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Monday, September 15, 2008

Why You Might Want to Stay at WaMu

posted by on September 15 at 11:17 AM

… despite it all:

1. I am no financial expert. I’m just someone with a checking account at WaMu, struggling to figure out what I should do, and just how bad WaMu’s situation is. They might be in better shape than many are asserting right now.

2. I like WaMu as a customer. Low fees, no minimums and a genuinely friendly staff all are big pluses. I left BoA for Washington Mutual because of this. I’d hate to go back.

3. There are a ton of branches with decent hours and ATMs everywhere. Even in the Midwest and East coast.

4. You will get your money back, as a depositor. Eventually. And provided you have less than $100,000 in any single account. Even if this requires the FDIC to borrow money from the Federal Treasury, and in turn the Fed to borrow via Treasury Bonds.

5. The FDIC is not FEMA, even under W. This should be a very competent Federal agency. And they’ve had practice, with the collapse of IndyMac.

About the only bank I’ve liked better is TCF bank—and that is only in the Midwest.

So, at the very least, a bit of thanks to the generally excellent tellers I’ve had at WaMu over the years. May you not suffer for the idiocy of those, right now accepting golden parachutes, above you.

RSS icon Comments



Great service, lots of new branches popping up all over the place.

Consider it.

Posted by palamedes | September 15, 2008 11:30 AM

Seriously. Credit unions all the way. If you're a member at one, you can usually bank at any of them.

Posted by brinsonian | September 15, 2008 11:36 AM

Also, my dad works there.

I'm leaving my money in WaMu because it's good for the Seattle economy if it doesn't collapse. I also have a Bank of America account that will tide me over if WaMu does fold and I have to wait for the feds to reimburse me.

Posted by annie | September 15, 2008 11:39 AM

Fawk yeah - credit unions. Stay away from BofA and anyone who works there for more than 1 year.

Posted by Fairy Peril | September 15, 2008 11:42 AM
You will get your money back, as a depositor. Eventually. And provided you have less than $100,000 in any single account.

Furthermore, if for some reason that guarantee couldn't be fulfilled, we'd be deeply screwed and keeping cash at any other bank probably won't save you anyway.

Posted by tsm | September 15, 2008 11:44 AM

I appear to be missing all these mysterious bullets that supposedly fly from BoA at its customers. I suppose I should call BoA customer service and ask them why I'm so special.

Meanwhile, WaMu's CSRs lied to me, dumped my accounts (over six months apart, because they are that fucking unorganized), and their tellers tried (in vain -- those extra clicks and keystrokes are noticeable when you're in there twice a month, guys) to hide from me the fact that these actions were going to occur.

Meanwhile BoA gave me an account when no one else would (after I'd had some 2002 financial and employment difficulties (like everyone else in the country)).

BoA's east coast penetration is much > WaMu's, btw.

Posted by K | September 15, 2008 11:46 AM

No shit about the last part. The new CEO gets 20 million in pay & incentives, and what do I get? Most likely a swift kick in the ass and 30 days of health benefits. I don't even want to be here, but I've pigeon-holed myself into the financial sector and can't get anyone to look at me for an entry-level position in engineering or science. /crys more, is a noob.

Posted by thanks | September 15, 2008 11:53 AM

Disclaimer: I am not a financial professional or something, just a geek who spends way too much time reading and thinking about this stuff.

If there's one thing I really think you can count on right now, it's the FDIC guarantee. They don't have enough money to take care of the banks that are going to fail, but they'll get backstopped by the Fed, even if it requires printing money until things "go away" Zimbabwe-style.

Why? There are a lot of failures that we can handle, but the second some random person gets told they can't have the $1,000 in checking/savings that they need to buy groceries (and I mean, can't -ever-, not just can't now) there's going to be a nationwide run on banks that's going to make 1929 look *easy*.

People believe in the FDIC, and it allows them to not put even more stress on a system that's in a lot of trouble. If that trust fails, it's all over.

Posted by Cow | September 15, 2008 11:55 AM

If you must use a bank, use one that banks the viking way.

Posted by elenchos | September 15, 2008 11:56 AM

"You will get your money back, as a depositor. Eventually. And provided you have less than $100,000 in any single account."

This is misleading -- the number of accounts is irrelevant. FDIC insurance is $100,000 per DEPOSITOR, not per account. Splitting your $200,000 checking account into a $100,000 CD and a $100,000 savings account at the same bank isn't going to protect you.

