Money | 09/15/2008 4:17 pm

Washington Mutual Solvency Fears Grow as Standard and Poor's Downgrades Its Credit Rating

Washington Mutual, the national banking institution with wide exposure to the real estate and credit crisis, hit another low today as its stock price closed at $2.00 and rating agency Standard & Poor’s downgraded its credit rating.

As stock prices tumbled across the big board, and Wall Street titans such as AIG scrambled for liquidity, the focus on Washington Mutual has become increasingly intense.

Washington Mutual’s large portfolio of underperforming home loans, and the continued weakness in the housing market are major reasons for both the spotlight on the firm, its falling stock price and the S&P downgrade.

Read more about: Financial, News, Wall Street, Washington Mutual

17 Reader Comments (so far…) Sign In or Register to comment

Another Domino. Watch Charlie Rose tonight (9/15) to get a good idea of what is going on. But, this is what happens when these banking institutions invest and put themselves heavily into debt without injecting enough of their own capital. And, with little or no oversight. Disgusting. And, I am more than a little p.o’d with McCain’s main policy advisor, Phil Gramm, the one who wrote his economic plan for the campaign, you remember the one who called us “a nation of whiners”. And, I think McCain was out in left field today when he said (and I heard him with my own 2 ears) say that the fundamentals of the economy were sound. And then, when Obama called him on it, he complained that Obama was hitting on the working class because when he said fundamental, he meant them. Spin/scam call it what you will; just don’t call it true…..

By Diana T on 09/15/2008 8:15 pm

e-mail alert

The law of unintended consequences. Except, I don’t think that Phil Gramm gave a damn about that. And God forbid he ever becomes the Secretary of Treasury. http://losangeles.injuryboard.com/miscellaneous/the-subprime-mess-and-ph…

By Diana T on 09/15/2008 8:51 pm

e-mail alert

Maybe Mrs Palin can help them sell all those annoying loans on eBay!

By Tee Zee on 09/15/2008 10:48 pm

e-mail alert

Diana, I heard McCain flipping and flopping around like a fish out of water on GMA this morning. Try as I will to tune the media out there are still times when it creeps it’s way back into my life. I do like to hear the weather and local news. He was asked about calling the economy fundamentally sound until after Senator Obama challenged him on it then changing his rhetoric to say it’s in crisis. His spin was that he knew that financial institutions were in crisis, but that he thought of the American workers as the fundamentals of our economy and that they were sound. Does this man even have a clue what is going on in this country? Does he know anything except war? Does he care about anything except war? If the republican party had cared about the fundamental financial stability of the American workers rather than the greed of their corporate and financial special interests we wouldn’t be in this crisis.

By Sherrie Crews on 09/16/2008 7:57 am

e-mail alert

Sherrie, Sure, he must have a clue since he has been a de-regulation hawk for the whole time he’s been in the senate. And, his BFF is Phil Gramm, who when he was Senator, authored the bill that got us to this day, and Mrs. Gramm who sat on the Enron Board and made at least $900,000. I cannot believe that suddenly McCain is on board for deregulation reform in the past 48 hours. Old saying: The trunk of the tree Always shows through the leaves. As for caring, McCain is stuck on defense, and it would seem, the military industrial complex, as well as Big Oil. But now, it’s time to move on to innovation, inspiration and future or else we will, as Thomas Friedman says, see ourselves on the decline. And, the other parts of the world are really hoping that doesn’t happen.

By Diana T on 09/17/2008 7:39 pm

e-mail alert

Is it Denial that has people not reacting to what is going on all around them. Are they just in a state of disbelief and soon anger will take over? Like the five stages of grief!

By Jennifer Dooley on 09/16/2008 10:08 am

e-mail alert

Jennifer- I wish I could be in denial. I had investments that were left to me from my mother’s death. I have been selling them to buy medicine. What’s left won’t buy much more medicine due to the values. At that point, I just don’t know what I will do. I canceled a Dr.s appt (one out of three) today because I can’t afford it. When the medicine is gone….I have no choice. I have a devastating illness on top of a brain tumor and thyroid tumor. It’s just too bad that only the wealthy can afford health. Survival of the fittest I suppose. Believe me…there is no denial here.

