Slog - Comments on Dear Dan, Bethany, and Jonathan Golob

Comment by Steven Miller

Steven Miller — Fri, 26 Sep 2008 09:25:26 -0800

"The withdrawals were largely concentrated among retail deposits that were over the Federal Deposit Insurance Corp's $100,000 insurance cap, said Tim Ward, the Office of Thrift Supervision's deputy director for examinations, supervisions and consumer protection." - doesn't sound like most slog readers to me...

Comment by Gomez

Gomez — Fri, 26 Sep 2008 09:25:48 -0800

1. Financial troubles come to light.
1a. Bank shows they have deposits to withstand 2-3 more years of ill fate.
2. However, media creates panic to sell copy.
3. Panic leads to depositors raiding bank and closing accounts.
4. Raid creates dramatic loss in deposits, crippling the bank.
5. Insolvency.

So actually, yeah, the media had a strong hand in WaMu's failure by panicking the masses. Way to go.

Whether or not they were influenced by the Feds to do so for other reasons may never be known. But before the precipitous drop, they had the capital to last until 2010 if nothing changed for the better.

Comment by Bellevue Ave

Bellevue Ave — Fri, 26 Sep 2008 09:30:37 -0800

Gomez, the belief in credit rating agencies had more to do with it than the news media simply reporting the downgrade to junk status.

Comment by Cat in Chicago

Cat in Chicago — Fri, 26 Sep 2008 09:30:50 -0800

At least we won't have to watch those goofy commercials anymore. WaMooooooooo!

Comment by poo

poo — Fri, 26 Sep 2008 09:32:20 -0800

I know I moved some out of my WaMu account, in case they screwed up and cut off access to my money while they were selling off their Aeron chairs down on 3rd ave.

But yeah, @1 right on, to be completely accurate and un-snarky.

Comment by chet.

chet. — Fri, 26 Sep 2008 09:34:39 -0800

@5 you did this because of Golob's warnings, right?

Comment by Mahtli69

Mahtli69 — Fri, 26 Sep 2008 09:37:25 -0800

This is like blaming escaped passengers for the Titanic sinking. Because, they could've stayed on the ship and helped bail water, right?

Comment by David

David — Fri, 26 Sep 2008 09:42:51 -0800

It's McCain's fault for scuttling the bailout plan yesterday.

Comment by uncle baggy

uncle baggy — Fri, 26 Sep 2008 09:42:52 -0800

smart paranioids switch to credit unions: https://www.smcu.com/promos/secure_deposits.html

Comment by Greg

Greg — Fri, 26 Sep 2008 09:46:17 -0800

Look, you can't blame Golob for pointing out that the prisoner's dilemma works.

Comment by w7ngman fan

w7ngman fan — Fri, 26 Sep 2008 09:48:39 -0800

I loved that throughout the last two weeks WaMu didn't add any sort of reassuring messaging to their website, or anywhere for that matter. What I loved more: That BECU did.

*high fives w7ngman

Comment by WaMu's PR Failure

WaMu's PR Failure — Fri, 26 Sep 2008 09:58:07 -0800

WaMu was totally inactive on combating rumors and press until it was too late. As 11 points out, even when they did try and react to the media they didn't do it effectively. They did post things on WaMu's site, but it only showed up after you logged in and then went back to the main page. Very few people would do such a silly thing. There were more than a handful of employees who expressed their concern to sr. management that we weren't being aggressive enough in our PR efforts, but owell.

Comment by WaMu's PR Failure

WaMu's PR Failure — Fri, 26 Sep 2008 09:58:17 -0800

Comment by Aislinn

Aislinn — Fri, 26 Sep 2008 09:58:34 -0800

@11: Like I said, you always post these on threads he is unlikely to read :)

Comment by WaMu's PR failure

WaMu's PR failure — Fri, 26 Sep 2008 09:58:38 -0800

Comment by i love my hourlong commute

i love my hourlong commute — Fri, 26 Sep 2008 09:59:48 -0800

When I worked at WM earlier this year, I had to attend a meeting where the presenter blamed the borrowers (including himself, ?I guess, as he put only 5% down on a house in Issaquah) for the bank's woes. "They wouldn't have signed if they didn't wwant the money." The woman who cried out "what about moral hazard?" at the meeting became my new heroine.

Comment by tomasyalba

tomasyalba — Fri, 26 Sep 2008 10:11:43 -0800

Hee hee! That Marketwatch article is great!

So looks like WAMU panicked its bondholders more than a year ago just by disclosing facts as required by law about its financial condition. Bondholders actually read the reports and concluded that WAMU's dissolution was baked in already. They began to hedge their losses right away, knowing they'd be wiped out, as they were yesterday.

More recently, WAMU panicked its retail depositors, and then individual depositors, by failing to be able to raise ordinary capital, failing to unload its bad assets, refusing to accept offers to buy, and acting as though nothing weird was going on.

WAMU's own actions created panic. The belated media reports were just candy sprinkles on the icing on the cake WAMU baked years ago.

Comment by w7ngman fan

w7ngman fan — Fri, 26 Sep 2008 10:22:07 -0800

As the many of you also too lazy to move your Wamoolah out of WaMu have probably noticed this morning, they finally changed their login page to say 'WaMu Customers: Welcome to JPMorgan Chase!'

I wonder if they'll be greeted as liberators.

@Aislinn It's the w7ngman fanboyism thought that counts.

Comment by Gomez

Gomez — Fri, 26 Sep 2008 10:43:10 -0800

the belief in credit rating agencies had more to do with it than the news media simply reporting the downgrade to junk status...

It's not that simple, Bellevue. If the market were that simple, it'd be far easier for the Feds to manipulate.

The media spent weeks harping on WaMu's perceived fragility, regardless of the bank's true status. That had a subversive, cumulative effect that sapped the bank's resources.

Comment by Ben

Ben — Fri, 26 Sep 2008 10:50:35 -0800

@18: It's not that I was too lazy to pull my money out. It's that I saw the risk of losing anything as too low to warrant exacerbating the problem, in however insignificant a way, by freaking out and stuffing all my money in my mattress. The fact that it was much less work for me to not do anything was just a nice bonus.

Comment by Bellevue Ave

Bellevue Ave — Fri, 26 Sep 2008 11:08:18 -0800

Gomez, The junk rating happened the same day that 16.7 bil pulled out.

Comment by Bellevue Ave

Bellevue Ave — Fri, 26 Sep 2008 11:21:52 -0800

furthermore im not denying the obvious that WaMu was in trouble or it was a simmering that turned into a boil, it's just that by your own post at the start, you can see the chain of events that led to the precise outcome a few days later.

Comment by elswinger

elswinger — Fri, 26 Sep 2008 12:27:07 -0800

It's my fault. I shouldn't have bought those groceries. It pushed WAMU over the edge.

Comment by Gomez

Gomez — Fri, 26 Sep 2008 12:42:15 -0800

All of it at once, Bellevue? You can verify this?

Comment by Gomez

Gomez — Fri, 26 Sep 2008 12:43:50 -0800

Posted too quick...

... this contradicts news reports that the run took place over a 10 day period.

Comment by Furcifer

Furcifer — Sat, 27 Sep 2008 13:11:48 -0800

2. However, media creates panic to sell copy.

Throughout the boom, the media bent over backwards to prop up these transparently larcenous fools. Had the media reported responsibly on the scope of the problem when it first became undeniable�say, three or four years ago�we might have averted this disaster entirely. Instead, they stood with the bankers and realtors on the side of irrational exuberance.