Washington Mutual Graded--DOWN

Moody's today lowered Washington Mutual's "financial strength" rating to E from D+, which I think is as low as you can go. It's also downgraded WM's preferred stock to Ca from B2. Ca is described as "highly speculative and likely in, or very near, default, with some prospect of recovery of principal and interest." All other ratings were "placed under review for downgrade."

It's not clear the $700 billion will help WaMu in the short-term, according to Moody's, especially if it takes time to implement a new program. "We believe WaMu's capital is insufficient to absorb its mortgage losses," says Craig Emrick, Moody's Vice President and Senior Credit Officer.

Moody's thinks WaMu could be bought, but "given the depth of the firm's asset quality problems, such a potential transaction could involve regulatory assistance." I take this as code for "FDIC takeover." This as our David Faber reported today that Washington Mutual wants to see the Treasury plan take effect before moving forward with any plan to sell itself. If the government can take over some of its worst performing assets.

BY THE WAY...
Last week while covering Washington Mutual,I mentioned that ValuEngine had the stock undervalued but still a "strong sell." I heard from ValuEngine's Steve Hach explained that I needed a better read on the data: "The main thing to remember is that the fair value model assumes that the market is totally rational and efficient and only looks at available fundamental data, while our buy/sell/hold rating takes fair value along with other forecast data and market technical data into account. Just because the fair value model calculates that a stock is under/over valued is no reason to assume that the stock is going to drop or appreciate in price at any time soon. So, WaMu can be undervalued significantly based on EPS and other variables but still be considered a sell."

READERS ARE ANGRY

On the post about Wall Street salaries,Joseph C. from Georgia writes:
"Finally, finally, FINALLY, someone has addressed one of the root causes for the mess we find ourselves in today. Congrats to Prof. Peter Morici at UMd for pointing out that executive compensation levels have reached disastrous and totally unrealistic levels. I got out of the stock market after recovering all losses from the dot-com debacle and have not returned. My main reason? Executive compensation. I figure if these companies, already operating on the brink, can continue to afford to pay such unethical salaries, they certainly don't need my money (or anyone else's for that matter!).

The CEO of Merrill Lynch made $74 million last year...this, in a year when the company lost over $50 BILLION and had to find a buyer in Bank of America. Why not ask this CEO to return, say, about $73,900,000.00 of this amount to help fund (and repair) the damage he, and others like him, caused? For the results they've delivered, I can't imagine ANYONE on Wall Street worth more than about $100,000.00 per year...

Historically, monies forwarded from stock purchases went to develop new products, build new factories, hire new workers, and, generally, expand successful, on-going business endeavors. Those days are over. Today, for the most part, these monies are received by companies (after having hefty fees deducted by the brokerage houses) and used to either (1) service debt or, (2) fund executive compensation.

IF the taxpayer is being asked to clean up all this vomit, we should, indeed, be allowed (through the government) to determine reasonable salaries for those 'at the top', those, generally, most responsible for the success or failure of their respective enterprises. Let some of those 35-year-olds start out at more reasonable salaries: $40 or $50 THOUSAND, not MILLION. Let them EARN what they receive. (A good argument could be made that we really don't need them anymore...with the internet, one can manage one's own accounts or buy directly from companies in which one wishes to invest. Besides, you'd have a hard time convincing me that Merrill Lynch or any of those other NY brokerage houses are good places to go for financial advice. Obviously, they don't understand derivatives any more than the rest of us!)"

On measuring the $700 billion in terms of Starbucks coffee, some other ideas:

From Danny D:
"When Mr. Nardelli was asked to leave Home Depot, his severance pay was $240 million. As a builder, that is 80 million 2x4's! No man is worth that many trees!!"

From "Helena Handbasket:
"I like to do the math in terms of (Goldman CEO) Lloyd Blankfein's bonus. According to Bloomberg, Blankfein beat Wall Street records with a bonus of $67.9 million in 2007. I went ahead and rounded it up to $68 million. You would need 10,294.12 of Lloyd Blankfein's bonuses to bail out Wall Street. That's a lot of helicopters and houses in the Hamptons!"

And in the "general outrage" column, we start with financial analyst David Barth in Florida:
"Isn't it time for Warren Buffett, Bill Gates, Steve Jobs and other corporate titans to come forward and point out that the economy is not as bad as the financial sector? Executives from IBM, HWP and many other large companies that are doing well in this economy should be showing some corporate and civic responsibility...These people have responsibilities to their own shareholders and customers to communicate the facts and not just take large paychecks, bonuses and stock options. So it is time for some of these people who love the camera and made a lot of money from 2001-2006 to step up to the plate and give some encouragement to the citizens by showing they have confidence in the country."

Pat in Maryland writes:
"I think it's great that the federal government thinks that the citizens are willing to just bail out the companies on Wall Street that were doing poor business practices! Did anyone ask you? They didn't ask me either! When do we get a say about things? You can't tell me to vote. I already do, it doesn't seem to make a difference. They (being the people making all the decisions in Washington) do what they want, when they want, all the time! I was thinking about it today--we are footing the bill. We are taking on additional debt, debt that I didn't want to take on, nor can afford to do. They are going to hand me a bill and expect me to pay for it! Kinda like my daughter coming home, telling me she just bought herself a brand new car and oh, by the way...here's the bill! Thanks Mom!...If I made a poor business decision, who would bail me out? Nobody. I'd be sitting in a courtroom filing bankruptcy."

And Ed. L. in California writes:
"I told my 2 year old daughter this morning, 'Congratulations, honey, you have now been placed into the 65 percentile tax bracket. Thanks to our Government and all the flaky bad people in this country.' I don't think she understood.. Believe me... she will when she starts working. This is a sad day in the good old USA. Where can I pick up my Made in USA Barf Bag?"

Questions? Comments? Funny Stories? Email funnybusiness@cnbc.com