The other night, a woman announced to the dinner table that she'd been into her branch of Washington Mutual and that everything seemed normal. It was as if she'd taken a stroll outside the gates of Baghdad's Green Zone and hadn't heard gunfire. That constitutes the good news, I suppose, for the Seattle-based bank which is in so much trouble. Unlike some other banks, WaMu is still kicking and apparent calm, instead of panic, in its bank lobbies is about all it can ask.
WaMu hasn't been the warm, reliable, conventional local bank it once was for quite some time — it has morphed, grown and gobbled competitors with a blob-like appetite for years, unleashed during the Reagan era to become the nation's 6th largest bank. It has a minor reputation for its funny ads — not so funny any more — satirizing stuffy old bankers who are out of touch with real people. However, in this age of credit insanity and risky investments, many of those fat cats are standing on the ledge in real life, with WaMu right there beside them. No longer does the bank look like the smarter, cooler kid. WaMu greedily jumped into the subprime market and took a bath along with many others. The stock has tanked; so, too, their credit rating, and they're desperate for a buyer.
It's worth taking a minute to remember how at one time, WaMu seemed like the least likely Seattle institution to get too big for its britches and do a financial facelift. For those who grew up with it, the bank is steeped in the history and ethic of old Seattle.
It was founded after the Great Seattle Fire to help get the city back on its feet with the credit needed to rebuild. For decades, its old-school slogan was "Washington Mutual, the friend of the family," a line delivered in TV ads by a Hollywood character actor who seemed like everyone's dream grandpa — think Ben Franklin in tweed. The bank was old-fashioned and proud of it. It was so rooted in localness that the revered historian, Murray Morgan, even wrote the official company biography. Nobody called it "WaMu" then. You intoned its full name: Washington Mutual Savings Bank. Cute nicknames have replaced the Greek columns banks used to have, and they now seem as ephemeral as an eBay auction.
What cemented Seattle loyalty with the Washington Mutual brand was its school savings program. Just about every kid in the Seattle Public Schools brought a nickel, dime, or quarter to class once each week and deposited the money into a WaMu savings account via a small envelope supplied by the teacher. It was designed to instruct kids in the basics of banking and savings, and they had an exclusive arrangement. So for decades, just about every kid in the city eventually came into possession of a little nest egg socked away painlessly over the years with change from your lunch money. When I was ready to head off to state college, my account had about $300 in it, which gave me a jump on my first year's tuition.
Washington Mutual wasn't funny then. It taught the value of saving your pennies, bit by bit, for the future. We weren't taught to over-leverage our virtual (and perhaps non-existent) income to buy a monster home with a credit card during a housing bubble. Somewhere along the line, the old "friend of the family" turned into just another enabler.
UPDATE: On Sept. 25th, the federal government seized Washington Mutual and began selling off its assets in what the New York Times called the"largest bank failure in American history."