WaMu stock plunges to lowest level since the '80s

Shares of Washington Mutual Inc. have plummeted today, and this time no one can blame "short sellers."

WaMu was down 46 cents, or 20%, to $1.80 at about 11:10 a.m. PDT. The stock earlier fell as low as $1.51, its cheapest level since the 1980s.

The Seattle thrift giant reportedly has been shopping itself to potential buyers since ousting Kerry Killinger as chief executive Sept. 7.

My colleague E. Scott Reckard reported last week that federal regulators were working to help broker a deal for WaMu, "concerned about the effect a failure could have on the bank insurance fund overseen by the Federal Deposit Insurance Corp."

But as Bloomberg reports today:

WaMu’s options may be dwindling as potential bidders shy away from making an offer because it’s not clear how much the proposed $700-billion U.S. bank rescue package will benefit the lender. WaMu has failed to attract a bid from at least five banks, including JPMorgan Chase & Co., in the week since it put itself up for sale. WaMu next approached Carlyle Group and Blackstone Group LP, two people briefed on the matter said. Those talks are preliminary, and hinge on the government’s role in helping WaMu, which faces an estimated $19 billion in bad loans, the people said, speaking anonymously because the discussions are private.

Credit-rating firms are putting more pressure on WaMu to strike a deal. Standard & Poor’s on Wednesday cut the company’s debt rating for the second time in nine days, to CCC from BB-minus. A rating of CCC means a company has a high likelihood of defaulting on its debt.

WaMu is the nation’s largest thrift, with $182 billion in deposits.

Short sellers have been betting heavily this year on the company’s demise, as noted in this post on Wednesday. But WaMu is one of more than 900 stocks that have been protected from further short selling since Monday, under a temporary ban imposed by the Securities and Exchange Commission.

So the stock today is being driven down by genuine investors who don’t want to take a chance on holding it, even at these pocket-change prices.

Comments

[steve greenberg]

They are getting exactly what they deserve. No bailout. Let them ROT.

[frank linet]

YOU FAIL TO MENTION THAT AS OF THIS POSTING ALMOST 200 MILLION PEOPLE HAVE PURCHASED WASHINGTON MUTUAL .. SO YOUR PREMISE IS FLAWED.. I AM ALSO REQUIRED TO POINT OUT THAT NO SOURCE EXISTS @ WAMU OR ANY WHERE ELSE THAT CAN SUBSTANTIATE IF TALKS ARE TAKING PLACE WITH OTHER BANKS , INVESTORS OR FUNDS.. ALL OF THIS IS CONJECTURE ON THE PART OF THE MEDIA .. WAMU IS SOLVENT TODAY YESTERDAY AND TOMORROW.. I AM LONG AND STRONG ON AMERICA , THE AMERICAN BANKING SYSTEM AND WASHINGTON MUTUAL .. IF WAMU GOES UNDER WE ALL GO UNDER

[sim p leton]

Gosh, now lets see, these banks came in and forced us to borrow enough money to live beyond our means. It really does prove that Big Government has to take care of us, we are not capable of balancing our own checkbook, let alone realize that a negative amortization spells trouble.

[coakl]

WaMu's likely losses in its mortgage and home equity portfolio will be much higher than the old estimate of $19 billion. This is why the bidders are having second thoughts about buying WaMu.

Did anyone notice that Paulson's bailout plan came out shortly after news of WaMu's attempt to auction itself off leaked out?

The feds also looked at WaMu's books and realized that the problem was far bigger than anyone had dreamed possible. At WaMu, the underwriting is so bad that the majority of loans are being defaulted on.

[John In Texas]

To the ALL CAPS guy:

So if WaMu goes under, we all go under? Bring your snorkel tomorrow because I get a funny feeling the FDIC is going to make an unpleasant announcement tomorrow (Friday) evening.

WaMu is my bank and they have great customer service; it's a shame their doltish Execs gambled so uncontrollably.

[Jeff]

If anyone hasn't noticed.........the as of 6:15pm pdt....WAMU's deposits are being taken over by JP Morgan and the FDIC.....its all over CNBC

[WaMooo]

WaMu is at 45 cents, is now the time to buy?

[Joel]

"WAMU IS SOLVENT TODAY YESTERDAY AND TOMORROW" Really? because as far as im concerned they went under a couple of hours ago. Makes you think

[Not Steve]

To "steve greenberg " - Gee Steve - I woke up this morning - saw the news... man you are clueless and very ignorant. It's a good thing no one listens to you. How could you be so wrong! Do you even pay attention to anything going on in the world? You seem to be one of those EMO type punks that goes purly be their feelings while jamming out to punk rock on an IPOD. WAMU had bad business practices - which lead to it's fall. Giving a CEO 7 million at sign on - was just stupid. Clearly no one is worth that much and WAMU just proved it.