Washington Mutual's online 3.75% APY online savings account as well as some of their CD offers have been highly competitive on BestCashCow over the last couple of months (these rates have since fallen). The bank has used high rates to attract deposits and help fund itself in the face of billions in writedowns in its option rate adjustable loan portfolio. The company's stock has sunk to $2 a share from a 52 week high high of $39.25. The NY Times reports that:
"Its plummeting stock price and the downgrade to junk bond status have also weighed on the bank. And it is paying higher deposit rates than many of its peers to attract customers, Bert Ely, a banking consultant, said."
News is emerging that WaMu is exploring its options and may either sell itself or seek additional capital. Potential suitors interested in buying the bank include Wells Fargo, JPMorgan Chase, and HSBC.
Another option is to raise more capital. That now seems more feasible since one of its investors, TPG Capital agreed to fortego an anti-dilution provision that hampered WaMu's efforts to raise additional money. The anti-dilution agreement would have required a portion of the new capital raised to be paid to TPG Capital, preventing another company from wanting to participate.
From a selfish standpoint I'd like to see WaMu stay independent. As we saw from Countrywide, once it was purchase by Bank of America, their competitive rates dropped like a rock. Cash hungry banks are good for depositors, as long as they don't go under.
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