What's up with WaMu?

Bloggers have noticed that Washington Mutual is now offering 5 percent on certificates of deposit. That may draw some assets, but it raises issues for some. Mish's Global Economic Trend Analysis says this: "WaMu is paying 5 percent on CDs at a time the Fed Funds Rate is 2.0 percent and the discount rate is 2.25 percent. Where can WaMu invest money safely and return 5 percent? The answer is nowhere. It is a moral hazard that WaMu can even offer CDs at 5 percent with FDIC guarantees." You really have to wonder how they're doing this. The same post also notes that prices for WaMu's credit default swaps are going through the roof. The big thrift certainly has not turned the corner.  

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