Last week acquaintances boasted to me of withdrawing all their deposits out of Washington Mutual. I tried my best to assure them WaMu would not collapse. It would survive, it would be sold whole, or it would be sold in pieces. And its most valuable, most saleable pieces were its bank branches and its individual accounts.
Today, this point was proven. The FDIC just arranged to have these assets sold off to JPMorgan Chase for $1.9 billion.
It might not have been so necessary, so imeediately, had there not been so many sudden withdrawals from WaMu accounts–more than $16 billion in less than two weeks!
Thus ends the rollicking saga of the little Seattle thrift institution, a secondary player in the local banking market back during the days before interstate banking giants, that became the biggest institution of its type in the nation.
It effortlessly subsumed such former giants as Dime Savings in New York and Home Savings in California. Like a dot-com (only using real money), its business model was to Get Big Fast. At the peak of America’s housing bubble, WaMu was the nation’s biggest home-mortgage originator, with some 2,000 branches coast to coast.
But all that growth was predicated upon one gamble– that the national home-buying mania, abetted by lax government regulations and the massive trading of obscure “mortgage-backed securities,” would just keep on a-growin’ forever. Or at least for five or six more years.
It’s easy to say they should have known better.
Which I just did.
But think of it this way: Imagine you were running the last big financial outfit still based in the NW region. Imagine you’d come to believe you had two options. You could remain a local player, slowly but surely losing ground against the consolidating industry giants. Or, you could become one of those consolidating industry giants.
Yeah, I would have picked (a) also.
WaMu’s shotgun marriage creates another addition to the roster of big companies that used to be based in Seattle but aren’t anymore. Some others:
United Parcel Service: Begun as a delivery service for local department stores in 1907. Now based in Atlanta.
Carnation Foods: Turned evaporated milk into a pantry staple; moved to Los Angeles; got absorbed by Nestle.
Airborne Express: Taken over by DHL. Seattle HQ closed. Ohio central air-freight depot threatened with closing.
Westin Hotels: Originally a regional circuit called Western; then a major global chain called Western International; merged with and de-merged from United Airlines; now just one of Starwood’s constellation of brands.
Boeing: You probably know about this one.
