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(Failure Magazine)   Over the course of 100 years, one bank built its reputation as a customer-focused regional bank. Then management decided it wanted to be a big bank. Within ten years, it was out of business   (failuremag.com) divider line 35
    More: Interesting, WaMu, regional banks, bank failures, community banks, reputation, JPMorgan Chase & Co.  
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3582 clicks; posted to Business » on 16 Aug 2012 at 1:34 PM (2 years ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2012-08-16 10:24:01 AM  
whitethreads.files.wordpress.com
 
2012-08-16 10:52:12 AM  
This is all Obamas fault.
 
2012-08-16 11:49:12 AM  

Dinki: This is all Obamas fault.


Could it be anybody else's?

When Obama founded WaMu in 1889, he did so with the elaborate plan of helping him become President in 2008, followed by Supreme Leader in 2012 and then Ruler of Earth in 2014 after his Secret Kenyan Muslin Drone Army rises up right after the election.
 
2012-08-16 12:17:07 PM  

Donnchadha: Dinki: This is all Obamas fault.

Could it be anybody else's?

When Obama founded WaMu in 1889, he did so with the elaborate plan of helping him become President in 2008, followed by Supreme Leader in 2012 and then Ruler of Earth in 2014 after his Secret Kenyan Muslin Drone Army rises up right after the election.


I read it on WorldNetDaily.com
 
2012-08-16 01:07:21 PM  
The problem has always been with greed. The need for more. It doesn't matter that the bank provided their community and customers with a service that was solid and well respected.

The unrestrained capitalist always says more. I want more.
 
2012-08-16 01:47:47 PM  
its actually impossible for an economy with a fractional reserve banking system to experience less than exponential growth without totally collapsing. we are so irrevocably, irredeemably, unforgivably farked.
 
2012-08-16 01:49:27 PM  

Darth_Lukecash: The problem has always been with greed. The need for more. It doesn't matter that the bank provided their community and customers with a service that was solid and well respected.

The unrestrained capitalist always says more. I want more.


Don't all rapists think that same way?
 
2012-08-16 01:52:04 PM  
When the only thing that matters anymore is your stock price and not the long-term viability of the company/bank, more often than not it means that the company/bank sacrifices itself on the alter of quarterly profits.
 
2012-08-16 02:15:40 PM  
 
2012-08-16 02:20:37 PM  

Darth_Lukecash: The problem has always been with greed.


I'm sorry buy Ayn Rand and our next VP say it is a good thing.
 
2012-08-16 02:57:14 PM  
There are two ways to grow a bank. Slowly or else by relaxing credit standards. The second option works, until it stops then you're farked. The goal is to pay yourself enough during the growth phase to not require further gainful employment.
 
2012-08-16 03:33:53 PM  
that's one of the things that can happen when you don't follow catholic social teachings.
 
2012-08-16 04:15:45 PM  

Cheron: Darth_Lukecash: The problem has always been with greed.

I'm sorry buy Ayn Rand and our next VP say it is a good thing.


Greed is good, it drives the economy. The problem is that irrational greed (that is greed that harms others) is concentrated evil, and most (99.999%) people are not rational enough to become a Randian hero. And when I say rational enough, I mean big picture minded enough to truly grasp that by only working for your own interests without respecting the interests of others, everyone suffers in the end - because that makes you a looter.

Most of the idiots out there who pray at the altar of Rearden and Galt (including Paul Ryan) are as guilty as most Christians in the fact that they gloss over the deeper meaning of the philosophy and only take the parts that are convenient to their interests.
 
2012-08-16 04:18:36 PM  

Darth_Lukecash: The problem has always been with greed. The need for more. It doesn't matter that the bank provided their community and customers with a service that was solid and well respected.

The unrestrained capitalist always says more. I want more.


"To stop suffering, stop greediness. Greediness is a source of suffering," said The Buddha.
 
2012-08-16 04:48:46 PM  
Huh, I guess that's typical. All we need to do to ensure the stability of the banking system is to legally limit the size of banks, amirite? Small, customer-focused regional banks never go out of business.
 
