I want to direct your attention to another major story about Washington Mutual, also at the Puget Sound Business Journal, detailing the final days at the bank. Its still behind the Puget Sound firewall, but is available at Portfolio.com. (Did you know Portfolio was still publishing? Me neither.)
Here’s your Ubiq–cerpt™:
“To recreate WaMu’s final days, the Puget Sound Business Journal examined hundreds of pages of documents obtained through the Freedom of Information Act and interviewed dozens of former WaMu executives and employees, as well as government regulators and outside observers. Many sources would only speak on condition of anonymity. These sources, including insiders who lived through WaMu’s downfall, paint a picture of panic, confusion and futility as events spiraled out of control.
These interviews show that WaMu suffered through not one but two bank runs in its final months. The first run was many times larger than the run that felled California lender IndyMac in July 2008, though neither shareholders nor the public knew about it. WaMu survived that run, and the second run was tapering off when regulators moved in and shut the bank, citing the run as the reason.
In addition, WaMu’s top executives, led by CEO Alan Fishman, were trying to sell the bank after federal regulators imposed a deadline, only to discover that they were being undermined by those same regulators, executives say. The government’s plan to seize the bank, if it became known beforehand, would cause potential buyers to immediately cool their heels, because buying after a government takeover would be a lot cheaper than even the desperate private purchase deal that Fishman was seeking.
The takeover of WaMu prevented a potentially catastrophic hit to the deposit insurance fund. In that sense the seizure was a success: Not a dime of the FDIC’s then $45 billion fund went to reimburse WaMu depositors because JPMorgan Chase had taken over.
Yet even a year later, fundamental questions remain unanswered. And in part because regulators have said so little about their actions, there remains a voracious appetite to get to the bottom of why WaMu failed.”
More at the link below . . .
A Giant Downfall
Puget Sound, Sep 25 2009