It’s been a rollercoaster ride these days for Washington Mutual shareholders. Yesterday the stock fell 17% to a 16 year low as UBS analyst Eric E. Wasserstrom predicted losses of over $27 billion by 2011, more than twice company estimates. Ratings firms had also downgraded a bunch of mortgage securities, sending all financial stocks down lower.
Today Wamu is up more than 11%, most likely because of Fed Chief Ben Bernanke’s comments yesterday that were reported this morning. Bernanke said high energy prices would likely lead to more inflation and the Fed would “strongly resist” that happening.
Last week Wamu ceo Kerry Killinger narrowly managed to hang on to his job, although the board brought in a new chairman. Could something else be afoot? A takeover perhaps? JP Morgan has long been rumored as a potential suitor. Even with the recent bounce, Wamu with its huge branch network, is valued at just $7 billion. I’m not saying I know anything more than that.
BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.