensates for every mistake until he zooms into a ditch.

Bad lenders and dim-witted/confused borrowers screw one another? Then dilute
the dollar. "Borrow" a trillion fucking dollars that you don't have to sedate
the market. Oh, that one will work great. I say, just let it be, before this
thing spirals out of control. That $700B would do plenty to alleviate poverty
for anyone who is, in fact, financially ruined by failing lenders.

We'll let the entrenched poor rot for decades, but bail out the rich in a
week. I'm outright disgusted.

What can be done? I heard there was a small protest in NYC yesterday, maybe
we'll have one in DC.

~~~
ars
You are very very badly informed!

The bailout will mean a 100% loss for all the "rich" people. It's the "poor"
that will win - they borrowed money, and don't have to pay it back.

~~~
thomasmallen
And you're very shortsighted! As are many people who believe that throwing
money at the problem is the answer.

This will just allow these unscrupulous lenders to maintain business as usual
(assuming the companies are re-sold a few years down the road, which is the
plan). That $700B will have to come from somewhere, and that place is nowhere.
This may be disastrous for the economy.

And you misquoted me, leaving off "entrenched" in "entrenched poor." If you
can buy a house, I have news for you, you are not a member of the entrenched
poor. The middle and lower-middle classes were able to buy real estate like
never before, and they will be bailed out.

Why, I ask, is rescuing new homeowners a priority now, when the third-world
poverty of the inner city and rust-belt country is viewed as some incurable
ailment? We know damn well why: Because this coincides with saving the
bankers' asses.

~~~
ars
>This will just allow these unscrupulous lenders to maintain business as usual

How will that happen when they won't exist anymore?

>That $700B will have to come from somewhere

No it won't. The number is the total debt the US would be on the hook for - if
people pay off their loans, then the US won't have to spend any of it.

What exactly do you want to do about the "entrenched poor"? Give them
presents? This has nothing to do with them.

I don't know if the bailout is a good idea or not, I haven't looked at it in
detail, but it's not as bad as you are making it out to be.

~~~
thomasmallen
Yes, we should be Santa Claus and give them presents. I'll turn elsewhere for
a serious debate. If you think that's the only way the government could help
the poor, or that the big-wigs who caused this mess will just vanish as their
companies are bought out, you've got another thing coming.

~~~
ars
That's exactly my point! They won't vanish, so bailing them out is not going
to cause them to stick around. They'll stay either way.

Basically I'm saying that hoping we'll get rid of bad managers is a bad reason
to be opposed to the bailout.

If you have ideas for what to do for the poor post them. I don't. But I do
know that keeping some companies alive will do more to help people then giving
the money to poor people will.

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HeyLaughingBoy
/me wonders if this is a good time to start analyzing bank stocks to find a
good buy...

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m0digital
I had Chase when I lived in Chicago and when I moved out to SF there weren't
any branches so I got Wamu. Sad to see Wamu go. I wonder what will happen to
my awesome savings account interest rates.

~~~
amrithk
The branches are being acquired by Chase. Perhaps the interest rates may be
similar to what Chase offers.

~~~
dkokelley
_Perhaps the interest rates may be similar to what Chase offers_

Ouch, I hope not. Regular savings accounts are getting 0.10% - 1.95% depending
on the type of account and balance. Compare to Wamu's 4% APY

~~~
cstejerean
That's because Chase is not desperate for cash.

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JesseAldridge
Good grief. Are we looking at another Great Depression here?

I ask seriously. I don't know much about this economics jibber jabber, but I
know that I sure have been seeing a lot of bad news lately...

~~~
Retric
No, a few rich people lost a _lot_ of money and are looking for a helping hand
by the US gov. but these company's are a small fraction of the US economy. In
the end it's not vary important what the rich do as depressions are mostly
about how the middle class react when things start to get bad.

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floozyspeak
Seems to send the message its ok to go bankrupt cause the gov will bail you
out, so wth, lets do it!

~~~
ars
OK for who? It's not OK for the bank of the shareholders - they lost
everything! The customers don't really care.

So OK for who?

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vaksel
wonder if they'll freeze the home equity lines

~~~
dhimes
Ours was frozen by Citi.

