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The Lost Bank: The Story of Washington Mutual-The Biggest Bank Failure in American History
Kirsten Grind (Goodreads Author)
really liked it 4.00 · Rating details · 586 ratings · 80 reviews
Based on reporting for which the author was named a finalist for the Pulitzer Prize and the Gerald Loeb Award, this book traces the rise and spectacular fall of Washington Mutual.
During the most dizzying days of the financial crisis, Washington Mutual, a bank with hundreds of billions of dollars in its coffers, suffered a crippling bank run. The story of its final, brutal Based on reporting for which the author was named a finalist for the Pulitzer Prize and the Gerald Loeb Award, this book traces the rise and spectacular fall of Washington Mutual.
During the most dizzying days of the financial crisis, Washington Mutual, a bank with hundreds of billions of dollars in its coffers, suffered a crippling bank run. The story of its final, brutal collapse in the autumn of 2008, and its controversial sale to JPMorgan Chase, is an astonishing account of how one bank lost itself to greed and mismanagement, and how the entire financial industry—and even the entire country— lost its way as well.
Kirsten Grind's The Lost Bank is a magisterial and gripping account of these events, tracing the cultural shifts, the cockamamie financial engineering, and the hubris and avarice that made this incredible story possible. The men and women who become the central players in this tragedy— the regulators and the bankers, the home buyers and the lenders, the number crunchers and the shareholders—are heroes and villains, perpetrators and victims, often switching roles with one another as the drama unfolds.
As a reporter at the time for the Puget Sound Business Journal, Grind covered a story set far from the epicenters of finance and media. It happened largely in places such as the suburban homes of central California and the office buildings of Seattle, but Grind covered the story from the beginning, and the clarity and persistence of her reporting earned her many awards, including being named a finalist for the Pulitzer Prize and the Gerald Loeb Award. She takes readers into boardrooms and bedrooms, revealing the power struggles that pitted regulators at the Office of Thrift Supervision and the FDIC against one another and the predatory negotiations of investment bankers and lawyers who enriched themselves during the bank's rise and then devoured the decimated bank in its final days.
Written as compellingly as the finest fiction, The Lost Bank makes it clear that the collapse of Washington Mutual was not just the largest bank failure in American history. It is a story of talismanic qualities, reflecting the incredible rise and the precipitous collapse of not only an institution but of trust, fortunes, and the marketplaces for risk across the world. ...more
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Published June 12th 2012 by Simon Schuster
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Start your review of The Lost Bank: The Story of Washington Mutual-The Biggest Bank Failure in American History
Dec 28, 2019 Kathy rated it really liked it
Amazing how arrogant these people were
Jun 06, 2012 Chad rated it it was amazing
Shelves: business-leadership, economics, financial-industry
Being a ten year veteran of WaMu and having spoken with many people in many different parts of the bank since it's failure, having followed much of what has been written about the events and my own experiences, I have to say that this book tracks very closely with what I was able to piece together as to the eventual failure of WaMu. In this, it appears that it is very reliable and accurate with only very minor nuances that maybe were not fully fleshed out or understood. Given my knowledge of the Being a ten year veteran of WaMu and having spoken with many people in many different parts of the bank since it's failure, having followed much of what has been written about the events and my own experiences, I have to say that this book tracks very closely with what I was able to piece together as to the eventual failure of WaMu. In this, it appears that it is very reliable and accurate with only very minor nuances that maybe were not fully fleshed out or understood. Given my knowledge of the events, I was not sure how much 'new' information I would find but I certainly did. There were times that things were made more complete of a picture for me (as the account of the daily final run on the bank), things that gave insight into the higher levels of the company (such as the lack of leadership fortitude of Killinger), and things that were down right surprising (such as the deal that almost was made for Countrywide and the discussion of buying New Century). Overall, this is a great resource for someone that is interested in knowing about the death of WaMu or getting another look into what became the Credit Crisis and eventually the Great Recession.
