Chutzpah watch: WaMu suing FDIC

Boy, the megabanks STILL “just don’t get it” just refuse to get it.

Washington Mutual is suing the Federal Deposit Insurance Corporation for a cool $13 billion it claims the agency caused it to lose in banking operations.

The FDIC turned down a number of WaMu claims allowances for lack of specificity.

To which, in the lawsuit, WaMu is, in essence, saying, “Trust us!”

But, there’s this tidbit further down the story, indicating WaMu must not follow news on a daily basis.

In the midst of outrage over AIG bonuses, etc., WaMu is seeking a jury trial.

Uhh, yeah, good luck with that.

Good luck with a judge this side of Nepal finding a jury that’s “untainted” by financial meltdown news.

WaMu getting more creative with surcharges

I’m sure this is an effort to make up for frozen money not earning anything right now.

A friend said Washington Mutual has a new policy, and a price-gouging one.

It is starting a $5 surcharge if the person to whom you write the check does not cash or deposit it at your bank. Not to you, to the "presenter" of the check.

Geez o pete. Well, that will at least puff the bottom line for WaMu's eventual buyer, JPMorgan Chase.

WaMu buyout and GOP balking NOT a sign for more bailout urgency

But, is McCain ginning GOP rebellion to justify debate-skipping?

Washington Mutual has been teetering on the precipice for months. And JPMorgan had the money to buy.

Besides WaMu actually having its death rattle, House GOP “upstarts” offering an alternative bailout plan is not cause for alarm, either.

(That said, the House GOP hypercapitalists’ plan would be pretty funny if it weren’t so stupid, per Hilzoy.

Among other things, it gives a nod or two to “investigation without regulation.”)

These two events have one benefit, at least.

Paulson and Bernanke will have to talk more about how much they knew and when they knew it, per White House Deputy Press Secretary Tony Fratto saying at least some elements of a bailout plan have been in the works for months.

Beyond that, though, unless some of the most liberal House Democrats and a couple of Senate Dems are rebelling, some sort of bipartisan mush should fly through the House and have enough Senate GOP support to avoid cloture problems.

Now, to do that may well require political gamesmanship on the part of House Democrats. Well, in that case, we’re at brinkmanship time again. It’s already worked once this week, at least the appearance of it has for public consumption; Paulson blinked on the CEO pay cap, at least on a symbolic version of it; he’s also accepted the bailout being done on the installment plan.

That’s why, even though McCain allegedly has not given direct support to the House GOP plan, it’s hard to see this as not being, at least in part, him attempting to justify skipping the first debate, by trying to make sure a bailout deal is not in place by midday Friday or so.

Wachovia cans CEO; what’s next?

In what is surely a sign of the subprime times, Wachovia Corporation CEO G. Kennedy Thompson is out on the street. Thompson had been stripped of his role as chairman of the board a month ago.

But, new chairman Lanty Smith said, “move on, don’t look here,” as in, this doesn’t mean Wachovia has new problems.

I disagree. Canning him without having any idea yet of a replacement has to raise red flags.

And, the warning flags are elsewhere, too.

Yesterday, Washington Mutual board stripped CEO Kerry K. Killinger of his position as chairman of the board. Rumor is he could be pushed out soon, too.

Housing woes continue

Washington Mutual, announcing a bigger-than-earlier-expected first-quarter loss, is digging up $7 billion in new capital from third-party investors.

How bad is it? The Street pegged WaMu’s loss at $344 million; instead, it’s a whopping $1.1 billion. And, WaMu is also taking a provision for $3.5 billion in loan losses.

And, why is TPG Capital potentially pounding sand down a rat hole? WaMu’s second-quarter numbers might not get a lot better; pending home sales fell to an all-time low in February. And, as with WaMu, analysts’ advance predictions were off, on the too-sunny side.

“The question was whether things were starting to stabilize,” said Global Insight economist Patrick Newport. “Apparently they're not.”

Newport predicts home sales will fall by another 5 to 10 percent before picking up at the end of the year, while the Realtors group forecasts sales will remain flat in the first half of the year before rebounding strongly in the second half.

Discount the National Association of Realtors report. The NAR is engaging in nothing but PR, not honest analysis, and has been doing so for months. It’s staking its hopes on the higher dollar limits for jumbo loans recently approved for Freddie Mac and Fannie Mae.

But, as I blogged earlier today on my “nouveau riche” post, McMansions are starting to hit the foreclosure chopping block in many places, too.

WaMu says screw mortgage holders and save exec bonuses

Surely Federal Reserve Chairman Ben Bernanke was making sure, withits executive bonus worries, Washington Mutual was under his especial focus of his three-quarter point rate cut, and will be at the front of the line for future bailout needs:

After CEO Kerry Killinger and other top executives missed all or a big part of their bonus pay last year, Washington Mutual wasted little time taking steps to apparently make sure it won't happen again — even if the mortgage market and the company remain in the tank.

The board decided in February to use different performance yardsticks that could make it look like Killinger and other top executives were doing great jobs — and all but ensure them millions of dollars in bonuses for 2008. ...

If the bank meets its watered-down performance hurdles this year, Killinger stands to pocket $3.6 million as a bonus for 2008, or about 365% of his base salary.

Shockingly, he'd get that bonus even if shareholders see more lousy performance at Washington Mutual. Killinger is at least partly responsible, given that he led the bank so deeply into the subprime morass. The company reported a nearly $1.9 billion loss in the fourth quarter of 2007, and analysts have forecast losses throughout 2008.

Those huge losses piling up because of subprime loans and foreclosures? At bonus time, the bank will ignore them.
Somehow, I doubt WaMu will let you “ignore” a mortgage payment just because you, too have “huge losses piling up.”

But, there is one way you can strike back:

Executive bonuses will be doled out for squishy achievements such as improvements in customer loyalty.

Got money in WaMu? Move it. Anywhere.

Got a loan it originated? Find a way to move that too.

And when WaMu calls you, tell it where it can shove its fucking customer loyalty.

Unfortunately, as the second and third webpages make clear, WaMu isn’t alone in lowering the bar on executive bonus targets.

Where is The CEO President? Why is he not decrying “the soft bigotry of low executive expectations”?

WaMu making HUGE job cuts

Per the AP:

Washington Mutual Inc., the nation's largest savings and loan, said Monday that problems in the mortgage and credit markets are forcing it to close offices, lay off more than 3,000 workers and set aside up to $1.6 billion for loan losses in the fourth quarter.

That’s not the half of it.

I’ve already read a bit of speculation that WaMu might have to board up ALL the windows. If that’s the case, the subprime crisis/housing bubble has officially become the worst economic problem since the two Arab oil embargos, and threatens to become the worst since World War II.

To say the least, WaMu is once-burned, twice-shy:

After dismantling much of its subprime mortgage operation in September, Seattle-based WaMu will now get out of the business entirely. The company said it will close about 190 of its 335 home loan centers and sales offices, shut down nine call centers and eliminate 2,600 home loan workers and 550 corporate and support jobs.

That, in turn, tightens the credit market, with less money for residential loans. And, all the slashing still won’t stanch the bleeding:

For the first quarter of 2008, the company said it expects loan losses to total $1.8 billion to $2 billion. Loan losses will remain high throughout the year, WaMu added.

Actually, I think WaMu will become a takeover target sometime next year. And, given that they’ve already dipped their toes in the water by propping up Citigroup, don’t be surprised if investors from Abu Dhabi or elsewhere in the Arab world try to get a piece of the action, if only most indirectly and discreetly.

And, that’s not the only rocky financial news of Monday. Bank of America shut down a major institutional investment fund Pthat was leaking like a sieve: