WaMu: Whoo Hoo? Whoops!

It’s been feeling a bit too much like the start of the Great Depression again in Seattle lately, between the unseemly demise WaMu and dignified raising of Nickelsville in response to the city’s homeless sweeps.

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Washington Mutual (WaMu) was the major bank in Seattle; especially after SeaFirst (Seattle First) merged into Bank of America some years back.  Now, as WaMu employees were told, according to yesterday’s Seattle PI, “Welcome to JPMorgan Chase.”

Washington Mutual Inc. came to an ignominious end Thursday, with federal regulators seizing the company and selling its branches, deposits and loans to New York-based banking giant JPMorgan Chase in the largest bank failure in U.S. history.

Largest bank failure in U.S. history?  Washington Mutual, where I used to have my money?  According to yesterday’s PI, “depositors had lost confidence” and “$16.7 billion in deposits had been pulled from the company just since Sept. 15.” “Whoo hoo!” as their ads go, or “Whoops!”? 

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Whoops, especially for investors who seem to have lost everything, while deposits are safe in the now Chase Bank branches (especially if they’re under the $100,000 insured by FDIC).  As for shareholders, according to today’s Seattle Times:

Against all odds, WaMu shares continued to trade Friday. That’s because, while JPMorgan bought the company’s banking subsidiary, it left behind the parent holding company — a shell containing little more than a passel of nonbanking subsidiaries. The shares fell to 16 cents as 102 million changed hands Friday.

Apparently, shareholders aren’t likely to see anything anyways, as they have to stand in line behind other creditors.  To add more injury to insult, many WaMu employees who may be loosing their jobs soon had stock options or a lot of WaMu stock in their 401k plans.

Meanwhile, what about the CEOs?  According to the Times:

Alan Fishman, chief executive for 18 days before the federal government took control, is eligible for $11.6 million in cash severance and can keep his $7.5 million signing bonus, according to an analysis by James F. Reda & Associates, a compensation-consulting firm in New York.

Fishman, a former CEO of New York-based Independence Community Bank, took over WaMu on Sept. 8 after the ouster of longtime CEO Kerry Killinger. Fishman remains CEO of WaMu’s holding company, spokeswoman Darcy Donahoe-Wilmot said.

Killinger, who presided over WaMu for 18 years, was entitled to $16.5 million in cash severance, $14.9 million in deferred compensation and $7.5 million in estimated pension benefits, according to Reda. Killinger also left WaMu with company stock then worth about $5.1 million.

All told, Killinger received take-home pay totaling $98 million from 1994, the earliest year for which data is available, through 2007, according to Equilar, an executive-compensation research firm in Redwood Shores, Calif. He pocketed a total $22 million in 2006 and 2007 alone.

Nice.  The ones who messed up get richly rewarded, while the hard working employees. . .?  Well, there’s always Nickelsville. Or is there?

PS: On an amusing note, my spell checker wanted to replace Killinger with Dillinger.  A bank robber.  Hmm, maybe Killinger is just a different kind of bank robber!

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