http://www.wamu-shareholders-resources.com/wamued.html
© by Daniel Wood/aka testorx, testorx2
Copyrighted, but permission is given to reproduce for now, as long as the copyright is acknowledged and credit is given to the author. For example “WaMued - The Story © by Daniel Wood, reproduced with permission”. I reserve the right to withdraw permission to reproduce this in the future.
Edition 5, 10/15/08. I expect many revisions.
On Thursday Sept 25th 2008, Washington Mutual - WaMu (WM) shares opened at $2.62, rose to $2.69, and fell for the rest of the day closing at $1.69. In after hours trading it fell to $0.16. Take note it fell 90.5% just in after hours. During the regular day it fell 35.5%. For the entire day it fell 93.89%. All these percentages are based on the open, and excluding the pre-market trading data which I do not have. For the day the DJIA rose 196.89 points and closed at 11,022.06
Clearly anyone who held through the day experienced a financial wipeout in their position. For some people, WaMu was their only position, and if fully invested the wipeout for them was 100%, a total wipeout. Some people may have done all that and also had used margin, they were more than 100% wiped out, they are in the hole.
What caused this wipeout? In a statement issued on the night of September 25th the OTS said “An outflow of deposits began on September 15, 2008, totaling $16.7 billion. With insufficient liquidity to meet its obligations, WaMu was in an unsafe and unsound condition to transact business. The OTS closed the institution and appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. The FDIC held the bidding process that resulted in the acquisition by JPMorgan Chase.”
Just seventeen days earlier with the placement of Alan Fishman as the new CEO for WaMu on September 8th, WaMu and the OTS had negotiated a Memorandum of Understanding concerning aspects of the bank’s operations. It concluded with this sentence. The business plan will
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