Where will WaMu find shelter?

Washington Mutual on the auction block


Merrill Lynch (NYSE: MER) analyst Kenneth Bruce issued a report Wednesday saying that WaMu is coming under increasing pressure to “seek shelter from the storm through a merger.

“The decision of another rating agency to downgrade (WaMu’s) debt to non-investment grade, and the market disruptions in the wake of the Lehman bankruptcy, are likely to further undermine (WaMu’s) fundamentals,” Bruce said in a note to clients.

The New York Post reported Wednesday that federal regulators have approached healthier banks about their interest in WaMu, including Wells Fargo, HSBC and Chase. None of the institutions have engaged in formal discussions with WaMu, the newspaper said.

Comment: Interesting!

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