2012-08-16 05:02:08 PM  
GF named my left testicle thundercles: its actually impossible for an economy with a fractional reserve banking system to experience less than exponential growth without totally collapsing. we are so irrevocably, irredeemably, unforgivably farked.

ummm, the gold thread is
 
2012-08-16 05:02:32 PM  

wingnut396: While CEO of Washington Mutual in 2007, Killinger earned a total compensation of $14,364,883.[3] In 2008, he took home $25.1 million in compensation. Killinger received a $15.3 million severance payment in September 2008 "as well as a $445,200 lump-sum payment for vacation benefits and a $300,669 'special payment'".[4]

Sounds like it all worked out well for those that matter. Can someone please get this valuable and esteemed job creator a tax cut?


This guy's descendents will never need to work a day in their lives. And that's the problem with insane compensation. "fark the company. I got mine and the Killingers are set until the inevitable heat death of the universe."
 
2012-08-16 05:04:12 PM  
Debeo Summa Credo: Huh, I guess that's typical. All we need to do to ensure the stability of the banking system is to legally limit the size of banks, amirite? Small, customer-focused regional banks never go out of business.

Did your parent feed you paint chips as a kid?

Region banks don't need large bailout's, less they drag down the entire country's economy. When banking is 11% of GDP and 88% of banking is done by 4 institutions, you got a problem if they fail. Region bank? Not so much.
 
2012-08-16 05:24:04 PM  

TyrantII: Debeo Summa Credo: Huh, I guess that's typical. All we need to do to ensure the stability of the banking system is to legally limit the size of banks, amirite? Small, customer-focused regional banks never go out of business.

Did your parent feed you paint chips as a kid?

Region banks don't need large bailout's, less they drag down the entire country's economy. When banking is 11% of GDP and 88% of banking is done by 4 institutions, you got a problem if they fail. Region bank? Not so much.


Except of course, all the banks listed in my farking link, whose liabilities have been taken on by the FDIC.

Oh, you don't consider that a bailout? Then how about this list that includes HUNDREDS of small banks that received tarp money, most of which by the way haven't paid the treasury back yet (as opposed to the large banks)

http://projects.propublica.org/bailou t/list
 
2012-08-16 05:32:26 PM  

TyrantII: Debeo Summa Credo: Huh, I guess that's typical. All we need to do to ensure the stability of the banking system is to legally limit the size of banks, amirite? Small, customer-focused regional banks never go out of business.

Did your parent feed you paint chips as a kid?

Region banks don't need large bailout's, less they drag down the entire country's economy. When banking is 11% of GDP and 88% of banking is done by 4 institutions, you got a problem if they fail. Region bank? Not so much.


You know what, let me modify my last post to admit you do have a point. Smaller banks won't take down the system by themselves, but they are correlated with each other. My main point in my original post was to indicate that size isn't the factor that led to wamus downfall, and that breaking up larger banks isn't the panacea that some believe. In fact, the existence of larger banks like JPM and wells Fargo to absorb some of the almost as large banks (wamu and wachovia) helped mitigate the crisis.
 
2012-08-16 06:10:09 PM  

Debeo Summa Credo: Huh, I guess that's typical. All we need to do to ensure the stability of the banking system is to legally limit the size of banks, amirite? Small, customer-focused regional banks never go out of business.


Sure they can fail but one of the regionals failing does not bring the whole of the US economy to its knees and cause a 5% job loss nationwide. Have more smaller businesses that are "not to big to fail" is a very smart and safe way to do things. Problem is the fact that idiot Republicans are unable to learn from the past and apparently like having the Robber Barons as their masters.
 
2012-08-16 06:22:19 PM  
We had a similar story in the UK. LloydsTSB had for years been criticised for "playing it safe" and being "boring" because it had avoided the sub-prime type deals and so on.
Come the crash and they're suddenly the shining example of a bank that was run right, and didn't need any bail out.

Until...

HBOS, a bank based in Scotland close to where then PM Gordon Brown lived, was in huge trouble and he bullied LTSB into buying them and saving them from failing (very bad news for him) or needing a government bail out (also very bad news for him).
So they bought HBOS. And found out it was in staggeringly huge trouble. Their hidden debts dragged the whole of LTSB into needing a bailout itself, and now they are being forced to sell a huge number of their branches.

Thank's Gordon. You tosser.

/Interestingly, their cautious, sensible, CEO was American.
 
2012-08-16 06:41:07 PM  

Kazrath: Debeo Summa Credo: Huh, I guess that's typical. All we need to do to ensure the stability of the banking system is to legally limit the size of banks, amirite? Small, customer-focused regional banks never go out of business.

