When the Federal Deposit Insurance Corporation shut down Seattle-based Washington Mutual Bank on September 25, 2008, it seemed like an epochal event. It was the biggest bank failure in history, involving seven times the assets of the previous record setter. WaMu was America’s biggest savings bank and largest mortgage lender and Seattle’s top tenant, with more than 1.6 million square feet of office space and two signature towers. Doom-and-gloomers feared downtown would become a ghost town.
For the thousands of employees and other loyal locals who’d kept their savings in WaMu stock and booked its steady dividends, the collapse really was a disaster. For J. P. Morgan Chase, the New York–based megabank brought in to take over WaMu, it was a bargain. Chase, which had long craved WaMu’s far-flung networks, tried to buy the bank for
$7 billion when it started struggling. Now it scored WaMu for $1.9 billion. WaMu shareholders got nothing.
For many Seattleites, it was a heartbreak. Other banks changed slogans and identities like neckties; WaMu stuck for decades with “the Friend of the Family” and lived up to it—to a fault in the end, when it jiggered appraisals, binged on subprime mortgages, and lent to just about any home buyer. Instead of young trendies and starchy suits, WaMu’s ads featured the Rodeo Grandmas. It was Northwest goofy/hip, the financial institution equivalent of Rrrrrrainier Beer and the Wheedle.
WaMu’s previous CEO, Lou Pepper, nurtured that cozy style but stayed prudent while building a regional powerhouse. His successor, Kerry Killinger, determined to go national, threw prudence to the wind. A premonition of disaster came when the slogan changed to “Whoo Hoo!” the sort of thing you might say before jumping off a cliff.
Now, excluding one artifact sign on the stadium exhibition center, Chase’s icy blue graphics have replaced WaMu’s amiable logo. Some stockholders are nursing their Social Security dollars after getting no redress in court. Otherwise, what’s remarkable is how little difference it all made in the end. Chase and the other too-big-to-fail banks just got bigger. Downtown Seattle is booming and its vacancy rate plummeting despite seven million square feet of new office space and a new subcity called South Lake Union. Pundits and historians of the Great Recession wax about Bear Stearns, Lehman Brothers, and Countrywide. Washington Mutual merits a footnote. Amazon, Microsoft, and Starbucks have conquered the world, but Seattle remains, blissfully some would say, a relative big-bank Podunk. —Eric Scigliano, Seattle Met news editor, 2005–2011