Doug Marshall
Market Assessment
Published September 18, 2008

The Oregonian, citing anonymous sources, revealed in today’s paper that Washington Mutual now seems prepared to “throw in the towel.”

The ailing Seattle thrift has hired Goldman Sachs (GS QuoteCramer on GSStock Picks) to begin an auction, several media reports including The New York Times are saying. The obstacle, however, is that no one knows what they are worth because the amount of bad loan debt is not fully known.

We can only hope that another financial institution will acquire the largest savings and loan in the country. As disruptive as that would be, the bankruptcy of WaMu would be far worse for the Pacific Northwest’s economy and specifically the commercial real estate community.

Ironically, the crisis that WaMu is currently facing has nothing to do with their commercial real estate lending programs. Their problems arose from WaMu’s origination of billions in subprime loans, home equity lines of credit and so-called Option ARM loans to people who could not afford them.

Shares of Washington Mutual stock have plummeted in recent weeks amid the concern of mounting losses. As of this writing, WaMu stock is trading at $2.35 per share, down about 94% from its 52 week high.

On a different note, regional lender Umpqua Bank may be the next to falter. Stay tuned.

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Sources:

Troubles hit Northwest as Washinton Mutual, with regulators’ help shops for buyer by Jeff Manning, The Oregonian, September 18, 2008

Washington Mutual Worries Remain; Associated Press, September 17, 2008

On the Brink – Washington Mutual Preps for Sale by Laurie Kulikowski, September 18, 2008.

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