Washington Mutual In a Death Spiral?

Filed under: GSE Bailout, Paulson's Blueprint — admin @ 10:40 am

Ruth Lee

More doom and gloom? Money and Markets ran a comprehensive article last week outlining the future of Washington Mutual, Wachovia and the economy’s general direction:

“Much of our nation’s financial structure is collapsing, and our government’s only response is phony money, bogus bailouts and a litany of false promises.

Ben Bernanke, Henry Paulson, the FDIC and the U.S. Congress say they can do it all.”

Washington Mutual in a Death Spiral? 

“Washington Mutual, America’s largest savings and loan, is unfortunately, also one of the nation’s largest subprime lenders. A direct consequence: It appears to be in a death spiral, losing $3.3 billion in the second quarter … admitting to losses of as much as $19 billion this year … and probably on its way to losses of an estimated $26 billion.

That estimated loss is over four times its total market value as of Friday’s close … twelve times its yearly earnings in the best of times. Can it get a new capital infusion to stave off failure?”

Click here to read the full article.