Interesting piece on the new Portfolio.com site — now under new ownership — on the question Why Did They Close WaMu?.
The question they ask is “Did regulators pull the trigger too soon.” I believe the answer was obvious — they had massive Sub-prime exposure, and were likely to have splattered quite spectacularly.
Regardless, it is the process of shutting down a huge bank that comes under scrutiny. Excerpt:
“Yet more than a year later the details of the decision remain shrouded from view. WaMu’s main regulators—the Federal Deposit Insurance Corp. and the Office of Thrift Supervision—continue to decline requests to discuss their actions, release liquidity figures, or give any other evidence that the bank was in a precarious situation that demanded immediate action. In refusing the disclosures, the regulators cite confidentiality regulations for a bank that no longer exists except in a liquidation proceeding and as a basis for numerous lawsuits.
Similar secrecy surrounds other bank failures. As the toll of closed banks mounts—more than 140 have been shut by regulators since the housing bubble burst in early 2008—and as Congress prepares to overhaul the regulatory structure, more people are asking what exactly was wrong with these banks, and whether regulators always acted appropriately in closing them.”
I am unconvinced of their conclusions, but it is worth a quick look.
(NOTE: The site is sometime glitchy — if you get “Not Found“, hit refresh a few times).
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Previously:
The Rise & Fall of WaMu (February 2nd, 2009)
http://www.ritholtz.com/blog/2009/02/the-rise-fall-of-wamu/
The Last Days of WAMU (October 1st, 2009)
http://www.ritholtz.com/blog/2009/10/the-last-days-of-wamu/
Source:
Why Did They Close WaMu?
Kirsten Grind
Portfolio.com, Dec 07 2009
http://www.portfolio.com/industry-news/banking-finance/2009/12/07/why-federal-regulators-closed-washington-mutual/
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