LastNightinVegas took the photo, and titled the post “This is the end, my only friend the end.”
WaMu is paying 5% on CDs at a time the Fed Funds Rate is 2.0% and the discount rate is 2.25%. Where can WaMu invest money safely and return 5%? The answer is nowhere.
It is a moral hazard that WaMu can even offer CDs at 5% with FDIC guarantees. Money is increasingly flowing to such endeavors, at taxpayer risk.
Losing money on CD deposits when your bank is imploding and advertising it with hand-lettered signs is the sign of an institution in desperation and near-collapse. That the Fed allows this is near-criminal.