Now would be a good time to get out of WaMu

muzie_IHB

muzie_IHB

New member
Just thought I'd offer a reminder if anyone out here somehow has more than 100K in WaMu accounts, that it would be preferrable to move funds out.



Today the cost for WaMu to insure its 1-year senior CDs has ratcheted up to 66 points. That is 66 percent, not 66 basis points. It would cost them 666,000$ to insure every 1,000,000$ of debt. The debt markets are almost marking the debt down as irrecoverable at this point. Stock is 92% down from its high as well.



WaMu also has more insured deposits than the FDIC has available in its account. Potential failure of WaMu would probably require some special governmnent authority for the goverment to provide these funds to the FDIC.
 
Mother effer....I have 19 more days before my WaMu CD matures in my deferred comp account.



ps. This should be in the economy thread.
 
[quote author="Trooper" date=1221218059]Mother effer....I have 19 more days before my WaMu CD matures in my deferred comp account.



ps. This should be in the economy thread.</blockquote>


Sarge, if the CD is for less than $100,000, it is insured by the FDIC and the FDIC will be able to borrow as much as it needs from the Federal Reserve and/or the Treasury Dept.
 
Yes, it's under the limit...but I was paying attention to this comment:

<em>

WaMu also has more insured deposits than the FDIC has available in its account</em>



Hey, someone in another thread said in the FDIC fine print, they actually have 99 years to "pay you back"......does anyone have info on this, or is it just a rumour. ?
 
[quote author="Trooper" date=1221219104]Yes, it's under the limit...but I was paying attention to this comment:

<em>

WaMu also has more insured deposits than the FDIC has available in its account</em>



Hey, someone in another thread said in the FDIC fine print, they actually have 99 years to "pay you back"......does anyone have info on this, or is it just a rumour. ?</blockquote>


Yes, it could be in the fine print, but the FDIC has ALWAYS given immediate access to funds. A credit line with the Federal Reserve/Treasury Dept. will be arranged and solidified before the FDIC closes WaMu's doors on Friday evening.




You are wondering how can I be so sure? Let us think about this. Considering that most banks in this country have approximately 1% in reserves, how many hours you think the fractional banking system would survive after the FDIC announced it did not have all the money necessary to pay on demand? No. Let me rephrase that. How many minutes?




The fractional reserve banking system exists <strong>ONLY</strong> because of the faith of the depositors in the FDIC.




I would move my deposits to Farmers & Merchants, but I would not panic or lose sleep.
 
crap. I wish it could have lasted for 3 more weeks. But once it's matured, I was going to redirect it into the only money market acct my Deff Comp plans offers......and guess what that is ? <span style="font-size: 13px;"></span>



yup. WaMu liquid savings.



I've opened a Schwab PCRA and was ready to self direct once the CD matured.....to get away from WaMu. Looks like it's going to beat me to the punch.



We'll see what happens next.
 
I was just at WAMU today, and I asked the account specialist (not the teller) if business accounts are also covered by the FDIC. They are. All of my banking is at WAMU, and I will probably leave it there. I don't keep more than the FDIC limit in the bank, so I am going to act as if it is business as usual. As awgee pointed out, the FDIC will make sure it is business as usual for regular customers while they figure out who is going to take over.
 
I wouldn't move your CD out.



It's safe, and if you wait three weeks, you can skip the "run" line. Just more it over when it matures.
 
Imho some people are being complacent here.



Yes, in theory, the government will never let anyone lose money in a bank. It would be a catastrophe if it did.



In theory the government should not have let Lehman brothers fail today...



I think the risks of actual money loss even if WaMu fails are very low. But opening an account in a different bank literally takes five minutes online. Sounds like people just don't want to spend the five minutes. Well, even if the full account is refunded, in my view, that five minutes can easily be lost 100 fold in any number of plausible scenarios: delays with the FDIC, possible errors with accounts on FDIC that need correction, possible bounced checks or bank errors, possible large unforeseen deposit on your account the day WaMu collapses, long panic lines at the bank (even if the money is safe) the day you need to get some money out yourself, etc. etc. It's not like we close a big bank every week and this is something everybody's accustomed to, there are bound to be frictions in the process that slow things down.