By Josie Sullivan on 09/16/2008 1:04 pm

e-mail alert

Josie, I am so upset to hear this. I am just sitting staring at the computer screen reading over and over, what you have typed. What words can I possibly say? You know I am sending you energy. .. surrounding you with love and light. We can not end this grip the Republican Administration and it’s lackeys have thrown this country into fast enough. That a beautiful woman like you, should be facing these circumstances is enraging. Survival of the fittest? More like survival of the cannibals!

By Deni G on 09/16/2008 1:50 pm

e-mail alert

Deni- Thank you for your sweet response! I just don’t know how we are going to make it another four years without some drastic changes.

By Josie Sullivan on 09/16/2008 5:13 pm

e-mail alert

I hope you get a chance to read Elizabeth Edwards article. I feel for you and your medical needs. I have a Son with out insurance and he has Mast Cell Disorder. I can only offer you some suggestions on how to handle getting meds. We have gone to generics. We also have turned to Wallmart for their RX plan.You can contact the drug Manufacturer for their programs. You, if unable to work and having lost all your income in the resent events, should look into Social Security for help. And I would look for what steps you can take in regards to your stockbroker advice..

By Jennifer Dooley on 09/17/2008 10:08 am

e-mail alert

Jennifer- I’m so sorry to hear about your son! I’m sending healing thoughts his and your way! I am checking into outside help…sadly. My stockbroker called this week and I’m going in on Monday to check out my options. Shoot, by Monday there may be no stocks left. So many people are in life threatening situations that it just makes me sick. I pray that the people who own the US will start recognizing the little people who live here and pay taxes. Big Hugs to you!

By Josie Sullivan on 09/17/2008 10:17 am

e-mail alert

Josie, Thank you for your prayers. I will pray for your Healing too. That really is the best Source! I have been reading Deepak’s posts and they are a big help in getting myself back to Staying the Course and not letting The Shadow self take over…Do you know that most of America is not owned by Americans…I am about to get the last break down on this..I’ll post it when I have it and it’s source checked.

By Jennifer Dooley on 09/17/2008 10:41 am

e-mail alert

Jennifer- Ya know, I had not even thought of that….you’re right about the ownership of America. I’ll be looking for your post. Blogger Hugs to you!

By Josie Sullivan on 09/17/2008 12:43 pm

e-mail alert

Credit rating agencies rate (in descending order) Investment Grade AAA, AA, A, BBB Junk BBB-, BB, B, C Default D Washington Mutual’s credit has been lowered to BB- by S&P, with the following accompanying statement, “Increasing market turmoil and the related impact from managing its concentrated mortgage franchise in this troubled housing and credit cycle led to the downgrade. It increasingly appears that market conditions could overtake credit fundamentals and leave the company with greatly diminished financial flexibility.” Washington Mutual nevertheless has “adequate capital positions from a regulatory perspective,” with a stable deposit base. Last week, the thrift said retail deposits as of August 31 were “essentially unchanged” from $143.6 billion at the start of the year. “Market conditions overtaking credit fundamentals” means that investors dumping their investments in this company without regard to the value of its underlying assets can result in worsening the condition of the company. Therein lies my assertion that market panic can be a self-fulfilling prophesy, and this is the time to look at facts - not sensational headlines.

By K O on 09/16/2008 10:19 am

e-mail alert

Kitty, Thank you for a voice of reason during a time of stress for many. I own no stock but I worry about the jobs of my tenants who I depend on for my income. I worry about my son’s business which he bought from his partner last year. He needs to borrow money to continue as well as the ability of his customer’s to borrow money to continue their projects so he has work for his employees. He owns a company that installs fire suppressant systems in commercial and public buildings. Those projects could disappear in a heartbeat. The young people who rent from me are usually the first laid off during hard times. Today I’m glad I didn’t rent my upper unit to a Horizon Air new hire last month. It looks like she will be moving back home with her parents. I am thinking hard about what I can do to anticipate the fall out of all this. I sometimes feel like the canary in the coal mine Over the last 5 years as I watched and dealt with rising prices for heating oil, natural gas, electricity, water and sewer costs, insurance and property taxes, then was hit with a drop in rents because everyone was buying houses with those cheap loans. I don’t know whether to be glad I didn’t take a huge cash out offer on my triplex several months ago, because the money could have disappeared in the stock market or sad because the value could shrink over the next few years. It’s an interesting conundrum. Again Kitty thank you for the voice of reason.

By beverly linens on 09/16/2008 2:16 pm