Posted by David | September 15, 2008 12:03 PM

"May you not suffer for the idiocy of those, right now accepting golden parachutes, above you."

Does anyone else get nervous when scientists asking for miracles?

Posted by RL | September 15, 2008 12:06 PM

I agree - do with a credit union. They're much more conservative in their lending and on solid footing. Plus, then you have a stake in ownership.

Example: WaMu approved me off the bat for a $25k limit on a new credit card; First Tech approved me for a $2k limit. (I need something in between those two, BTW, for work expenses.)

Posted by ioWAndy | September 15, 2008 12:07 PM

"eventually" is the key word that Jonathan used. There is a chance that a failure as large as Wamu will take time for the FDIC to work out. Indymac blew a huge hole in their reserves. If you rely 100% on your wamu account (e.g. you dont keep cash on hand, and don't have a credit card that you could use for a few days to a few weeks) then I would suggest finding a healthier bank.

Posted by happy renter | September 15, 2008 12:13 PM

For god's sake, take any money at BoA and move it to a credit union such as Watermark. I want to cry tears of joy every time I go into my credit union and am served quickly, kindly and ably, with interest, fast check deposit acknowledgment, and no fees, by humans. Watermark gives you 8% on the first $500 in checking and $500 in savings. They are also insured to $250,000 instead of $100,000.

Interestingly, when I was in the middle of a trip last fall (to see Terry Pratchett speak in darkest Pennsylvania), I logged on to my Internet bank Sunday morning for taxi cash only to see a notice that the FDIC had taken over my bank and would be moving my funds to ING. (ING is currently still barely "performing," according to the website The FDIC rules are here: .)

Posted by Amelia | September 15, 2008 12:15 PM

I'd get my money out, now. Yeah, the FDIC will eventually get your money back. But why expose yourself to the risk of fees and other associated bullshit in the meantime?

If you have direct deposit of your paycheck, what happens to it when WAMU goes tits up? How about automatic payment of student loans, mortgage or insurance?

Realistically, you're looking at the possibility of living off your credit card for a couple of months, paying late payment fees, and generally going through a big hassle.

When other small banks have gone under, another, larger bank takes over the depositors because it's a nice, manageable, profitable business. But WAMU is so large, who knows what the mechanics of the takeover will be?

Posted by mistermix | September 15, 2008 12:19 PM

BECU! All the way. You'll never find yourself in this situation with a credit union; and they offer all the perks you like about WaMU, but with even better rates.

Posted by Joe | September 15, 2008 12:21 PM

Thanks for posting a counter point.

Seriously people, if WAMU goes down and everyone loses their $, and the FDIC fails to bail people out, there will be a shitstorm across the entire financial system. The FDIC failing would mean people at every other bank would also pull their $, and then those banks would also fail, and then we're in the great depression pt 2........

Telling people to pull $ out of WAMU only helps make this scenario more likely.

Posted by mo | September 15, 2008 12:48 PM

Why do you think credit unions are safer than a large bank?

Posted by aaa | September 15, 2008 12:51 PM

oh, and SKF ftw!

Posted by happy renter | September 15, 2008 12:53 PM

I second Amelia and others who suggest using a credit union instead of a bank.

Before I moved across the country to Washington, I opened an account with Bank of America (then NationsBank) thinking that I'd be able to use it here and back home. As it turned out, that national bank had a very regional ATM system, and there were several things -- including making deposits -- that I could not do at a BofA ATM here.

I then moved to Washington Mutual, wanting to support a local bank and not knowing just how national they were. Several years ago, I showed up at WaMu's downtown branch along with many other people there for the same reason and moved all my money out because of WAMU's local anti-public-transit measures (this mass exodus was organized by someone at The Stranger; Josh Feit, IIRC).

At that time,I started using Watermark Credit Union. I've been happy with them to this day. Every single time I interact with their phone support or walk-up-window clerks, I come away happier. My experience has been that people there know what they're doing, are exceedingly helpful, and do not hate their jobs. Maybe they're just good actors, but I don't think so. Because of their shared networks, I can do most anything at branches of other credit unions that I can do at my own, so I often go into a nearby BECU branch instead of heading downtown to Watermark. There's no fee for using Watermark's or participating credit union's ATMs.

Though I ended up with my credit union mostly by chance, I now see them as the co-ops of banking and am proud to opt-out of the traditional banking system.

Posted by Phil M | September 15, 2008 1:08 PM

I bought SKF a few days ago at 120, and I can't wait to cash it out at the opening bell. I'll take 10% in a few days any time.

