The scary headlines about WaMu’s stock slide have a few readers worrying if now is the time to pull their deposits. I’m a WaMu customer myself and I say no. For now, though I could be wrong, this just looks like more hot panic sweeping the market. First off, you’re FDIC-insured up to the first $100,000. You will get your money. Secondly…
In the event of WaMu failing, the FDIC will swoop in and your deposits will be assumed by a new bank. You would still have access to your deposits as normal via ATM, check, and debit cards. There might be a brief delay while they re-establish telephone and internet access.
The worst thing for WaMu would be if a run on the bank started, vaporizing their liquidity. Then people worried about the worst happening would be in fact causing it.
(Photo: thekateblack)
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“First off, you’re FDIC-insured up to the first $100,000. You will get your money. “
You might check that fact again… The FDIC has been loaning mony out to banks like crazy for the past year or so, and there are a lot of people talking about the FDIC not having enough cash on hand to fulfill obligations if a bank like WaMu goes down.
@dallasmay: More FUD. The FDIC is not going to run out of money. Congress would not let that happen. We don’t WANT congress to have to act, so the logical course of action to prevent that is to not cause banks to fail unnecessarily with a run. IF WaMu fails, you WILL get your money within days. That is a fact. You can take that to the bank.
@mugsywwiii: And at the rate we’re going, the only bank you’re going to be able to take it to is BoA.
I’m happy with my bank. Branches in the 6 states I’m most likely to be in, and (so far as I know) it’s not set up to fail.
@RamV10: PNC Bank is still going strong. I also have access to Navy Federal and soon will have access to USAA.
I am happy with my bank choices.
If WaMu fails, the FDIC will go in on a Friday after the bank closes and do one of two things. Turn it into a federally sponsored bank (IndyMac became Indymac Federal Bank), or allow another bank to buy its customer base and deposit base. This includes credit cards, mortgages, savings/checking accts, CDs and anything else you may have. You will have access to your money by writing checks and ATM withdrawals will still work because your account and routing numbers tell the bank cashing your payment checks exactly where your money is.
Taking your money out may be prudent in your situation – to each his own, but it is absolutely not necessary. The FDIC insures accounts up to 100K, 200K for joint accounts. Just make sure that none of your accounts have more than the insurance limits, that is how people lost money at IndyMac, et al.
WAMU has a 6 month ‘pass’ with the OTS smackdown and the termination of Kerry K.,so get some of that high yield short term CD action.
So since my mortgage is through WaMu, then if they go belly-up then I don’t have to pay it anymore, right? I know, I know. But a guy can dream.
Ben are you serving your own self interest here? If the Indy bank failure taught folks anything it showed that even with FDIC coverage you may not have access to your funds except at the $400 window of the atm. Some people are STILL waiting to get access to their accounts to close them at Indy.
“The worst thing for WaMu would be if a run on the bank started, vaporizing their liquidity. Then people worried about the worst happening would be in fact causing it.”
And that is the exact problem with this country right now. Those squealing pigs at Wall Street are running for the hills, usually on very bad and incorrect information. Look at United. Their stock plummeted and harmed the company, all based on false and outdated information and panicky investors who didn’t bother doing their homework.
Please, don’t pull your money out of the bank. You’ll only be part of the problem. (Although, I find it surprising that Ben has his money in WaMu, even with all their failings published on The Consumerist…)
Why would protecting MY money be detrimental to you. If WAMU can not handle a “run” on the bank then I suggest they made bad loans or are not liquid enough in todays market. Quite frankly that is not my problem. No customer owes them anything. If they go under a new bank will arise, or the strong smarter bank will take over. I have no problem watching incompetent companies fail. It is a good thing. Unfortunately we allow them bankruptcy protection and the high level execs walk away with 100′s of millions of dollars (Lehmans CEO for example). I could go on about Kmart, NWA, United, Delta, Delphi. If their business models do not work anymore they need to make new models. WAMU would lay off or fire a worker if they were overstaffed, and not worry about their future, so why the hell should we care about theirs.
@johnnya2:
[www.bloomberg.com]
“On a more positive note, we recognize that WaMu’s holding company liquidity position is currently solidly positioned to meet all of its fixed obligations through 2010,” S&P said. “The bank is operating with adequate capital positions from a regulatory perspective and has demonstrated funding resilience as the deposit franchise has remained stable.”
@mugsywwiii: S&P maintained investment-grade ratings on Enron until a mere three weeks before it melted down. The rating agencies were “not connected at the right level,” says Armand Ursino, a vice president at JP Morgan Asset Management in New York.
[findarticles.com]
And I’m going to trust S&P now?
@mugsywwiii: Then why does it matter if I decide to do what I want with my money? If they have such a strong position they have no need to worry about a so-called run. If they fail, OH well, sorry to see ya go
If WAMU goes under, the FDIC’s funds would be wiped out. But they’ve already set up a plan to borrow from the Treasury Dept if that happens:
[www.forbes.com]
I had a WAMU account for many years, and I was really happy with them. I only closed it last year because there are no branches in D.C.
Unless you have more than $100,000 in your account, don’t worry. Your money isn’t going anywhere. If you have more than $100,000, move the difference to another bank. If you’re really worried, keep enough cash to get you through a month or two. Pulling all your money will only make matters worse. It will make it more likely that the bank will collapse and you’ll have to wait for FDIC to step in.
