Good morning: I opened this morning's Seattle Times and saw that Washington Mutual ousted its CEO, Kerry Killinger. Killinger held on far longer than alot of people thought he would given Wa. Mu.'s abysmal performance over the past year.
Several people at Wa. Mu. didn't blame Killinger for the mess they're in. Rather, they said it was the President, Steven Rotella, who led them into subprime and option ARM lending that started Wa. Mu's precipitous slide. Either way, the person at the top usaully pays the heaviest price when things go wrong so Killinger had to go.
I'm wondering what took so long. All the other big financial institutions cut their CEO's much sooner (think Citigroup, Merrill Lynch, etc.). And Wa. Mu. had been having problems for over a year now. The stock went from over $40/share to $3 and loan losses were in the billions. Killinger was a company man (over 30 years of service) and built Wa. Mu. into a huge bank from a much smaller Savings and Loan.
The question going forward is what will happen to Wa. Mu? Their stock is still hovering around $3/share and there have been rumors of a buyout by another financial institution. Their portfolio of risky mortgages (think pay option ARM's) is still very high as a percentage (some estimate as high as 20%) and these loans are part of the reason there have been so many defaults and foreclosures. Right now Wa. Mu. is pretty sick. Will they survive? I think so but it may be because of a merger or as a much smaller entity.
Although it's always saddening when a company and community involved person such as Killinger is ousted, life goes on. And Killinger is estimated to walk away with over $23 million in severance. This is on top of what he already had salted away. I've watched Wa. Mu. turn into a behemoth up here and believe they're a good bank. Perhaps now the healing can begin! Have a great week!
Paul
Paul McFadden
Paul - It's been interesting to note that over the last year, WaMu began to "nickle-and -dime" their clients in an effort to bring in income however they could. The problem was they were treating the symptoms of their ailment, not the cause.
Big Pay for a Big Man! Goes to show....if you consistenly do the right thing, you may grow slower, but you will also grow stronger. You'll be able to ride out any storm
Paul I worked for him when he bought the sub prime company I worked for ( Long Beach Mtg) Seems like a good guy? But Funny how we got A phone call telling us we were let go (most with no severance) and he walks away with millions? I still own a lot of stock so I am hoping for the best?
Wa Mu will end up like all the other banks...down the tubes. Once on the steady slide downwards, it would take a lot to bring it back up.
Thanks Nancy. We'll see what happens.
Darin: Good luck to you. I think Wa.Mu. will survive although it may involve a merger.
Robert: Thank you! I couldn't agree with you more. It's funny how the tortoise beat the hare!
Hi Stewart: You're right. Personally I like Wa.Mu. We bank there, have friends that work there and want them to succeed.
Have a great day today!
Paul
WAMU closing stock price: $0.16
Yes. It's essentially worthless. I obviously feel for the shareholders.
Paul