So if you value your time as well as your money, to me switching accounts is a sound investment.



Not to mention there is something awkward in leaving your money at an institution knowing full well the said institution most likely does not actually have the money anymore - at least not in aggregate... It's one of those cases of "as long as I don't look, it's still there!".
 
Well, the WaMu CD is held in my Deferred Comp acct and it doesn't mature until 9/30. I'll have to pay an early exit fee if I remove it...I have no idea how much that is.



I guess I'll just cross my fingers and hope for the best.
 
I don't think you'll lose it, and if you have to pay a fee and all I agree it's not worth the trouble to move it. As I said, it's more about the potential time and hassle if and when they fail than the actual loss.
 
There is no need to feed the panic here. Yes, it's good to move the money when the account matures but don't worry for now, the Fed will print more money if it's needed. :lol:
 
[quote author="Trooper" date=1221572577]Well, the WaMu CD is held in my Deferred Comp acct and it doesn't mature until 9/30. I'll have to pay an early exit fee if I remove it...I have no idea how much that is.



I guess I'll just cross my fingers and hope for the best.</blockquote>
Troop, I wouldn't pay the fees if your money is under the FDIC limit. Just wait until 9/30 and take your money out then. I've been through 4 bank closings, and it wasn't any hassle on my part at all. It was completely seemless to me that the bank was taken over by the FDIC.
 
[quote author="Astute Observer" date=1221608322]I have two CD's that got rolled over, and the rate is only 1.25%. 8 more months to go. Should I pay the penalty and put them somewhere with higher rate? I think I know the answer, and will be heading to WaMu shortly.</blockquote>
IMO, for 1.25%, I would pay the fees. You can get a much better interest rate than that. You'll get back the fees in a few months with a better interest paying CD.
 
All my money is at WAMU and there it will stay. WAMU Federal does not bother me. They have been the best bank ever and hopefully they will weather the storm JP Morgan is looking to acquire them. It was sad to see people running INDY MAC and there was no reason for it unless you where not fully protected. I am sure the people who are not protected at WAMU have already made changes.
 
[quote author="OCCOBRA" date=1221621630]All my money is at WAMU and there it will stay. WAMU Federal does not bother me. They have been the best bank ever and hopefully they will weather the storm JP Morgan is looking to acquire them. It was sad to see people running INDY MAC and there was no reason for it unless you where not fully protected. I am sure the people who are not protected at WAMU have already made changes.</blockquote>
My friend and co-worker withdrew all of his funds from WaMu earlier today (over $50k but under $100k). He wasn't comfortable with having his money over there. He'll be placing most of those funds into his Charles Schwab account.
 
Even if it FDIC pays your money back in less than 99 years, I'd still think twice before letting your money sit in a soon-to-be-gone bank (and since when everybody is so trusting of the government? I personally think that if there is an unprecedented market crash combined with banks' failure, which seems likely at this point, the government can do whatever it wants, including acting on that 99 years repayment term).

Do you really want to deal with the hassle of getting your money back that way? Isn't your time (that you will spend trying to get your money back, doing the paperwork, standing in line at the bank, and etc.) worth something? To me, if you lose under $100 in fees by yanking your CD before it matures, I'd do it now. If it is more than $100, I'd probably wait until it matures or the bank goes belly up, whichever is earlier :)
 
I'm a big Lurker have not posted in a long time. enjoy all the good advised and the good manners here. Question. How do you guys feel about citibank?

thats where i have an acoount. I guess they are rated c- I dont have alot of money in savings there 10k thats all still making debt investments. ie paying off car and student loan.



but I do get scared reading all this stuff? at times
 
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