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Wednesday, December 19, 2007

WaMu Layoffs....from Lender

3,150 layoffs, $5.2 billion in charges

"The mortgage market is undergoing a fundamental shift due to credit dislocation
and a prolonged period of reduced capital markets liquidity," the press release
stated. "As a result, WaMu expects national mortgage originations to shrink to
$1.5 trillion in 2008, down about 40 percent from an estimated $2.4 trillion
this year."

Washington Mutual, the nation’s largest savings and loan institution is also experiencing the problems of the current and what I believe will be a long term financial crisis. They go on to say,

"The first quarter range reflects the company's current view that prevailing
adverse conditions in the credit and housing markets will persist through 2008,"
WaMu stated. "The company also currently expects quarterly loan loss provisions
through the end of 2008 to remain elevated."

If the problems exist through 2008, how long will it take for a recovery to take effect? I believe it will take several years, as history has already shown us, to stabilize.

I am not so much worried about Washington Mutual, Citi Bank, J. P. Morgan Chase or even the Wall Street banks such as Merrill Lynch, Bear Stearns or Morgan Stanley. THEY WILL ALL SURVIVE, their top executives will survive as has been exhibited, will leave their respective firms with golden parachutes making into the hundreds of millions. Their lifestyles won’t change, their large homes will not be in foreclosure, their yachts, automobiles and other toys will all remain in tact.

But what of the 3150 employees that now find themselves out of work and no income coming in?

How will they survive? Most live from paycheck to paycheck as most Americans do. They have mortgage payments, probably on inflated value real estate, they have car payments and just the basics of survival, food, clothing, utilities and insurances. What will they do now?

Unemployment figures released by the government show that we are holding steady at about 4.7% and this seems to be a “positive” economic indicator. I don’t believe in this indicator. I don’t think it is accurate or takes into consideration ALL unemployed. Even if it did what does it mean to those 3150 from WAMU, the latest casualties of this crisis?

Is this government report on unemployment saying that for every job that is lost, one is created? If it is, and it seems it is, then does it take into consideration a job lost at a higher rate of pay being replaced by a job at a much lower rate of pay? Is our economy OK just because a $20 an hour job is lost and replaced with a minimum wage job? No it does not! Does the government report on unemployment indicate the plight of those newly unemployed? NO IT DOES NOT!

The average American is sinking, the middle class disappearing, small business, the backbone of our economy is being destroyed to the benefit of “big business” such as WAMU and the others I mention above. As you read the story linked to this article, you will see that WAMU is backing away from the mortgage broker industry in favor of their own retail business. In other words, they will no longer offer their programs through a mortgage broker but will retain the business from their own retail mortgage offices of which they are closing over 200.

Does anyone see what is happening yet? Is free enterprise disappearing? Is control being turned over to just the select few at the very top of the economic ladder (large corporations)?

I, for one do not feel bad for WaMu as an entity. They will not only survive but are positioning themselves to thrive when this meltdown is over. I DO FEEL BAD for the tens of thousands of employees like the 3150 at WaMu that will not survive or thrive.

One more comment on this issue: WaMu, could you not have waited until AFTER the holiday season to make this announcement and begin your layoffs? Did you have to do it right before the holidays? Is there no more concern about the feelings of individuals? Is corporate America so “steel curtained” that their employees are just like pieces of inventory sitting on a shelf with no feelings or emotions?

To WaMu, I say, “you could have waited just a few more weeks to do this. You are not in a cash bind, still running in a profit mode and still paying your top executives their enormously large salaries, bonuses and perks.

As to your decision NOT to do business with mortgage brokers, I say, “greed will get you in the end”. I await your demise.

1 comment:

  1. I'm *GLAD* they laid me off Dec 10. Then I knew not to spend too much at Christmas! Laying off *after* the holidays would leave big spenders with huge bills to pay and no paycheck. This way, big spenders knew not to spend. (I'm not a big spender, but it still helped me plan travel accordingly - ie, go the cheap way!)