WaMu Fails: Biggest Bank Failure in History
Sep 26th, 2008 by admin
The Washington Mutual Tower in Seattle
I just can’t get over it.
Washington Mutual, WaMu, the Seattle-based thrift that became a national powerhouse, has failed.
Since September 16, customers have withdrawn $16.7 BILLION dollars, leaving the bank weaving so precariously that Thursday, federal regulators pronounced it ”unsound” and took it over, even though Friday is normally the day they’d have taken action against a failing bank.
I walked past the WaMu building last night on the way to the bus stop and there were probably 30 journalists and photographers standing around waiting for someone to come out the front doors, but the lobby looked like a ghost town.
This failure is bigger than Continental Illinois National Bank and Trust’s failure in ‘84 and bigger than the recent failure of IncyMac, like, 10 times bigger, in fact.
I have a good friend who is corporate counsel for this bank. I am afraid to e-mail her.
JP Morgan Chase has purchased some pieces of the bank, but shareholders, bondholders are effectively out. They’ve lost it all.
WaMu, under ousted CEO Kerry Killinger (who departed in grand style to the tune of something like a $17.5 million dollar severance package), envisioned itself as a Wal-Mart kind of a bank, accessible to working class people. Instead of walling in their bank tellers, the tellers stood at table-like structures in large, open settings that included espresso bars, until very recently. As part of that particular corporate culture, WaMu offered adjustable-rate, subprime mortgages in all manner of forms and constellations. Killinger took huge, some believe unconscionable, risks, and this is the result. Of course, he’s not feeling it, what with the cool $17.5 million.
Regulators were quick to act because had WaMu failed, FDIC would have been imperilled, given the recent failure of IndyMac which has depleted FDIC funds.
Amazing, amazing times we are witnessing now.
Heart
I used to get a lot of unsolicited applications in the mail for WaMu credit cards, but I never applied for one. I guess that will stop.