Washington Mutual (WAMU) shares plummeted 30% today over concerns the company may collapse. SFGate reports that stock price of the troubled bank has dropped over 90% in the past year.
"They are a company with fundamental problems that is getting the worst of the brunt of the market," said Jaime Peters, an analyst with Morningstar in Chicago. "That is scary because finance is all about confidence. "
The worst-case scenario would be WaMu failing - or coming to the brink, if Uncle Sam swooped to the rescue a la Bear Stearns. A collapse of the nation's largest S&L would be devastating. But Peters and others said they don't think the situation is that dire yet.
While WaMu has appeared troubled for months - its shares have plunged more 90 percent over the past year - recent events have brought it to the forefront of Wall Street's concerns. Since Monday, the stock price has been halved. On Wednesday it closed at $2.32 a share, down 98 cents or 30 percent.
SeattlePI.com says a couple issues contributing to the steep decline include a credit outlook downgrade from Standard & Poor's and concern that accounting rule changes will make it harder for WaMu to find a buyer.
The 98-cent a share loss, leaving the stock at $2.32 a share, came after drops of 82 cents a share Tuesday and 15 cents a share Monday, all following the naming of a new chief executive and disclosure of an agreement with federal regulators calling for a new business plan.
News service reports attributed the fall to factors such as Standard & Poor's lowering its credit outlook on the company from stable to negative, speculation that accounting rule changes will discourage potential buyers, the Office of Thrift Supervision order, and Lehman Brothers' $4 billion loss and plan to sell all or parts of the company
ABC's headline asks "Is WaMu Next?" implying that WaMu may be the next bank to fail in what has been a troubling series of bank failures resulting from the credit crisis. It wasn't a very good day for other financials either but the day was the worst for WaMu. More discussion of the WaMu's troubles can be found here, here, here, here, here, here, here, here, here, here, here and here.
Washington Mutual (
