Standard & Poor’s Ratings Services (S&P) downgraded Washington Mutual Inc’s (WaMu) creditworthiness further into junk territory on Wednesday, noting the increased likelihood that any sale of the company would only be done in piecemeal fashion.
The fate of the ailing Seattle-based thrift has hung in the balance for weeks, as investors question the potential for a sale or government intervention in the face of WaMu’s plunging stock price — which has fallen 77 percent so far this year.
S&P noted that in the stressed financial services sector, there are few potential buyers not struggling with their own capital constraints and mortgage debt issues, narrowing the possibility for an outright takeover of the entire thrift. But a carve-up of Washington Mutual would increase the risk of default for creditors of the holding company, because the bank’s stable deposit base would be gone.
Washington Mutual assured customers on Wednesday that S&P’s rating actions do not affect the safety of customers’ deposits, which are insured by the Federal Deposit Insurance Corporation (FDIC) up to certain limits.
WaMu has said its capital levels remain above regulatory standards for being considered “well capitalized,” but debt ratings agency Moody’s this week cut the financial strength rating of WaMu’s main bank subsidiary to “E,” its lowest, saying its capital is insufficient to absorb its mortgage losses.
Last week, a sale of the nation’s largest savings and loan seemed imminent, as Goldman Sachs Group Inc was brought in to assist with a transaction and a major investor removed a potential roadblock to a sale.
But after the government announced last Friday it was working on a plan to help troubled banks remove billions of bad mortgage debt from their books, momentum stalled as buyers awaited details.
A possible scenario attractive to buyers would be WaMu’s takeover by the FDIC.
S&P’s outlook on WaMu’s ratings is negative, implying they could be downgraded even further. But the agency said it could revise the outlook to “developing” if WaMu issued definitive news of a sales transaction or if there was concrete proof of “the potential benefit the Treasury’s new bailout plan may offer to WaMu as an independent company.”
Taiwan’s Lee Chia-hao (李佳豪) on Sunday won a silver medal at the All England Open Badminton Championships in Birmingham, England, a career best. Lee, 25, took silver in the final of the men’s singles against world No. 1 Shi Yuqi (石宇奇) of China, who won 21-17, 21-19 in a tough match that lasted 51 minutes. After the match, the Taiwanese player, who ranks No. 22 in the world, said it felt unreal to be challenging an opponent of Shi’s caliber. “I had to be in peak form, and constantly switch my rhythm and tactics in order to score points effectively,” he said. Lee got
‘CROWN JEWEL’: Washington ‘can delay and deter’ Chinese President Xi Jinping’s plans for Taiwan, but it is ‘a very delicate situation there,’ the secretary of state said US President Donald Trump is opposed to any change to Taiwan’s “status quo” by force or extortion and would maintain that policy, US Secretary of State Marco Rubio told the Hugh Hewitt Show host on Wednesday. The US’ policy is to maintain Taiwan’s “status quo” and to oppose any changes in the situation by force or extortion, Rubio said. Hewitt asked Rubio about the significance of Trump earlier this month speaking with Taiwan Semiconductor Manufacturing Co (台積電) chairman C.C. Wei (魏哲家) at the White House, a meeting that Hewitt described as a “big deal.” Asked whether the meeting was an indication of the
‘RELATIVELY STRONG LANGUAGE’: An expert said the state department has not softened its language on China and was ‘probably a little more Taiwan supportive’ China’s latest drills near Taiwan on Monday were “brazen and irresponsible threats,” a US Department of State spokesperson said on Tuesday, while reiterating Washington’s decades-long support of Taipei. “China cannot credibly claim to be a ‘force for stability in a turbulent world’ while issuing brazen and irresponsible threats toward Taiwan,” the unnamed spokesperson said in an e-mailed response to media queries. Washington’s enduring commitment to Taiwan will continue as it has for 45 years and the US “will continue to support Taiwan in the face of China’s military, economic, informational and diplomatic pressure campaign,” the e-mail said. “Alongside our international partners, we firmly
The Ministry of Foreign Affairs yesterday said it has lodged a protest with Pretoria after the name of the Taipei Liaison Office in South Africa was changed to the “Taipei Commercial Office” on the South African Department of International Relations and Cooperation’s (DIRCO) Web site. In October last year, the South African government asked Taiwan to relocate the Taipei Liaison Office, the nation’s de facto embassy, out of Pretoria. It later agreed to continue negotiating through official channels, but in January asked that the office be relocated by the end of this month. As of the middle of last month, DIRCO’s Web
RSS