Reply #30: Washington Mutual hit by funding concerns: Unsecured creditors reduce exposure to thrift, analyst sa

[UpInArms]

http://www.marketwatch.com/news/story/wamu-hit-concerns-creditors-pulling/story.aspx?guid=%7B5EA5F544%2D6F59%2D418A%2D8A8F%2D73FE17C90BED%7D&dist=TNMostRead

SAN FRANCISCO (MarketWatch) -- Washington Mutual's stock took a hit on Thursday on concern the nation's largest thrift is losing access to some sources of funding.

Many of WaMu's (WM: 4.05, -0.60, -12.9%) unsecured creditors are "quietly" reducing their exposure to the troubled bank, according to a report by Kathleen Shanley, an analyst at Gimme Credit, citing information in the company's second-quarter earnings report.

That means the thrift has to rely more on insured deposits and borrowing from the Federal Home Loan Banks for funding, she wrote in a note to investors.
WaMu shares dropped 13% to $4.03 on Thursday.

A WaMu spokesman said the company does not need to rely on funding from outside sources.

"As we stated publicly months ago, Washington Mutual funds all of its business through its banking operations," the spokesman added.

At end of June, WaMu had more than $40 billion in liquidity, or access to cash and other assets that can be easily converted to cash. The thrift stopped using commercial paper, one common source of short-term borrowing for some companies, roughly a year ago.

However, in the company's results released earlier this week, it said that total deposits fell by $6.13 billion during the second quarter.

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