It is clear that ultimately the fate of WaMu was in the hands of the board and management of WaMu. The coupling of errors in judgement (an ever increasing appetite for riskier loans even in the face of a deteriorating housing market) and failures of leadership, management, and oversight (as is the case with an out of control Home Lending Group) eventually positioned the bank to the position that it was in danger. It also seems though that even with the events that unfolded, the seizure of WaMu did not have to happen or at least not in the timing that it did. This seems to me to be because of numerous errors and agendas that were at play, from a CEO who did not provide adequate leadership, to a weak OTS, an incompetent and aggressive FDIC, undermining by a cut throat group of executives at Chase, and generally a bias of those in decision making circles that WaMu was not worth saving (largely due to the fact that WaMu was a consumer based company and not entangled in all of the exotic products that fueled the bubble much more so than Option ARMs ever could on their own- e.g. MBS, COD, etc). On a personal note, I remember being at a State of the Group meeting and listening to Rotella outline how we were going to focus more on 'higher margin loans' (i.e. sub prime, equity, etc). This was in early 2006, and at the time I was thinking "That does not make sense, the housing market is slowing and declining" but eventually I thought "Well, they are smart people and know more than I do". This forever will be a lesson to me- trust myself and never think others are so smart that it cancels my own good sense and judgement.
It is amazing how one little public letter by a Senator can set in motion so much devastation. Sure, one could argue that the devastation would have happened at some point because of the poor decisions and execution made in lending practices and not to mention the exotic products fueling the housing boom but in banking, one can not underestimate the importance of confidence. The lack of which can destroy banks. Schumer sent in motion the failure of Indymac. Most likely Indymac would have failed but not when it did and not in such a horrific fashion, if not for Schumer's letter. This in turn not only put pressure on WaMu in the first run on deposits but it also did two important things: 1) Put in the mind of deposit holders the long lines and frustration of account holders unable to access their money and 2) sending the media off in a frenzy of constantly asking 'who is next to fail'? The eyes of the media landed on WaMu (at WaMu's own fault) and that energized account holders to panic and withdraw money that was FDIC insured. As the previous failures of Indymac, Bear Stearns, and a host of smaller mortgage lenders increased the problems that lead to the Credit Crisis, so did the failure of WaMu increase it further leading to the failure of Lehman Brothers and eventually a near complete meltdown of the world's financial markets. The jumbled and mishandling of these events (having to do with WaMu and others) is amazing. To hear people like Bair thing that they did well and the WaMu seizure was not even a 'blip' is mind blowing in how they fail to see the big picture.
I was struck by how inept Killinger was to manage crisis. We are given a picture of a person who is completely unable to accept and act on things that need to be confronted and changed. It is too bad that the first real crisis that severely required a CEO able to navigate in crisis was one of the biggest the company ever saw and likely due to his inability to lead, the company paid the ultimate price. However, it is clear that the failure of a strong board acting as trustees of the company enabled the management team to increasingly bumble through acquisitions, increasing consumption of bad loans and eventually waiting much too late to make a change at the top. One has to wonder what Fishman would have been able to do if he had been brought in much earlier.
There is a story here that if you are not a WaMulian, you could miss. It is that where the company was built on such a strong foundation and inspired such heartfelt loyalty that it pains ex-employees to think of the failure even today (how many employees of Indymac or Lehman Brothers do you think actually cared about the company and were sad to see the companies demise versus their own career/financial situations?). The 'old guard' was moved out and the new executives were brought in. Pretty much everyone at all corners of the bank could feel this tension and could feel the change of the culture. Simply put, a lot of these new executives just simply were not good organizational fits to what WaMu was. They further corrupted the company as it was lead down a path of eventual extinction. One very graphic way to see this is how none of these 'newer' executives contributed to the Alumni fund when asked. That just does not seem to fit the brand attributes of 'fair, caring and human' that was the lifeblood of the company.
The one area that I think Grind has left unanswered and only lightly touches on is the roles of Chase executives in undermining WaMu. In several occasions she seems to hint at possible unethical and perhaps even criminal activity but backs away with footnotes saying that nothing was proven. I think that there is enough that has not been answered for an investigative journalist to further dig into this story. It is, in my view, unacceptable with how much circumstantial evidence there is about Chase's involvement (such as remembering going to a cab to a meeting but having no memory of the meeting at all) and the FDIC's absolute refusal to show any amount of transparency (as providing the heavily redacted documentations). It just seems that too many in the 'club' have too much interest in not letting people really know what they did and how they did it.
