December 14, 2007
JustQuotes: Washington Mutual Cuts On Continuing Credit Crunch
"This week Washington Mutual, the Bay Area's fourth-largest bank, said it will slash 2,600 jobs nationwide and close mortgage offices as it goes to Wall Street, hat in hand, seeking a $2.9 billion capital infusion. Even some of WaMu's top performing mortgage lenders were shown the door as the company anticipates the volume of mortgage originations will plunge 40 percent next year.” (Credit crunch forces layoffs at Bay Area banks)
First Published: December 14, 2007 7:35 AM
Comments from "Plugged In" Readers
An additional 40% drop in originations? That's pretty frightening considering we're not in a recession and mortgage rates are still near historic lows. And what happens if we do slip into a recession?
Posted by: Michael at December 14, 2007 2:41 PM
40% does sound like a lot but compared to the phenomenal growth in mortgage originations over the past few years, things are just returning back to the pre-boom equilibrium.
Posted by: Willow at December 14, 2007 3:44 PM
"And what happens if we do slip into a recession?"
If that happens next year, that means I'll certainly have a second home. :D
Posted by: S&S at December 14, 2007 4:09 PM
It is no longer hyperbole to state that the US mortgage generating system is collapsing. Given the massive change in size, one wonders, where does this lead? For an individual to obtain a mortgage, millions of people have to be obtaining mortgages. But the system is breaking down. Who will provide the FLOW of capital when the entire secondary market is dissappearing? Do people really think WM and Wells are going to be originating mortgages, without the secondary market? And if the only party that can create a secondary market is the Government, then, how much money will they have to print to provide the capital?
My fellow Americans understand the "credit mechanism" about as well as they understand oil.
Posted by: SurveyKid at December 14, 2007 8:48 PM
Yup. But it will be another year or two before the crescendo of wails of misery from the people to "DO SOMETHING!" opens up the political space to allow this. I wouldn't be surprised to see the government offering 30yr 0% loans as part of the "Restoring the American Dream Act" of 2009.
Posted by: diemos at December 15, 2007 9:09 AM
not that I support the idea of the govt spending money, but its not like they havn't wasted money before. the 30 year 0% interest loans would at least be money staying in this country.
Posted by: viewlover at December 16, 2007 3:28 PM
the banks that don't sell their loans are still writing new paper every day. try wachovia.
countrywide saw the same 40% drop in originations as wamu. the bigger part of this stort that didn't get pasted into the header was the huge cut in their dividend. 75% i think.
Posted by: james at December 16, 2007 6:22 PM