Large Stock Focus: WaMu Plunges 96% for the Week; National City, Wachovia Are Put In the Same Boat
NEW YORK -- Signs that scared depositors pushed Washington Mutual over the edge started a shareholder run from other institutions, yet WaMu's loss was a gain for J.P. Morgan Chase and the Dow Jones Industrial Average. All now await the U.S. government's progress on a rescue bill for the banking system.</br></br>The fall of WaMu, a major mortgage lender and a household name, underscored the scale of the credit crisis the U.S. government is seeking to resolve. As the housing market continues to deteriorate, it is threatening the entire financial system.</br></br>One trader at a Wall Street firm said markets were in a state of paralysis while the government rescue is in limbo. "People are not doing anything until this bailout thing is resolved," he said.</br></br>Shares of WaMu were almost wiped out, falling $1.53, or 91%, to 16 cents, for a loss of 96% on the week. The concentration of loans in some of the hardest-hit areas of the housing bust eventually caused a crisis of confidence in the lender, which traces its roots to the 19th century, and it was unable to find a buyer in a recent auction.</br></br>After the failure, however, J.P. Morgan Chase stepped in to buy WaMu's banking operations for $1.9 billion. Shares of J.P. Morgan rose 4.78, or 11%, to 48.24, the Dow's leading gainer.