Overall, it is a good and easy read. It is a book that I would recommend.
Aug 12, 2015 Benjamin Barton rated it it was ok
Mrs. Grind was originally on the right track with her research back in the ealy days of the WAMU saga but somewhere along the way, she forgot to include all the 'juicy' bits of the story, i.e. corporate espionage and corrupt collusion between Jamie Dimon and Sheila Bair leading up to the takedown of WAMU by the FDIC and subsequent overnight firesale single bidder auction of WAMU assets to JPM for fractions of a penny on the dollar. Washington Mutual was a solivent bank at the time it was taken Mrs. Grind was originally on the right track with her research back in the ealy days of the WAMU saga but somewhere along the way, she forgot to include all the 'juicy' bits of the story, i.e. corporate espionage and corrupt collusion between Jamie Dimon and Sheila Bair leading up to the takedown of WAMU by the FDIC and subsequent overnight firesale single bidder auction of WAMU assets to JPM for fractions of a penny on the dollar. Washington Mutual was a solivent bank at the time it was taken down and Washington needed a fall guy (mainstreet bank) to bite the dust in order to unleash TARP. Conveniently, Jamie Dimon needed to expand Chase's branches to the west coast via "Project West" in addition to addressing JPMs own troubled balance sheet at the time. Jump forward to present date and watch as assets are slowly rolled out of obscure places to be reflected on JPM's balance sheet like the recent $30 billion value "discovered" in the apartment loans that were part of WAMU's portfolio. Tens if not hundreds of billions more to be discovered that were taken from WAMU shareholders in an ongoing story of fraud and corruption of the highest order. Wait, watch and see. This book is only a preface to the complete story that is still unfolding. ...more
Aug 15, 2013 Kathleen (itpdx) rated it really liked it
Shelves: lwv-book-group, non-fiction
Often when there is a complex news story that arrives in bits and pieces and is difficult to understand, I say that I will wait for the book to come out. This book may not be THE book about the financial crisis/recession that started in 2008 but it is an excellent introduction. Grind has put together an understandable and compelling account of the failure of Washington Mutual (WaMu) Bank. She paints vivid pictures of some of the personalities of involved, as well as the corporate culture of the Often when there is a complex news story that arrives in bits and pieces and is difficult to understand, I say that I will wait for the book to come out. This book may not be THE book about the financial crisis/recession that started in 2008 but it is an excellent introduction. Grind has put together an understandable and compelling account of the failure of Washington Mutual (WaMu) Bank. She paints vivid pictures of some of the personalities of involved, as well as the corporate culture of the bank.
And she leaves the reader to puzzle out what toxic blend of who's ego, greed, or incompetence was the catalyst and why nobody seemed to able to right the ship.
Nov 03, 2015 Deb rated it it was amazing
Tragic tale, particularly when you knew the players. Great insight to what was going on behind the scenes in Washington, but so sad see all the components that led to the dominos falling and the downfall of a great company.....
Jun 04, 2018 Suresh Ramaswamy rated it really liked it · review of another edition
Washington Mutual was the biggest bank failure in the U.S. With 3,600 branches and 43,000 employees spread across the nation, US$ 128 billions in deposits and assets of US$ 310 billions, there just was no reason why the bank should not have been bailed out and allowed to fail. It appears that the U.S. Government wanted to do away with community banks, and hence this decision. By the end of the financial crisis of 2008 more than 250 community banks, big and small, had been allowed to fail inspite Washington Mutual was the biggest bank failure in the U.S. With 3,600 branches and 43,000 employees spread across the nation, US$ 128 billions in deposits and assets of US$ 310 billions, there just was no reason why the bank should not have been bailed out and allowed to fail. It appears that the U.S. Government wanted to do away with community banks, and hence this decision. By the end of the financial crisis of 2008 more than 250 community banks, big and small, had been allowed to fail inspite of the US$ 700 billion bail out package.
