The WaMu Story



Saga of $4B


JPM Benefits








Key People Involved in the Seizure


Many people were involved directly or behind the scenes in the seizure of Washington Mutual Bank. JPMorgan CEO Jamie Dimon made an offer for WaMu in April 2008 and subsequently purchased WaMu's assets from the FDIC after the seizure. Former JPMorgan exec Rotella, WaMu's President and COO, was responsible for oversight of retail, commercial, and mortgage loans. Secretary Paulson insisted that WaMu should have sold itself after

WaMu CEO Kerry Killinger rebuffed Dimon and accepted an investment from TPG. SEC Chairman Cox refused to put WaMu on the protected “No Short” list. Killinger was forced out and replaced by Alan Fishman. OTS Director Dochow was responsible for oversight of WaMu, despite his checkered past. OTS Director Reich approved the seizure, while FDIC Chairman Bair conducted secret negotiations to sell WaMu to avoid possible depletion of their insurance fund. After the Chapter 11 filing, Williams was named President and A&M's Maciel was named CFO.

JPMorgan CEO Jamie Dimon

JPMorgan had made a takeover bid of $8 per share in company stock, or about $7 billion, for the 119-year-old Seattle, Washington-based bank. “

Wall Street Journal said that the JPMorgan offer was in stock, so if the stock were to rise, it would prove beneficial for Washington Mutual Shareholders.”

Washington Mutual Selects TPG Deal Over JPMorgan $7B Offer

Despite a serious interest expressed in Washington Mutual prior to the seizure, JPMorgan Chase did not put in a bid as Goldman Sachs attempted to sell WaMu.

WaMu Auction Gets No Bidders Yet, FT Reports

`JPMorgan is getting a steal compared with what they were going to pay,' said Scott Adams, a pension and investment analyst at the American Federation of State, County and Municipal Employees in Oakland, California, which owns WaMu shares. `It's very tragic.'''

JPMorgan had 75 people involved in the transaction and ``bid to win'' because it wanted WaMu's assets, Dimon said on an earlier conference call today. JPMorgan used its own investment bank to value the mortgages, he said. ``We don't know and we don't care'' about rival bids for WaMu, he said. “

JPMorgan Buys WaMu Bank Business as Thrift Seized

President and COO Rotella

Steve Rotella, former head of JPMorgan's residential lending business, was named WaMu's President and Chief Operating Officer on January 10, 2005. His responsibilities include oversight of retail, commercial, and mortgage businesses as well as day-to-day administration.

Rotella thinks WaMu's mortgage business needs to speed up processing of customer applications. He also thinks WaMu could do much more with small-business customers, and that its Web site could be more sales-oriented. “

Washington Mutual Confident it's on the Right Path

WaMu Offers New All-in-One Mortgate, Home Equity Loan

Private Equity Firm TPG

TPG, formerly Texas Pacific Group, is a private equity group with offices worldwide. TPG led a group of investors who purchased $7B worth of newly issued stock. TPG co-founder David Bonderman was given a seat on WaMu's board.

$7B Gives Shaky WaMu Firmer Footing

"In TPG we have found a great partner with a terrific investment track record," said Washington Mutual chief Kerry Killinger. "We are particularly pleased that David [Bonderman] will rejoin our board. He has a long history with the company - having previously served as a Washington Mutual director - and we are privileged to once again benefit from his insight and experience."

Washington Mutual's Smart-Money Rescue - Apr 8, 2008

Treasury Secretary Paulson

Nov. 9 (Bloomberg) -- U.S. Treasury Secretary Henry Paulson warned former Washington Mutual Inc. Chief Executive Officer Kerry Killinger to sell the thrift to JPMorgan Chase & Co. two months before WaMu failed, the Seattle Times reported. “

Paulson said, “You should have sold to JPMorgan Chase in the spring, and you should do so now. Things could get a lot more difficult for you,” reported the Times, citing a WaMu executive.

Bloomberg News Article: Paulson Warned Washington Mutual to Sell

WaMu CEO Killinger

Washington Mutual’s decision to oust Kerry Killinger as chief executive after 18 years could have far-reaching repercussions for the Puget Sound area, particularly if the thrift’s new chief executive decides to make sweeping changes at the embattled financial institution, according to experts. “

WaMu also announced that it has entered into an agreement or “Memorandum of Understanding” with its regulatory federal agency, the Office of Thrift Supervision (OTS), to provide a multi year business plan, forecasting its earnings, asset quality and business segment performance. “

CEO Killinger out, Fishman in at Washington Mutual

WaMu CEO Fishman

Fishman was formally announced this past Monday as WaMu's first new CEO in nearly two decades. He succeeded Kerry Killinger, who built WaMu from a Puget Sound-centered thrift into a nationwide financial powerhouse. “ He served as Washington Mutual's CEO for less than one month.

New WaMu CEO Called a Savvy, Scrappy Exec

SEC Chairman Cox

WaMu CEO Killinger sent a fax to Chairman Cox requesting that WaMu be added to the proposed emergency order to prohibit short selling in certain securities. Despite having been faxed at 1:30 pm Jul 17 2008, it was received more than five days later by the Chairman's Correspondence Unit at Jul 22 2008 at 8:40 pm. WaMu was not added to the list.

