Monday, December 10, 2007

WaMu making HUGE job cuts

Per the AP:

Washington Mutual Inc., the nation's largest savings and loan, said Monday that problems in the mortgage and credit markets are forcing it to close offices, lay off more than 3,000 workers and set aside up to $1.6 billion for loan losses in the fourth quarter.

That’s not the half of it.

I’ve already read a bit of speculation that WaMu might have to board up ALL the windows. If that’s the case, the subprime crisis/housing bubble has officially become the worst economic problem since the two Arab oil embargos, and threatens to become the worst since World War II.

To say the least, WaMu is once-burned, twice-shy:
After dismantling much of its subprime mortgage operation in September, Seattle-based WaMu will now get out of the business entirely. The company said it will close about 190 of its 335 home loan centers and sales offices, shut down nine call centers and eliminate 2,600 home loan workers and 550 corporate and support jobs.

That, in turn, tightens the credit market, with less money for residential loans. And, all the slashing still won’t stanch the bleeding:
For the first quarter of 2008, the company said it expects loan losses to total $1.8 billion to $2 billion. Loan losses will remain high throughout the year, WaMu added.

Actually, I think WaMu will become a takeover target sometime next year. And, given that they’ve already dipped their toes in the water by propping up Citigroup, don’t be surprised if investors from Abu Dhabi or elsewhere in the Arab world try to get a piece of the action, if only most indirectly and discreetly.

And, that’s not the only rocky financial news of Monday. Bank of America shut down a major institutional investment fund Pthat was leaking like a sieve.