In her book "The Lost Bank" Kristen Grind has wonderfully recounted and covered the failure of WaMu. The major cause for the failure was, of course, unbridled greed for more profits and cupidity of the top executives in believing that loans could be made without verifying the background and repayment capacity of the borrower (subprime loans).
Added to this scenario, build a ponzi scheme of new mortgages against the same property and the proceeds used to cancel the old outstandings.
That WaMu not only continued to sell mortgages through the same discredited advisor (whose 50% and 80% advances were found to be to fraudulent borrowers) but also rewarded him as the most successful advisor is beyond belief. Such an organization deserves to fail.
One of the most culpable person was the CEO Kerry Killinger who was at the helm of affairs of WaMu for seventeen years from 1991 to 2008. His removal as CEO in September 2008 was too little too late. Kerry Killinger was either too naive or too careless about the health of the advances made by WaMu. Probably had Killlinger been ousted in 2006 or early 2007, the story of WaMu may have been different. Had Fishman been appointed, maybe WaMu could have been turned around.
That said, the role of Sheila Bair, the Chairman of FDIC, is also suspect. What she saw in Jamie Dimon of JP Morgan Chase whom she favoured to take over WaMu remains a mystery. Even before Fishman could complete his private auction, FDIC had started her own negotiations with Jamie Dimon. The OTS which was the primary regulator of WaMu objected to certain actions of Sheila Bair. OTS Director Reich felt that if FDIC shopped around for sale of WaMu, it would send out signals that the bank would fail and could be acquired cheaply from the regulators.
Later, this would prove to be another point of contention between the two agencies. The FDIC would say that shopping around a bank that is about to fail and be sold on the cheap would not dissuade interested buyers from bidding on it on the open market. One FDIC official described this statement as "an urban legend." The OTS would argue, in effect, that there's no way companies would buy something more expensive now when they knew they could get it cheaper later.
In later interviews with WaMu's bankruptcy examiner, the FDIC disagreed with JPMorgan's recollection of the call, saying Bair encouraged JPMorgan to buy WaMu on the open market, not after a failure.
There is speculation as to whether JPMorgan and Santander agreed not to compete with each other when bidding on U.S. banks during the financial crisis. The speculation arises largely from a June 2008 e-mail sent by a JPMorgan executive, summarizing a meeting between Dimon and Santander's chairman. WaMu, Wachovia, Suntrust, and PNC were among the possible acquisitions discussed by the two executives. "We covered them in detail and Jamie reckoned that these are opportunities in which JPMorgan would also be interested," the e-mail read. "It is important to have an open dialogue with them as Santander would not pursue any one of these opportunities if JPMorgan were to do the same (can't compete on price with JPMorgan for an acquisition in the USA). But Santander would probably hire JPMorgan as an advisor if we are not going after them." A later report by the independent examiner hired in the bankruptcy of WaMu's holding company dismissed claims of bid-rigging between the two companies.
In a later interview with WaMu's bankruptcy examiner, Scharf disagreed with this recollection of the meeting. He recalled that Wigand was much more definitive, telling executives that the agency planned to close WaMu on Friday, September 26, and bids would be due September 24. Scharf's board presentation from September 19, in which he discussed a purchase of WaMu from the FDIC, also reflects a September 26 closure date.
Thus overall, the role of JP Morgan Chase and FDIC is highly suspect and the dealings were not above board.
The book is extremely well written and readable. Informative and riveting. A must read for persons interested in the financial crisis of 2008.
Dec 18, 2017 Sallie rated it liked it
This book is not for everyone, but was extremely interesting to me because for eight years I worked for one of Washington Mutual's subsidiaries. The decision of WaMu to sell off all ancillary businesses (I changed jobs, following the sold-off subsidiary under new ownership) was prelude to the giant series of missteps resulting in WaMu being the largest bank EVER to fail.
