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WaMu is having a bad day (see news on WaMu). I rang the alarms on WaMu twice -most recently in early October - Washington Mutuals Mortgage Division Posts 5th Straight Quarterly Loss and initially in early September - Yeah, Countrywide is pretty bad, but it ain't the only one at the subprime party... Comparing Countrywide to its peers. You see, you don't even have to be a client to like me:-) This upcoming quarter marks the 6th consecutive quarterly loss for their mortgage division. They saw this coming more than a year and a half ago, and so did I. Unfortunately, I covered that short on WaMu a few weeks ago to raise cash, but luckily reinstated it just in time to catch the big drop. I need to write a piece on handling extreme market volatility and holding on to positions. Many of the stocks that I am bearish on have become volatile momentum plays and have detached significantly from their fundamentals. This makes them more than twice as risky, and quite expensive to hold on to - but also offers significant profit opportunity when traders push a proximal bankruptcy candidate up to $30 per share on the call of someone like Stephen Kim from Citibank. I digress (especially since WaMu hasn't been that volatile), and back to the point - I believe that WaMu, like Countrywide, are not the only banks at the subprime underwriting party (the problem is not subprime loans, but subprime underwriting - which spreads the effects throughout the lending industry that includes consumer, corporate, retail and wholesale - and fails to confine it to any one sector of low FICO mortgages), but we will cross that bridge when we get to it.

As for the severity of the situation, peruse:

  1. Bubbles, Banks and Builders
  2. Bubbles, Banks, and Builders, Pt. Deux
  3. Bubbles, Banks & Builders: Pt.III - "Do or Die, Bed Stuy" and
  4. Bubbles, Bank, & Builders - Pt IV: I can't believe this guy

Ramble off, 'nuff said!