WaMu Failure Shakes Seattle

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Sally Rawlings was one of the last people to buy shares in Washington Mutual Inc., showing faith that her hometown Seattle savings and loan would be able to weather its financial crisis. ``That was a mistake,'' she said of the purchase she made two days ago. ``I went to the symphony, and when I came out it had been seized and sold.'' She was among customers, workers and local residents stunned by the fate of the 119-year-old thrift, even after it put itself up for sale last week with an estimated $19 billion in losses on soured mortgage loans. WaMu was seized by federal regulators Sept. 25 and sold to JPMorgan Chase & Co. ``I was just walking by and saw the newspaper headlines and thought, `Whoa, that's my bank, I should check on my money,''' Amina Abdulle said after visiting a WaMu branch. ``The lady assured me nothing will change -- just the name.'' Signs at branches in Seattle still read, ``This way to a Whoo-hoo moment.'' If they asked, customers got a two-page handout explaining that all deposits had been transferred to New York-based JPMorgan. For many, the bigger issue is the loss of Seattle jobs and prestige that may follow the collapse. After surviving two world wars and the Great Depression, the thrift foundered because of bad mortgage loans. ``I'm not too happy,'' said Kelli Aggerbeck, who works in WaMu's treasury department. ``The management haven't given us any specifics on what will happen to workers yet. It's not a good thing, but it is good to have all the talk about what would happen from last week over with.'' Mass Withdrawals Federal regulators say WaMu became unsound after customers withdrew $16.7 billion starting Sept. 16, during a seesaw week that ended with the U.S. government's proposed $700 billion bailout of financial institutions. WaMu shares plummeted 60 percent this week before the Federal Deposit Insurance Corp. stepped in. Charles Scharf, who runs JPMorgan's retail bank, told reporters on a conference call yesterday that it's too early to say how many WaMu jobs may be cut. Just two years ago, WaMu erected a 42-story headquarters building in downtown Seattle. About 3,500 jobs there may be most at risk, said Stephen Lerch, the interim chief economist for Washington state. Workers in branches may be safer because JPMorgan doesn't overlap much with WaMu's base in Washington, Oregon and California, he said.

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WaMu Failure Shakes Seattle, From Shareholder to Job Seeker
Sept. 27 (Bloomberg) -- Sally Rawlings was one of the last people to buy shares in Washington Mutual Inc. , showing faith that her hometown Seattle savings and loan would be able to weather its financial crisis. ``That was a mistake,'' she said of ...
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Source: Bloomberg
NewsDateTime: 6 hours ago


Just two years ago, WaMu erected a 42-story headquarters building in downtown Seattle. About 3,500 jobs there may be most at risk, said Stephen Lerch, the interim chief economist for Washington state. Workers in branches may be safer because JPMorgan doesn't overlap much with WaMu's base in Washington, Oregon and California, he said. Bills to Pay ``Any time you lose a job, those people all have mortgage payments or rent apartments and buy groceries,'' Lerch said, adding that the losses come as the statewide economy is weakening, with real personal income forecast to drop 0.2 percent in the fourth quarter. ``Washington's been doing better than the U.S. economy, but it's starting to converge.'' Like Rawlings, Seattle newcomer James Ruth had no idea anything was amiss when he went to apply for a job at a downtown branch on 4th Avenue yesterday. He said he wasn't aware the bank had been sold and was told WaMu is ``still expanding.'' The Seattle Times, in an editorial yesterday, lamented the loss of Seattle's last big independent bank. ``The city that was once the proud headquarters of Seafirst, Rainier, People's, Seattle Trust, University Savings, Puget Sound Mutual and Washington Mutual -- `The Friend of the Family' -- now feeds bank corporations in Charlotte and Manhattan,'' the paper wrote. Safe Haven WaMu started as the Washington National Building Loan & Investment Association on Sept. 25, 1889, 119 years to the day before its failure. A fire had engulfed downtown Seattle and residents needed a safe place to put their money, according to a history on WaMu's Web site. In 1890, the bank made what it calls the first monthly installment home loan on the Pacific coast, giving $700 to a Norwegian-born seaman to build a house in Seattle. Mortgages underpinned WaMu's rise and fall. Kerry Killinger, who was ousted Sept. 8 after 18 years as chief executive officer, tried to use mortgages as a foot in the door to sell checking accounts, home equity loans, life insurance and credit cards to customers. He remade WaMu's branches in a less traditional style. Tellers stood in the open at supermarket-style kiosks and managers met loan-seekers on couches. Advertising echoed the informal theme, from the ``Whoo-hoo'' in WaMu's advertising campaign to the ``Sure'' instead of ``Yes'' that customers punched on ATM screens. Options ARMs Like others at now-struggling financial institutions, Killinger pushed at the height of the housing boom into riskier loans to less creditworthy buyers. WaMu was the second-biggest provider of payment-option adjustable-rate mortgages, behind Wachovia Corp., with $54 billion held in its portfolio in the first quarter, according to Inside Mortgage Finance. Option ARMs let borrowers skip part of their payment and add that sum to the principal, so that when housing prices fall, as they have since 2006, they might end up owing more than the residence is worth. Facing $19 billion of losses on soured mortgage loans, the lender put itself up for sale last week. ``What amazes me is how they gave people mortgages without good credit,'' said Rosalie Edburg, 89, a retiree in Seattle who kept her savings and checking accounts at WaMu. ``It sounds like their minds were on vacation.''

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