I disagree – IF you have more than $100,000. I wouldn’t leave a cent of non-FDIC-insured money in WaMu at this point.
But for anyone wanting to see them fail, I have to admit: for all the nightmare stories posted about them, it would be kind of sweet to see them brought down by their own customers.
@jswilson64:
So what do you do if you have more than $100K in one bank? I was planning on buying a house this year until I found out that the company I work for is being bought and I may be being laid off in the next year or so. So I’ve got some savings, etc, stacking up.
I’m with BofA (and say what you like about them, I haven’t had issues) but now I’ve started to think about what happens with amounts over FDIC limits. I don’t really want to manage multiple accounts, but I could throw some savings somewhere else to get under limit, I suppose. Just a tangent.
No, no, no, Ben you have it all wrong. Short the stock then start a bank run. Read it all in my new book:
“How to Scam the American Financial System for Fun and Profit: Forward written by Angelo Mozilo
This is only a problem if you aren’t the first person to withdraw your money. So yeah, the rest of you shouldn’t do that.
good banks don’t have their credit downgraded to junk… the way I see it, let bad banks fail. I’d rather pay for the inevitable borrowing by the FDIC as a taxpayer than bailing out one more craptastic company.
I pulled my money yesterday. I doubt the fed will bail out the largest S&L, and I don’t particularly want to deal with it. I do not really think my actions will make a bit of difference to the worlds largest S&L, but I don’t see any reasons to have to put up with the delays and FDIC. Of course, my checks haven’t yet cleared in the new bank, so I remain in the WaMu pool. Maybe tomorrow.
I am now in the midst of changing all my direct withdrawals for utilities, mortgage, etc. It is pure hell. It is the reason I never moved earlier. Some companies/utilities require you to mail them a voided check, some require a faxed form, some let you simply do it over the web, some require you to call from your home phone only, etc.
@jdmba: Ask your new bank if they have a Switch Kit…give your bank the info and they will do all the contacting and switching.
“You will get your money” isn’t quite accurate. Yes you will. Eventually. If thats your only bank, I would highly recommend you have a month of spending cash.
First off, you’re FDIC-insured up to the first $100,000. You will get your money.
That statement presumes the FDIC is capable of insuring it. It wouldn’t surprise me to see complete collapse of the US financial system and a worldwide depression by January.
@P_Smith: If the FDIC insurance fund runs out, it will be bailed out. I don’t think there’s any question about that. A taxpayer bailout isn’t a great scenario but you’d still get your money.
On the other hand, if you’re really expecting the complete collapse of the U.S. financial system, the FDIC is not your main concern; you’d better be stocking up on gasoline, bottled water, and toilet paper in your underground bunker.
@P_Smith: The government can always print more money. Worst case, you’ll see serious inflation.
Actually, I have substantial cash on hand, so a depression might not be so bad if I can keep employed.
The fact is, everyone with money above 100k has to pull out. That alone might be enough to make them fail.
I don’t know about you, but I’m pulling all of my cash out of my WaMu credit card right away.
Yeah, right. The FDIC will step in an your money is safe. Sure.
Recent reports suggest that the FDIC doesn’t have any money with which to make good on their obligations. — Pretty much like Lehman Brothers, AIG, Fanny Mae, Freddy Mac, and others.
If you want to trust “your government” go right ahead. I don’t want to say I told you so.
@UnnamedUser: Run, Chicken Little, Run!
@UnnamedUser:
Um, the FDIC has enough funds to cover just about any bank failing. They may have to tap the Treasury if it gets REALLY bad, but I haven’t seen any indication that we’re looking at a failure of the FDIC any time soon.
@wishlish:
It’s the train you don’t see that usually ends up hitting you.
I’m not going to agitate and say that the FDIC is in jeopardy either, however there have been some substantial failures thus far and it would appear that we are in for a few more. Why take the risk if you don’t have to by staying with a bank that is widely believed to be walking dead?
I’m actually kind of surprised that any active follower of the Consumerist actually *has* a WaMu account…
George Bailey would be proud of you, Ben.
The new most popular savings option. Bank of mason jar located somewhere in your back yard.
Well, if you want to wait 4-9 YEARS to get your money back through the FDIC with no interest be my guest to leave you money with WaMu.
We pulled out $175,000 and went to Chase. Going to invest that in paying off our home. At least that is somewhat inflation proof and I have a bad feeling inflation is going to go NUTS as the US Treasure starts printing money like mad to pay for this mess.
Banks rely on deposits in order to lend and borrow money — a basic function of monetary policy and part of the money multiplier effect ([www.investopedia.com]). For every $1 that you pull out of the bank, you are actually (in effect) pulling $10 out of the economy. Imagine this on a larger scale. By panicking, you’re actually CAUSING the “worst case scenario” to happen. Don’t pull your money out, its FDIC insured. You’ll get your money back in short order if WaMu does fail.
‘Your money is perfectly safe, so do not take it out of this bank so that you do not participate in a run.’
If you guys believe what you’re saying, then you shouldn’t be the least bit worried that I’m taking my money out. =)
When I see headlines about “Yanking Your WaMu” I start to wonder if I have wandered in Fleshbot by mistake.
I have been a Chase customer and I have been a Wamu customer. I like everything about Wamu and dislike everything about Chase. Wamu will be around a long, long time if their customers don’t start a run on the bank. If you have an account with Wamu, stay there. Your money is safe. Stay with Wamu and they’ll be there for you.