SEC Document - Fax Requesting Inclusion in "No Short" List

Christopher Cox stepped down as U.S. Securities and Exchange Commission chairman, leaving behind a demoralized agency “

Cox Quits at SEC, Leaves Schapiro to Restore Clout

OTS West Regional Director Dochow

Dochow was the top supervisory official at the agency in the late 1980s, during the savings and loan crisis. He was demoted in March 1990 and transferred to the OTS office in Indianapolis, but later rose through the agency again to become the head of the Western region — where numerous large thrifts were located. “

Seattle-based thrift Washington Mutual Inc. in September became the biggest bank to collapse in U.S. history, with around $307 billion in assets. It was acquired by JPMorgan Chase & Co. for $1.9 billion. “

Regulator in IndyMac and Washington Mutual Cases Gets Reassigned

Director Dochow quietly retired a short time after having been reassigned.

OTS Director and FDIC Board Member Reich

Director Reich authorized OTS West Regional Director Dochow to seize WaMu, appointing the FDIC as receiver of the 'failed' bank. Director Reich stated that WaMu “is likely to be unable to pay its obligations or meet its depositors' demands in the normal course of business,” despite an OTS Fact Sheet stating that WMB “met the well-capitalized standards through the date of receivership.” Director Reich left his position at the OTS on February 27, 2009.

Grounds For Appointment of FDIC as Receiver

OTS Fact Sheet - WMB Met the Well-Capitalized Standards Through the Date of Receivership

OTS 08-046 – Washington Mutual Acquired by JPMorgan Chase

OTS 09-007 - OTS Director Reich Sets Departure Date

In the debate over how aggressive regulators should be in examining troubled banks, it has usually been the FDIC against all comers. The other banking regulators tend to be more concerned about avoiding the disruption that comes from a bank failure than the FDIC, which has its insurance fund to protect.

"Tension between the FDIC and the OTS and the OCC [the Office of the Comptroller of the Currency] and for that matter the Federal Reserve has been there forever," says Ellen Seidman, a former OTS director.”

IndyMac Exposes Rift Between Regulators

FDIC Chairman Bair

By the end of 2009, about 100 U.S. banks with collective assets of more than $800 billion will fail, predicts Christopher Whalen, managing director of Institutional Risk Analytics, a Torrance, California-based firm that sells its analysis of FDIC data to investors. “

It won't take many more failures before the FDIC itself runs out of money. The agency had $45.2 billion in its coffers as of June 30, far short of the $200 billion Whalen says it will need to pay claims by the end of next year. “

Morning, 09/25: Bloomberg: FDIC May Need $150 Billion Bailout as More Banks Fail

Afternoon 09/25: Open Letter to Bloomberg News about FDIC Deposit Insurance Fund

Evening 09/25: JPMorgan Chase Acquires Banking Operations of Washington Mutual

Chairman Bair told reporters in a conference call after the seizure, “This institution was a big question mark about the health of the deposit fund. It was unique in its size and exposure to higher risk mortgages and the distressed housing market. This is the big one that everybody was worried about.”

Fed Takes Over WaMu in Largest Bank Failure in American History

Federal regulators wanted to avoid a collapse that would severely strain the nation's deposit-insurance system. The big-name investors who'd pumped billions into WaMu just months ago sought to salvage something from their ill-timed intervention. And the half-dozen banks hovering over WaMu saw a grand opportunity but wanted to pay as little as possible.”

Before it was over, regulators would hold a secret auction behind the backs of WaMu management and seal a deal the company was powerless to oppose.”

WaMu's Desperate Last Days

Regulators also hustled to shut down WaMu faster than they have with other failing banks this year. Normally, when the FDIC and another regulatory agency are preparing to take over a bank, the FDIC will solicit bids for the bank on Tuesday or Wednesday and then seize it on Friday evening, after the bank's branches have closed for the weekend. Sometimes the FDIC will even wait another week to step in. Every bank to fail this year has been shut down on a Friday. The FDIC steps in on Fridays to ensure a smooth transition so that customers hardly notice the handover.”

In WaMu's case, the FDIC set a Wednesday evening deadline for interested parties to submit their offers for various parts of WaMu. Twenty-four hours later, they were already preparing to seize the bank. Earlier this month, Treasury Secretary Henry Paulson made it clear to WaMu that the company should have accepted the takeover deal JPMorgan had offered earlier this year, according to a person close to WaMu.”

WaMu is Seized, Sold Off to JPMorgan

WaMu President Williams

A U.S. bankruptcy court has granted a request from Washington Mutual (WAMUQ.PK) to appoint Robert Williams as president of the bankrupt savings and loan. “

'Williams will be paid a salary of $175,000 for the four month "critical period" starting November 13, 2008, through March 12, 2009, and a monthly salary of $75,000 through the "transition period" starting March 13, 2009, through November 13, 2009, according to court papers.'

'In the "consulting period" starting November 14, 2009 through March 14, 2010, Williams will get a salary of $50,000 a month, the filing said.'

Bankruptcy Court Approves Williams as WaMu President

WaMu CFO Maciel

Maciel will serve as Washington Mutual's designated principal financial officer and principal accounting officer for Securities and Exchange Commission reporting purposes. Under his employment deal, Maciel he will continue to work for turnaround firm Alvarez & Marsal North America, and will not receive any compensation directly from Washington Mutual.” Mr. Maciel is a senior director in A&M's Turnaround and Restructuring department.

Turnaround Expert John Maciel Named WaMu CFO; Williams as President