Washington Mutual: The bank just big enough to fail
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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.
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.
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