Washington Mutual Still High on Radar of Bank Failure Prediction Markets
Washington Mutual Inc. shares fell in premarket trading Tuesday after ratings agency Moody's Investors Service cut the bank's ratings a day earlier and amid a report at least five banks are considering purchasing the embattled company.
Shares of Seattle-based Washington Mutual fell 40 cents, or 12 percent, to $2.93 in premarket trading. Washington Mutual shares closed Monday at $3.33.
Internet prediction market, Intrade.com, still gave Washington Mutual a 40 percent chance of failing though that likelihood appeared to be diminishing in the wake of a US Government planned massive bailout and several suitors on tap to acquire the troubled bank.
Washington Mutual has been among the hardest hit banks by a sharp rise in mortgage defaults since the middle of 2007. The bank has set aside billions of dollars to cover potential losses, yet Moody's expects the capital cushion to still be short of what is necessary. The "E" rating signals an increased likelihood the bank will need outside financial support.
Bloomberg, citing unnamed sources, said at least five banks are considering purchasing Washington Mutual. Among them are Toronto-Dominion Bank, JPMorgan Chase & Co., Wells Fargo & Co. and Citigroup Inc., according to the report.
There was yet another bank closure that went widely unreported this past Friday.
Pioneer Community Bank, Inc. in McDowell County, West Virginia, acquired the local deposits of Ameribank's five branch banks in that state after the federal Office of Thrift Supervision closed Ameribank Friday night and appointed the Federal Deposit Insurance Corporation to serve as receiver of the failed bank. Although customers had questions, Monday proved to be a relatively normal business day, FDIC spokesman David Barr said.
"So far it's been going very smoothly," Barr, who was stationed at the former Ameribank branch in Northfork, said. "There has been regular traffic. It seems like regular Monday morning traffic. I do know of one individual who closed an account."
Presently, Intrade.com has mostly heavy trading volume on 25 to 29 bank failures by year's end. Bank United Financial was getting the highest volume from those betting on the next bank closure.
Jagajeet Chiba, Gambling911.comSubmitted by Jagajeet Chiba on Tue, 09/23/2008 - 10:27 -->