The book is a well-written narrative of the gradual shift of priorities of a highly regarded bank, and the discomfort with This book is not for everyone, but was extremely interesting to me because for eight years I worked for one of Washington Mutual's subsidiaries. The decision of WaMu to sell off all ancillary businesses (I changed jobs, following the sold-off subsidiary under new ownership) was prelude to the giant series of missteps resulting in WaMu being the largest bank EVER to fail.
The book is a well-written narrative of the gradual shift of priorities of a highly regarded bank, and the discomfort with which many changes were met by senior executives who had reformed a struggling bank in the 1980s. The bank's ultimate downward spiral (ending in 2008) could simplistically be blamed entirely on greed (and it certainly played a major part), but it had a lot to do with the ascendancy to POWER and its addictive nature that takes over the rational side of the addict.
Having shared many an elevator ride with the bank's smiling, optimistic executives in those eight years I worked there, I had a nodding acquaintance with those leaders and completely respected the integrity of all. Kirsten Grind's depiction of the gradual change in the hierarchy is chilling. Many of the good people at the top left, heartsick . . . one by one. It's a very sad story. ...more
Jun 17, 2018 Johns rated it it was amazing
Shelves: amer-history
A thorough history of a preventable financial tragedy. In my opinion it's a classic case of a sleepy board of directors who had little to no working knowledge about operating a large savings bank. The board of WaMu should have reigned in a beguiling CEO long before the FDIC seized the failing institution. The makeup of the WaMu board was that of a typical Puget Sound oversight operation: cozy patricians from other Seattle-based companies who collected their director's fees and did nothing to A thorough history of a preventable financial tragedy. In my opinion it's a classic case of a sleepy board of directors who had little to no working knowledge about operating a large savings bank. The board of WaMu should have reigned in a beguiling CEO long before the FDIC seized the failing institution. The makeup of the WaMu board was that of a typical Puget Sound oversight operation: cozy patricians from other Seattle-based companies who collected their director's fees and did nothing to stop the approaching wreck. (Full disclosure: for several decades we were Seattle-area residents who banked exclusively at WaMu until 2001. Several of our former homes were financed by the bank. Thankfully, we never were lured into buying the stock.) ...more
Dec 19, 2016 Chris Ramirez rated it it was amazing
Good book. I always love to hear the inside stories of these colossal business failures. After reading the book it seems pretty obvious to me that there is an east coast bias when it comes to banking. You can't help but feel like Paulson was taking care of his buddies at AIG, Citi, and Meryl but let WAMU eat it. I hate when the government gets to pick the winners and the losers. Either let them all fail or bail them all out. What it really proves to me is that any institution could fail and the Good book. I always love to hear the inside stories of these colossal business failures. After reading the book it seems pretty obvious to me that there is an east coast bias when it comes to banking. You can't help but feel like Paulson was taking care of his buddies at AIG, Citi, and Meryl but let WAMU eat it. I hate when the government gets to pick the winners and the losers. Either let them all fail or bail them all out. What it really proves to me is that any institution could fail and the economy recover its just that some CEOs are better at selling the opposite idea. ...more
Aug 12, 2018 Ana rated it really liked it
Shelves: nonfiction
Working on bank resolution plans got me interested in actual bank failures of larger banks and how those events influence FDIC policy. But even if you don't work in this space, this is a well-told Tale of the personalities and model that lead to its enormous growth and the human failings that lead to its downfall.
Apr 23, 2019 Definitelydennis rated it it was amazing
A fantastic account of what led to Washington Mutual failure and a great illustration of the 2008 financial crises.
Full of first-hand accounts, fantastically written, and engaging from start to finish.
Dec 22, 2019 Josh rated it really liked it · review of another edition
Pretty solid history of the collapse of Washington Mutual.
Good overview of how culture matters.
Would recommend for all finance and banking students.
Mar 25, 2019 Josh rated it it was amazing
I found this book enlightening as a case study on building culture and what can break good team culture.
Jun 13, 2018 Fernando rated it really liked it
Shelves: audiobook
Great book about another casualty of the last financial crisis.
Sep 15, 2019 Gretchen Elhassani rated it it was amazing
This was great. Very accessible history of the bank collapse.
