Washington Mutual and National City Bank Shares Plunge

July 14, 2008 by · Leave a Comment
Filed under: Industry News 

Editor’s Note: Very rough day for WaMu, at the time of this writing, their shares are down over 30% today alone. At this point I would be quite worried if I was an investor in this company. It will be very important to watch where is closes today and on Friday. According to Reuters, National City has dropped 25% as well. Here is the release:

Shares of National City Corp and Washington Mutual plummeted more than 25 percent each, leading financial stocks lower on Monday amid fears about bank stability and the future of the mortgage market.  The rout in banking stocks was widespread, and included both commercial and investment banks. The KBW Bank index .BKX fell 7 percent.

“The fear factor is in play right now,” said Michael Nix, portfolio manager Greenwood Capital Associates.

Investors are particularly skittish about the health of the banking system after U.S. regulators swooped in to seize mortgage lender IndyMac Bancorp Inc on Friday in the third-largest banking failure in U.S. history.

“Investors are out there saying, if this happened to Indymac, why not NatCity?” said Matt McCormick, stock analyst at Bahl & Gaynor Investment Counsel in Cincinnati.

Kristen Baird Adams, a spokeswoman for National City, said, “Clearly there is a lot of market speculation broadly today. We are experiencing no unusual depositor or creditor activity.”

The United States on Sunday offered to support Fannie Mae and Freddie Mac. The two major mortgage lenders’ difficulties threaten to further hurt the already weak U.S. mortgage market.

Washington Mutual could face $26 billion in losses, with $21 billion from mortgages, a report from Lehman Brothers said on Monday. A Washington Mutual spokesman was not immediately available for comment.

Washington Mutual shares were off $1.45 to $3.50 while National City shares fell $1.15 to $3.27.

Source: Reuters

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