WaMu Fails
.The largest bank failure in US history (so far). Washington Mutual, rumored to be in trouble for quite some time, was seized by federal regulators today. Apparently customers had withdrawn $16.7 billion over the last ten days.
They’re being sold to JP Morgan, who look like they’re doing well out of it, considering that they tried to buy Washington Mutual in March for $4/share. Apparently the feds have managed to get this done without using the FDIC fund, which is probably good overall. The big losers look to be Washington Mutual shareholders and creditors, who may get nothing.
This isn’t a good sign for the economy as a whole, but it’s not a bailout, which is something (shareholders shouldn’t be protected from their losses, generally). JP Morgan seem to be taking over larger chunks of the US financial system, but that’s another issue.
I have a personal grudge that makes me unsympathetic to Washington Mutual’s plight—back in 1999 I tried to open an account there and was treated like trash by their branch/new accounts (I can’t remember which) manager, who wanted none of my money in his bank, apparently. I went across the street to another bank and had a completely different (i.e. helpful and reasonable) experience.
Obviously it’s not rational to characterize an entire $300 billion organization on the basis of one interaction, but I don’t like banks in general, I don’t act on this dislike of WaMu in particular, so it’s not harmful—and hey, it turns this piece of clearly bad news into something leavened by schadenfreude.