Apr 03, 2018 Anuja rated it really liked it
It is a fascinating insight into the rise and fall of a financial institution. The first half moved at a past pace, and the last half dragged just as much. Worth a read, nonetheless.
Nov 27, 2012 Breakingviews rated it liked it
By Antony Currie
All financial institutions - not just those deemed too big to fail - need strong regulatory oversight. That is one lesson of Kirsten Grind's new book about the demise of Washington Mutual, "The Lost Bank." Grind, who covered the bank for Seattle's Puget Sound Business Journal before moving to the Wall Street Journal, offers decent coverage of the bank's demise in September 2008. But her incredibly well-researched account of how the bank got there is more captivating.
The story By Antony Currie
The story begins in 1981 when lawyer Lou Popper, one of the firm's directors, reluctantly agreed to run the Savings and Loan after it almost imploded. Over the next nine years he rebuilt WaMu's reputation and restored employees' pride - largely by being a principled, hands-on chief who mucked in with the workers and stuck to the basics of banking.
His hand-picked successor, Kerry Killinger, seemed just the man to keep WaMu on the straight and narrow. He lacked his patron's people skills, but was studied and cautious, avoiding ostentatious clothes, cars and houses. He balked at any unnecessary expenses. from lavish lunches on the company dime to corporate jets. A favorite saying was "check your ego at the door."
But Killinger quickly decided to impose his own stamp on the company by going on an acquisition spree. There was good strategic logic. In the fragmented U.S. banking sector, well-managed mergers could cut costs, improve margins and offer more services to clients. But getting bigger can make executives cocky. Craig Tall, who ran the M&A effort, started seeing all deals, big or small, as essentially the same aside from the number of zeroes on the check. At one point he even started to decide how much to offer by pulling a number out of a hat.
By the end of the millennium, Killinger had taken WaMu's assets up to $150 billion - a 21-fold increase in nine years - and was hungry for more. He moved the headquarters into a plush new skyscraper, started using a corporate jet - though would rarely allow other executives to - and started wearing snappier clothes. He became best buddies with Lehman Brothers' Dick Fuld and began hanging out at high-profile events like Davos.
Management suffered. Killinger loathed conflict and hated making difficult decisions, but spent less and less time in the office and refused to appoint a president or chief operating officer. Despite a well-deserved reputation for integrating acquired retail banks, WaMu continually put off consolidating as many as 12 mortgage platforms. By 2008, the bank often couldn't even measure, for example, borrowers' loan-to-value, or how many home loans customers might have. The attitude toward risk control is best expressed by a risk manager's instruction to her staff: stop acting like a "regulatory burden" and instead become a "customer service" to support the bank's growth.
Killinger's ambition was to make WaMu the nation's largest mortgage lender. That led him to stick with a five-year plan to increase higher-risk lending well into 2007, despite a 2003 internal probe which showed that only a quarter of WaMu's subprime loans were any good, and despite multiple statements from 2004 onwards, including his own, that mortgage markets could be in a bubble.
The board of directors didn't restrain Killinger's ego. He had them eating out of his hand and for most of his tenure only one of them had any banking experience. The board only managed to fire him a few weeks before the FDIC moved in. At times during his 18 years running the firm, said a colleague, he looked "like a sweet old lady who owns a giant Rottweiler." Little wonder that in the end he couldn't keep the dog under control.
Grind's narrative could be a tad clearer on the timeline and she tends to overdo some of the anecdotes. But it's a compelling read that should serve as a cautionary tale for bankers, shareholders and regulators alike of how ego, mismanagement, groupthink and greed can undermine even the healthiest franchise. ...more
Mar 09, 2017 Amanda rated it it was amazing
Such an interesting look at WaMu's bank failure - easy to read, yet informative.
