Obsolete Certainty

It appears that losing billions of dollars on bad mortgage loans wasn’t enough for Washington Mutual. The large thrift has decided to jump head first in the subprime credit card business in an attempt that could be best described as essentially playing a double or nothing bet. According to an article by Ari Levy in Bloomberg, WaMu has increased their credit card business by 56% since acquiring Providian Financial Corp. WaMu stated in its annual report that it seeks customers who “are often underserved by large prime/superprime-oriented credit-card issuers and who satisfy its underwriting criteria”.

Moshe Orenbuch, an analyst at Credit Suisse Group in New York is quoted in the article saying, ‘Lower earnings in the credit-card business are going to compound their earnings issues.” Well Duh!

Former Citigroup CEO Charles Prince, whose unemployment status is at least partially the result of the real estate crisis, is having trouble unloading a modest little home.  Prince has a five bedroom Tudor style home in Greenwich, Connecticut that has been on the market for six months. Unfortunately for Chuck, the mortgage crisis has put a bit of a chill on the housing market, even in the wealthy areas of the New York City metro area.

According to an article by Sharon Lynch in Bloomberg, Prince paid $4.48 million for the home in 2003 and currently has the property listed for $5.85 million (after a $300,000 price reduction). Of course something tells me that the paltry reduction will not be the last. According to the article, a Bloomberg survey indicates that home prices in Greenwich fell over 8% since the first quarter of last year and declines of as much as 25% are noted in the majority of upscale New York suburbs.

Welcome to our world Mr. Prince.