Sure they can fail but one of the regionals failing does not bring the whole of the US economy to its knees and cause a 5% job loss nationwide. Have more smaller businesses that are "not to big to fail" is a very smart and safe way to do things. Problem is the fact that idiot Republicans are unable to learn from the past and apparently like having the Robber Barons as their masters.


It's not safer when the risks of the smaller banks are correlated, or the financial system is so intertwined that the collapse of a smaller or medium size firm causes a cascading problem.

And the banking crisis wasn't the only factor that led to the job losses. Don't fool yourself, if it were the financial system only we'd have had a much quicker rebound as the financial sector was largely turned around in 2009, thanks partially to tarp.

Weve had a continued sluggish economy because we are still deleveraging from the credit boom, particularly in the household sector. It's amazing how much worse the economy will get when you go from years of over borrowing/spending to paying back some of that debt.
 
2012-08-16 07:54:38 PM  
Flint Ironstag: We had a similar story in the UK. LloydsTSB had for years been criticised for "playing it safe" and being "boring" because it had avoided the sub-prime type deals and so on.
Come the crash and they're suddenly the shining example of a bank that was run right, and didn't need any bail out.

Until...

HBOS, a bank based in Scotland close to where then PM Gordon Brown lived, was in huge trouble and he bullied LTSB into buying them and saving them from failing (very bad news for him) or needing a government bail out (also very bad news for him).
So they bought HBOS. And found out it was in staggeringly huge trouble. Their hidden debts dragged the whole of LTSB into needing a bailout itself, and now they are being forced to sell a huge number of their branches.

Thank's Gordon. You tosser.

/Interestingly, their cautious, sensible, CEO was American.


Happened with Bank of America and Merrill Lynch. BOA was actually pretty well insulated from the subprime mess, then the gov pressured them to "privately bail out" ML through acquisition, and balked at helping once the true balance sheets made an appearance. Cost the CEO his job rightfully, since it screwed shareholders, but it was a pretty shady deal.
 
2012-08-16 07:56:57 PM  
Debeo Summa Credo: TyrantII: Debeo Summa Credo: Huh, I guess that's typical. All we need to do to ensure the stability of the banking system is to legally limit the size of banks, amirite? Small, customer-focused regional banks never go out of business.

Did your parent feed you paint chips as a kid?

Region banks don't need large bailout's, less they drag down the entire country's economy. When banking is 11% of GDP and 88% of banking is done by 4 institutions, you got a problem if they fail. Region bank? Not so much.

Except of course, all the banks listed in my farking link, whose liabilities have been taken on by the FDIC.

Oh, you don't consider that a bailout? Then how about this list that includes HUNDREDS of small banks that received tarp money, most of which by the way haven't paid the treasury back yet (as opposed to the large banks)

http://projects.propublica.org/bailou t/list


deposit liabilities are just one part of a balance sheet, increasingly the smallest part of banks that also invest. Plus FDIC is insurance.

If the financial crash was just regional banks having liquidity issues and deposits being covered by FDIC, we wouldn't be in this mess. Hell, if we didn't allow deposit banks and IBanks to merge, we also wouldn't have had this mess.
 
2012-08-16 08:43:55 PM  
I worked at WaMu in commercial lending when it went under.

What was interesting was that, as the decline started, they decided to shut down "risky" business units, but their definition had nothing to do with risk. Our office was shut down because it was only 18 months old. The types of loans we did were low risk and the bank underwrote them conservatively. Meanwhile, while property valued cratered there, they kept California open because they "understood" the market.

At the end of the day the last offices closed were those with the most problems.

Oh, and even we knew the mortgage portfolio was going to take the bank under despite having no involvement with it or the people who ran it.
 
2012-08-16 10:40:44 PM  

TyrantII: Debeo Summa Credo: TyrantII: Debeo Summa Credo: Huh, I guess that's typical. All we need to do to ensure the stability of the banking system is to legally limit the size of banks, amirite? Small, customer-focused regional banks never go out of business.

Did your parent feed you paint chips as a kid?

Region banks don't need large bailout's, less they drag down the entire country's economy. When banking is 11% of GDP and 88% of banking is done by 4 institutions, you got a problem if they fail. Region bank? Not so much.

Except of course, all the banks listed in my farking link, whose liabilities have been taken on by the FDIC.

Oh, you don't consider that a bailout? Then how about this list that includes HUNDREDS of small banks that received tarp money, most of which by the way haven't paid the treasury back yet (as opposed to the large banks)

http://projects.propublica.org/bailou t/list

deposit liabilities are just one part of a balance sheet, increasingly the smallest part of banks that also invest. Plus FDIC is insurance.

