WaMu Seized by the FDIC - JP Morgan Steps In

It was announced just a short while ago that the FDIC has seized Washington Mutual's deposits and that JP Morgan is buying it. 

This is the 13th bank to fail this year, a sure sign that the US is in pretty deep financial trouble. 

Everyone saw that Washington Mutual was in trouble, but I think we all hoped that it would ride it out. I, for one, didn't think it would actually fold. 

So if you are a Washington Mutual customer, don't worry, your money is FDIC insured if you have less than $100,000. You'll be notified probably by mail about what happens next and everything should keep working in the meantime. 

The biggest sign that WaMu was in trouble for me was the rapid hike in Savings Account Interest Rates. This occurred because WaMu was trying to attract as much business as it could to get enough money to keep going. So keep an eye out for similar behavior from other banks. I doubt this will be the last failure we see this year, but I really hope nothing bigger goes under. 

So what is your take on this? Could this have been avoided? Will it happen again? Should we be scared?

I know that I'm going to be keeping a very close eye on the economy and on announcements from other banks right now. I hope all of you WaMu customers have a smooth and easy transition over to JP Morgan. 

How Safe is WaMu Right Now?

Image by thetruthabout

Washington Mutual have been getting a lot of press recently as the bank seems to be struggling. Today they announced that their CEO, Kerry Killinger has been replaced. They also keep pushing their CD rates higher and higher, with a recent one advertised at 5%. Acts such as these seem desperate, but they are definitely trying not to go under. The shake up in management might be a good image boost and an injection of energy and fresh ideas. The CD rates will hopefully attract more deposits to help WaMu cover the failing mortgages that got them in trouble in the first place.

So the big question on customers minds is : Should I keep my money in Washington Mutual?

The answer to that would be, yes for now.
If you have less than $100,000 you have little risk right now. Washington Mutual is FDIC insured so if they do fail, your money is covered. It's a good time to take advantage of their CD rates, since they have the best available right now.

Something else to consider is that if the bank fails, not only will it be bad for the economy but it could have a devastating impact on Washington Mutuals employees. To cover their losses, it is likely that WaMu will shut all of their branches and have to let many employees go in the event that the bank fails.

With the failing of IndyMac and several other banks, concern for banks that are struggling is valid, but at this point, panic is not. I'll be very interested to see if Washington Mutual can ride this out, and I hope that they do.

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