If you’ve been paying attention to the US banking system you’ll know things are a mess. With IndyMac failing, a projected $4 – $8 billion, or roughly 10%, of the FDIC’s reserves will go bye-bye. Several large near-term failures will whomp the FDIC and leave citizens wondering – is my money safe?
Washington Mutual is in line to be the next big failure. Even though the bank came out today and said they were fine, Wall Street didn’t necessarily agree. The shares ended down 34.8% at $3.23. Tomorrow morning’s action on WM will shed a lot of light on what Wall Street thinks, after investors have had some time to digest everything.
My prediction? If Washington Mutual doesn’t fail by Friday, none of the big banks will. Why? Because either (1) someone bought up Wamu’s assets for pennies on the dollar or (2) the Fed stepped in (again) to provide another source of easy capital. Given the system-wide situation, I believe (2) is the likely candidate.
Let’s see what happens…
washington mutual is the next bank going under. All the signs are there.