Washington Mutual: The bank just big enough to fail

People walk past Washington Mutual Inc.'s headquarters September 16, 2008 in Seattle. The savings and loan bank had its credit rating reduced to junk status by Standard and Poor's.

As we look back five years, ahead of the five-year anniversary of Lehman Brothers' historic bankruptcy filing, it's easy to forget that the financial crisis was about much more than the devastation of Wall Street. Kirsten Grind has written a book about what she calls "the Main Street failure" of the financial crisis in 2008. Her book is called "The Lost Bank: The story of Washington Mutual and the Biggest Bank Failure in American History."

Washington Mutual was a bank headquartered in Seattle, Wash. After a good old-fashioned run on deposits on Sept. 25, 2008, the bank went bust. But "no depositor of WaMu was wiped out" says Grind. The FDIC stepped in and sold the bank to JPMorgan Chase. Anyone with a WaMu ATM card would have found no disruption in their accounts -- they lost not a single penny.

Source: FDIC

Grind says she was surprised that WaMu didn't get much attention at the time, nor has it been mentioned much since 2008. By late September of that year, Lehman Brothers had already gone bankrupt while Fannie Mae and Freddie Mac had been taken over by the U.S. Treasury -- it was easy to miss a bank collapse that seemed to hurt no one.

The only folks still suffering since WaMu's collapse are perhaps the company's leadership, says Grind. The government's TARP program was announced only six days after WaMu went bust -- six days too late to save the bank.

Lehman's Legacy: A Timeline Follow the key events before and after the Lehman Brothers collapse, and see how the financial crisis unfolded. Follow the timeline

About the author

Kai Ryssdal is the host and senior editor of Marketplace, the most widely heard program on business and the economy in the country.


I agree to American Public Media's Terms and Conditions.
With Generous Support From...

Sustainability Coverage

  • The Kendeda Fund
  • Wealth & Poverty Coverage

  • The Ford Foundation