Posted by Bellevue Ave | September 15, 2008 1:10 PM

Seems like Obama could point out that McCain is basically opposed to the New Deal. Because the existence of the FDIC is a MAJOR reason that our economy is not collapsing right now. Republican economics is a suicidal ideology completely out of touch with reality.

Obama could even point out that Republicans's anti-government crap is tantamount to wanting to roll back the 20th century. I can dream...

Posted by Trevor | September 15, 2008 1:16 PM

Trevor to be fair much of the reason our country is in the situation right now is because of New Deal programs not being updated to reflect a changing reality or not being treated like they use actual government resources.

the government is neccesary but it's created a safety net that is too small and misplaced.

Posted by Bellevue Ave | September 15, 2008 1:21 PM

TREVOR - is FDR on the ticket?

10 per cent of voters know the history - nice idea - won't work.

Yes, to above, programs from 50-70 years ago are just not connected to modern needs. Good point.

Posted by Al | September 15, 2008 1:43 PM

Bellevue Ave and Al--

Are you seriously going to claim that the (defacto in 1998, de jure in 1999 with the Financial Services Modernization Act) dismantling of the Glass-Steagall act had nothing to do with this present crisis?

I, and people smarter than me on this topic, place the blame almost entirely on the removal of this key Depression era regulation for leading us all to doom.

And, I wish FDR was on the ticket. The fact that John "Keating Five" McCain and Sarah "I can see Russia from my house" Palin are leading right now tells me we're fucked, more than anything else.

Posted by Jonathan Golob | September 15, 2008 1:54 PM

The key thing that has me worried is "eventually." I rely on WaMu to pay the bills. I can't afford for that account to be inaccessible for a single day. I know a lot of folks are saying, don't worry, if the FDIC takes over, it will be fine, but I'd rather not be passive and find out. My money is moving elsewhere.

Sorry if that sounds like a "run on the bank" but I'd rather be first in line with that run, rather than last. It's our money; we should do what we can to protect it.

Posted by Webomatica | September 15, 2008 2:00 PM

Jonathan @ 25:

If by "the present crisis" you mean "the fact that I have to worry about my demand deposit institution (e.g. WaMu) going under because its MBS investments went south," then Glass-Steagall would probably have prevented it.

If by "the present crisis" you mean "massive contraction of credit markets as MBS investments went south," then there is no reason to believe Glass-Steagall would have helped. MBSs could deliver mortgages to more people at lower interest rates than traditional banks, so if Glass-Steagall had been in effect, people would just have got their MBS-funded mortgages from investment banks instead of demand deposit banks. There would still have been a housing bubble, still a collapse of the MBS market when that housing bubble popped, and still a massive contraction of credit markets as leveraged institutions collapsed and fear of contaigon spread. It just wouldn't be demand deposit institutions collapsing.

Posted by David Wright | September 15, 2008 2:28 PM

webomatica, you're just as guilty of following the herd at the peril of other people as Wall Street traders.

Posted by Bellevue Ave | September 15, 2008 2:47 PM

DW puts it down.

Posted by Bellevue Ave | September 15, 2008 2:49 PM

@27, I don't believe you. I think that fewer mortgages WOULD, in fact, have been given out, and the ones that would have been told "no" would have been the high-risk ones that are contributing to this meltdown.

Posted by Fnarf | September 15, 2008 3:06 PM

Fnarf @ 30:

I would argue that most sub-prime mortgages were issued by non-banks (e.g. Countrywide) anyway, and that most people weren't limiting themselves to their local bank when shopping for a mortgage. (When I last got a mortgage, in 2003, I hired a mortgage broker, who checked a large number of bank and non-bank mortgage providers on my behalf.)

But this is a speculative argument. Perhaps fewer people would have taken out mortgages they shouldn't have, if they had had to go to Countrywide instead of WaMu. Maybe even enough fewer. Less speculatively, what I think you will have to grant is that nothing in Glass-Steagall would have legally prevented the scenario I sketched from unfolding.

Posted by David Wright | September 15, 2008 3:34 PM

It's not subprime. It's Alt-A.

Much scarier and WAY more widespread...

Posted by Pondscum | September 15, 2008 4:31 PM

Totally credit unions.

They tend to hold local assets so they don't outsource mortgages, and being tax exempt your money doesn't help finance the War Of Stupidity (aka The Iraq War).

Posted by Will in Seattle | September 16, 2008 12:26 AM

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