WaMu's $1.6 billion write-down: Oh the shame of it all

Posted Dec 11th 2007 1:20PM by Sheldon Liber
Filed under: Major Movement, Bad News, Management, Rants and Raves, Market Matters, JPMorgan Chase (JPM), Money and Finance Today, Washington Mutual (WM), Wells Fargo (WFC), Headline News

The logo on a glass door of money lender Washington Mutual Washington Mutual . . . ahem . . . WaMu (NYSE: WM) has just let the other shoe drop, or at least shareholders are hoping that is the case. After yesterday's market close, it announced a $1.6 billion write-down, a reduction in the dividend from 56 cents per share to 15 cents (73%), 2,600 layoffs, downsizing of loan departments, closing of sales offices, closing its broker-dealer business, WaMu Capital Corp., as well as its mortgage banker warehouse lending unit, and more.

It is ironic that Washington Mutual has changed its name to WaMu. Now that it has changed its name, it just needs to leave town as most anyone would do after being disgraced. Seems like in so many respects, that is what it's doing, slinking away. It may very well slink into the arms of an acquisition by a better-managed company like JPMorgan Chase (NYSE: JPM) or Wells Fargo (NYSE: WFC).

I hope I have not jinxed JPM and WFC with my compliments . . . hmm.

Since I have been a shareholder and major supporter of Washington Mutual for many years and have made one of my biggest blunders touting the bank as an investment opportunity, I have my own shame too...although I refrain from running or hiding. The truth will set you free: I made a big mistake!

I did sell some of my holdings at $36 per share, but alas, not all of it. Last night, WaMu's closing stock price was $19.88, and as I type away it is trading at $18.29.

Although the SEC has volumes of requirements regarding disclosure of all of the information now coming to light, those who think the government should back off corporate America should reflect on the fact that almost no information is ever released from a public company until it is forced to do so.

What is even sadder than the lack of transparency is the slothful manner in which WaMu management moved to take any action, so that now, all the bad news comes at once. Unless of course this was not "the other shoe" and that one has yet to drop!

To verify my track record, including bad calls, read Chasing Value and Serious Money.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm.

Tags: Bank mergers and acquisitions, BankMergersAndAcquisitions, featured, Sheldon Liber, SheldonLiber, WaMu, Washington Mutual, Washington Mutual (WM), WashingtonMutual, WashingtonMutual(wm), WM

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Reader Comments (Page 1 of 1)

12-11-2007 @ 6:14PM

Rick S said...

I am amazed that there have been NO changes in top management as a result of this mess. Perhaps there needs to be some changes on the board as well.

12-11-2007 @ 6:18PM

joeb said...

It is time to break up the WaMu management of greedy people and put some one in charge that has some ethics and transparancency

12-11-2007 @ 9:41PM

Mr.noitall said...

I told you I didn't like this pick, Sheldon, check the comment I make for your article about it back on April 4, 2007. Hey, at least you're admitting your mistakes. Over-all I think your track record is pretty good.

12-13-2007 @ 8:10PM

mike r said...

Hi..my question is..should i buy this stock (wm) @ or below us$12.00 per share? word is all the "rats" at wm are headed to countrywide..will this help stabilize the company?