Jul 12, 2016 Randy rated it really liked it
It's hard not to conclude that Washington Mutual was a sacrificial lamb to help the Bush Administration pass TARP, the $700 billion fund that gifted money to favored financial institutions. Granted, WAMU probably deserved to fail based on the horrible lending strategies of long time CEO Kerry Killinger. Killinger took over WAMU and led it on a rapid expansion program making it one of the largest retail banks in the country. But, at some point in the history of this Seattle institution, Killinger It's hard not to conclude that Washington Mutual was a sacrificial lamb to help the Bush Administration pass TARP, the $700 billion fund that gifted money to favored financial institutions. Granted, WAMU probably deserved to fail based on the horrible lending strategies of long time CEO Kerry Killinger. Killinger took over WAMU and led it on a rapid expansion program making it one of the largest retail banks in the country. But, at some point in the history of this Seattle institution, Killinger reached his level of incompetence. There is also the suggestion in the book that he went middle aged crazy, shucking his high school sweetheart for a new wife and changing from his historically austere lifestyle to a more expansive, expensive way of living which included a second home, a boat and private jets. Killinger had fair warning from long time WAMU executives that there were problems in the California mortgage market but he didn't like to deal with bad news and took no action.
When government regulators got involved WAMU was caught in a battle between OTC and FDIC as to which bureaucrat had jurisdiction. OTC wanted to keep its fees coming in and FDIC wanted to make certain its funds were not depleted by having to disperse insurance funds to WAMU account holders.
Clearly, WAMU could have been bailed out as "too big to fail" as several New York banks later were. Perhaps because of its Seattle location WAMU was expendable and in the end it was virtually gifted to JP Morgan in the the largest bank failure in history.
This is a very detailed account of how it all went down. A lot of inside baseball that might leave the reader wondering if he needs to know all that to understand how it happened. For anyone in the Pacific Northwest it is almost a a must read. Safeco Insurance virtually went out of business (sold to Liberty Mutual) at the same time WAMU was going down the tubes. Two old guard Seattle businesses evaporating as the new guys—Amazon and Microsoft achieved ascendancy. ...more
Sep 16, 2013 Anita Edwards rated it it was ok
Interesting but not a page-turner. A fairly well writen story of a local icon which unlike Starbucks, Amazon and Microsoft,failed through growth. Lots of facts I didn't know and a view into Washington (DC)regulatory politics we don't often see on the Left coast, but not really new ground. We've heard this story too many times before--fair-haired darling of Wall Street starts to believe his own press and is forced to prop up earnings by taking bigger & bigger risks. That said, it is a Interesting but not a page-turner. A fairly well writen story of a local icon which unlike Starbucks, Amazon and Microsoft,failed through growth. Lots of facts I didn't know and a view into Washington (DC)regulatory politics we don't often see on the Left coast, but not really new ground. We've heard this story too many times before--fair-haired darling of Wall Street starts to believe his own press and is forced to prop up earnings by taking bigger & bigger risks. That said, it is a competent job of investigative reporting with some startling moments--like the random focus group of 10 people not one of whom could explain what kind of morgage they had or the terms, even with the statement in their hands.
It still amazes me how many people it took to pull off this debacle--borrowers, lenders, appraisers, investment bankers, regulators, investors, etc. I would include auditors in this list, but the sad fact is that hardly any of WAMU's mortgages which were traunched & packaged into securities were actually audited--shouldn't that have bothered someone? Yes, I know, easy to say afterwards, but my credentials are that I was the "fool" making extra payments on my mortgage to pay it off early when everyone else appears to have been "taking advantage of the system" by getting home equity loans and interest only refi's. Not that I saw the financeal crisis coming--I didn't. I just fundamentally distrust debt in all it's forms. Seems like I'm still pretty much alone in that view even today.
Jan 21, 2017 Ankit rated it really liked it
This book is not for everyone. But if you're at all interested in learning more about the 2008 financial crisis, or enjoy stories about the rise and fall of organizations, or just have a fading memory of WaMu and wondered whatever happened to those guys...then give this one a shot.
For those of us in California, many of us remember Washington Mutual branches opening up seemingly everywhere not too long ago...okay maybe it was a long time ago...(remember free checking accounts...that was WaMu!). This book is not for everyone. But if you're at all interested in learning more about the 2008 financial crisis, or enjoy stories about the rise and fall of organizations, or just have a fading memory of WaMu and wondered whatever happened to those guys...then give this one a shot.
