Entries Tagged 'Washington Mutual' ↓
September 16th, 2008 — Bank Run, Banking, Chase, Credit Crisis, Economy, Washington Mutual
Washington Mutual’s [[WM]] stock climbed back out of the hole on Tuesday, as it recovered from a rough start after Standard & Poor’s dropped the bank’s credit rating to junk amid continuing troubles with the mortgage market.
Although the company’s shares had initially dropped 15% after the market open, losses then softened and shares headed back up within an hour. WaMu closed 16% higher.
Investors were probably pleased by WaMu’s reaction to their downgrade. The bank said the rating agency attributed its action to worsening conditions in the market, and not to any specific material change in WaMu’s financial situation.
In addition to the positive response, rumors also began to surface that JPMorgan Chase could be looking to buy the bank. Analysts said this helped to drive up the stock.
JPMorgan Chase has not made a public comment about a possible deal.
September 15th, 2008 — Chase, Credit Crisis, Economy, JPMorgan Chase, Subprime, WaMu, Washington Mutual
J.P. Morgan Chase [[JPM]] has emerged as a likely candidate for purchasing Washington Mutual [[WM]], which is staggering under huge mortgage losses and just saw its credit rating reduced to junk status today.
Earlier in the year, Chase had made motions to WaMu, but WaMu looked the other way. Chase had reportedly offered a stock-swap buyout at $8 per share.
WaMu instead decided to pursue a $7 billion financing deal with TPG Capital, that valued WaMu at $8.75 per share. TPG structured the deal for a 13% stake in WaMu so that it’s made whole if the bank sells for less than it paid within 18 months of the original investment.
Also adding to speculation about a WaMu sale is the board of directors decision earlier this month to get rid of long-time CEO Kerry Killinger, who had been resistant to selling the thrift.
Other banks that have been cited as potential buyers for troubled WaMu include both Wells Fargo [[WFC]] and HSBC [[HSBC]].
September 15th, 2008 — Credit Crisis, Economy, Market Crash, WaMu, Washington Mutual
Washington Mutual [[WM]] has been downgraded to “junk” status today by Standard & Poor’s as concern mounts about mortgage losses. The downgrade caused shares of the largest U.S. savings and loan to plummet after-hours following a 27% drop in regular trading.
The credit rating agency lowered WaMu’s credit rating to “BB-minus,” three levels below investment grade, from “BBB-minus.” It cut its rating on Washington Mutual’s banking unit one notch to “BBB-minus” from “BBB.” S&P said that it has a “negative” outlook, meaning that another cut is possible within two years.
The announcement by S&P followed downgrades last week by both Moody’s Investors Service and Fitch Ratings.