Washington Mutual Creditors Pull Out, Stock Declines

[Aug 14, 2008.]

 

Washington Mutual, the biggest savings and loans company in America, dropped in value on  the stock market earlier today, due to reports that the nationwide lender is losing access to some of its funding.

The report was issued by financial analyst Kathleen Shanley of Gimme Credit, and was based on data on Washington Mutual's income during the second fiscal quarter of 2008. Shanley asserts that a large number of the companies who have made unsecured loans to Washington Mutual are slowly ceasing dealings with the bank, wary of its fiscal troubles. This implies that Washington Mutual will have to draw more of its capital from deposits and from loans from the government's Federal Home Loan Banks.

As a consequence of these assertions on the part of analysts, Washington Mutual stock decreased by 13% today on the New York Stock Exchange. When trading ended for the day, Washington Mutual stock sold for $4.03 per share.

Meanwhile, the bank denies relying on any entities outside of itself for the money needed to conduct its affairs. "As we stated publicly months ago, Washington Mutual funds all of its business through its banking operations," a Washington Mutual spokesperson assured the press.

According to WaMu's second-quarter earnings statements showed that the bank received $6.13 billion less in deposits over the course of the second fiscal quarter of 2008.

The bank possessed over $40 billion in liquid assets at the beginning of July. Nonetheless, analysts worry about the decline in deposits to Washington Mutual on the part of commercial financial institutions, who tend to deposit funds through professional brokers. Washington mutual possessed only $100 million in deposits from professional brokers at the beginning of July, 2008. At the beginning of January, 2008, that number was at $2.5 billion.

As a result of these statistics, Moody's Investors Service, an investment ratings firm, is considering lowering its estimation of Washington Mutual as an investment possibility.