Here’s the scenario:
- CEO comes out (with a sun tan) and says the housing market is bad, worse than we thought, sort of statement.
- Reserves are raised to cover anticipated losses.
- The other shoe drops.
WaMu’s actions back then may have been a precursor to this day from my obtuse perspective. As appraisers, we could feel their disconnect with collateral risk back then. The advertising campaign “The Power of Yes” and its characterization in the market as the “bank of last resort” could be catching up to them.
Washington Mutual Inc said today that most U.S. housing markets are weakening, creating a “near perfect storm” that may force the largest U.S. savings and loan to set aside more money for bad loans.
They comment that housing appears to be weakening, which strikes me as as an understatement of housing boom proportions.
housing market faces rising delinquencies and foreclosures, higher borrowing costs, tighter underwriting standards and tough capital markets, “creating what we call a near-perfect storm for housing. “Most housing markets appear to be weakening, to us.”
Aside: I never understood how a national financial institution could sustain significant growth for an extended period of time when the business model depends on low mortgage rates. ie American Home Mortgage, Countrywide, Washington Mutual. hmmmm.
Its no fun in mortgageville right now.