If the financial crash was just regional banks having liquidity issues and deposits being covered by FDIC, we wouldn't be in this mess. Hell, if we didn't allow deposit banks and IBanks to merge, we also wouldn't have had this mess.


Totally disagree. Lehman wasn't a commercial bAnk, neither was Bear or AIG. Wamu and Wachovia and national city weren't ibanks. Glass steagall is a red herring.
 
2012-08-16 10:52:24 PM  
The author can't be too authoritative if he doesn't know how Jamie Dimon's name is spelled.
 
2012-08-17 12:34:51 AM  
Family member worked for Wachivia (not Wamu) and shared a story that bears on this discussion...

He said that Wachovia began as a mining bank and slowly grew its reputation as Wamu did: careful management and impeccable customer service.

Then along came First Union. I myself once visited a First Union IT center and observed their nasty corporate culture firsthand. And their reputation had finally caught up with them, because their retail operation was cratering.

That's when First Union decided the cheapest route to a good reputation was to just buy one. So they "merged" with Wachovia. It wasnt really a merger, because First Union was monstrously large vs Wachovia. It was really just an acquisition, and the thing they really wanted to acquire was the name.

The power of Wachovia's reputation saved First Union's retail operation, at least for a couple of years. The family member gave us regular updates of the rapid demise of Wachovia's corporate culture. First Union's memes infected and killed Wachovia's spirit.

The family member eventually quit in disgust. And then a few more years passed before I heard that Wachovia was in financial trouble. But that was really First Union's doing.

Rotten bastards, killed their own reputation and then killed someone else's. And I guarantee the execs and MBAs responsible for it all have long since collected their bonuses, massaged their resumes to disguise their guilt, and moved on.

/I hate humans
 
2012-08-17 01:38:28 AM  

SharkTrager: I worked at WaMu in commercial lending when it went under.

What was interesting was that, as the decline started, they decided to shut down "risky" business units, but their definition had nothing to do with risk. Our office was shut down because it was only 18 months old. The types of loans we did were low risk and the bank underwrote them conservatively. Meanwhile, while property valued cratered there, they kept California open because they "understood" the market.

At the end of the day the last offices closed were those with the most problems.

Oh, and even we knew the mortgage portfolio was going to take the bank under despite having no involvement with it or the people who ran it.


I should have suspected something was amiss (early-to-mid-2000's) when WAMU was marketing to people like me; employed, but not making enough to really afford a house.

I still miss banking with them. IIRC, I had a better deal with them for checking and savings accounts than any of the local credit unions.

/ Chase "altered the deal" so I fled soon after they gobbled up WAMU
 
2012-08-17 03:45:36 AM  
When I was younger, banks paid me 4 percent on a savings account and charged 10 percent or so to loan money. Now they pay next to nothing and loan money at up to 30 percent.

Plus they charge huge fees for EVERYTHING.

How do the fail? I dont get it.
 
2012-08-17 04:01:24 AM  
That's too bad about Lloyd's Bank. I banked with them briefly in 1980-81. I liked their black horse logo. Still have one of their posters lying around someplace.
 
2012-08-17 09:01:25 AM  

I sound fat: When I was younger, banks paid me 4 percent on a savings account and charged 10 percent or so to loan money. Now they pay next to nothing and loan money at up to 30 percent.

Plus they charge huge fees for EVERYTHING.

How do the fail? I dont get it.


Find a credit union that you can get into that doesn't suck. They have their rates posted. You probably won't get a 4% return anywhere(on all your money, you might be able to in some cases if you have over or under X, or it only counts so much of X), but you can get better loan rates. I can get a car loan for 4.75 with my CU (or I can try another one and probably get 3.25%).
 
2012-08-17 10:10:38 AM  

I sound fat: When I was younger, banks paid me 4 percent on a savings account and charged 10 percent or so to loan money. Now they pay next to nothing and loan money at up to 30 percent.

Plus they charge huge fees for EVERYTHING.

How do the fail? I dont get it.


They don't loan all their money at 30%. Home loans are below 4%. 30% rates go to deadbeats who can't be trusted to pay the money back.

And therein lies your answer. Even that 30% is not always enough to compensate banks if more borrowers than expected don't pay back their loans.
 
2012-08-17 01:04:28 PM  
Thought it was gonna be 'The Failure of M&I'...
 
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