Thursday, November 8, 2007

Washington Mutual: Going down in flames

First let me disclose my long term dislike for Washington Mutual; therefore it difficult to describe this bank without some level of bias. I heartily cheered when this institution stopped doing business in North Carolina after the state banking regulators basically told them to take a hike.

Even the most ardent optimists would have difficulty in seeing a shiny side of the WaMu coin now. The recent stock price slide pretty much tells the story as WM now hits lows not seen for over 7 years. All the risk items that I have outlined in the past about this bank have come home to roost, and this appears to be only the leading edge of the story.

In the opinion of many people, Washington Mutual has had a long history of shady business practices, abusive interactions with customers, and financial statements that are less then transparent. Some of the particular items that WaMu has been accused of include:

  • Improper handling of acquired loans in a manner that was abusive to customers with the sole intent of generating increased revenues for the firm.
  • Pushing people into improper loans that had higher fees. Regularly breaking the federal truth in lending laws in a deliberate manner.
  • Pushing for appraisal of homes above market value. WaMu is currently being investigated for this by N.Y. Attorney General Andew Cuomo.
  • Improper reflection of the both the loan write-downs and derivative pricing on company books. Failure to disclose the actual financial state of the company and follow standards consistent with GAAP.
  • Lack of proper understanding regarding the handling of credit risk and failure to disclose relevant business information to shareholders.

One of the classic articles about WaMu and their improper treatment of mortgage holders can be found at:
'I Can't Believe They Treat People Like This.'
Washington Mutual, the nation's no. 1 mortgage lender, calls itself a customer-friendly bank. Many customers beg to differ.

Further information critical of Washington Mutual can be found at:

I would urge people to read all of this information before doing business with Washington Mutual.

Recent Washington Mutual Press Articles:
N.Y. Attorney General says WaMu demanded higher appraisals

Washington Mutual: Things Are Worse

Washington Mutual Falls Hard, Again


Anonymous said...

During my tour in Korea in 2003 I did my banking through Washington Mutual and discovered my mistake. Only two of us on base that I know of delt with them, and we both encountered the same greaving problem. The fee for checking balance on your account was $30. I went months without even knowing this because of lack of interest, and my young age of 21. I'm sure there are others out there that experienced this problem. $30 for a small electronic transaction is nothing short of a scam. To top it all off, the withdraw fee was only $1.00. Go figure.