For those of us in California, many of us remember Washington Mutual branches opening up seemingly everywhere not too long ago...okay maybe it was a long time ago...(remember free checking accounts...that was WaMu!). But that's all a memory now. How this relatively small, regional bank from the Pacific Northwest (where executives dressed up for Halloween parties and customers were greeted by name) became one of the largest banks in the country is a fascinating read on its own. How it all spiraled down from there is fascinating in its own way (can you imagine using the words "flexible lending rules" in a bank commercial today: https://www.youtube.com/watch?v=CJve7...).
Kirsten Grind does a great job of introducing us to the men and women within WaMu along with others in the industry and gives intimate details of discussions, feuds, business and policy decisions that led to this rise and fall. She also gives a behind the scenes view into how JP Morgan Chase was able to purchase a bank that had over $300 billion in assets, for less than $2 billion!
I enjoyed this book quite a bit, but admittedly I enjoy the topic quite a bit. The language gets a bit technical towards the end, but the writing and storytelling are quite good and will keep your interest. ...more
Oct 08, 2012 Jane rated it really liked it
Shelves: finance
I was on the fence about the rating for this book. It has two shortcomings in my opinion. One is that it suffers from a regional bias. To be fair, it is unlikely any other journalist could have covered WaMu's story in such depth. The other problem I had with it was the lack of any mention of the bank's auditors. Where were the auditors while WaMu was selling out its shareholders? Perhaps the author did not consider it relevant but American shareholder's should. I for one plan to consider the I was on the fence about the rating for this book. It has two shortcomings in my opinion. One is that it suffers from a regional bias. To be fair, it is unlikely any other journalist could have covered WaMu's story in such depth. The other problem I had with it was the lack of any mention of the bank's auditors. Where were the auditors while WaMu was selling out its shareholders? Perhaps the author did not consider it relevant but American shareholder's should. I for one plan to consider the auditor when purchasing individual stocks in the future. Apparently many people believe WaMu should not have failed ... that it was pushed to failure by the government. It may be that WaMu suffered a fate in the same way Lehman versus AIG. According to a statement by Hank Paulson, the fate of those two companies depended on who came first. After seeing the fallout from Lehman's failure, the government could not let AIG go. WaMu came after the failure of Indy Mack. However, in this case, the losses would have been absorbed by the FDIC insurance fund which could not absorb another bank as large as WaMu apparently. WaMu experienced two bank runs. There was no reason to believe they could survive the second especially with the Moody's downgrade. WaMu's substantial number of risky loans directly contributed to the overall crisis ... we all paid the price. Although I was not a direct shareholder, as an index fund investor I took part of the losses as well. ...more
Apr 23, 2012 Tiffany rated it it was amazing · review of another edition
Shelves: wtfiswrongwithus
Holy crap, the Great Recession of 2008 and all of the failed mortgages and bank bailouts was just a messed up situation. I don't fully understand it, but Grind's book certainly helped explain what happened, at least what happened to Washington Mutual.
This is a really good, thorough look at the WaMu crisis and how they got there. To me, the most heart-wrenching sentence (Not the most heart-wrenching aspect of the overall story; people losing all their money and their retirement funds is WAY Holy crap, the Great Recession of 2008 and all of the failed mortgages and bank bailouts was just a messed up situation. I don't fully understand it, but Grind's book certainly helped explain what happened, at least what happened to Washington Mutual.
This is a really good, thorough look at the WaMu crisis and how they got there. To me, the most heart-wrenching sentence (Not the most heart-wrenching aspect of the overall story; people losing all their money and their retirement funds is WAY sadder. But the *one* sentence) was toward the end, when, as Grind points out, Washington Mutual was sold on its 119th birthday, after it was started to help Seattle get back on its feet after the Great Fire of 1889. I just thought about all those people who lost their businesses and their city on that day in 1889, and the two people who opened a bank to help all those other people rebuild, then that bank survives for so long, and branches out across the country (Seattle pride), and then poof! The company (or, certain officials of the company) runs itself into the ground. This great Seattle pride following a great Seattle fire came to a sad, sad end. ...more
Jan 26, 2013 Ku rated it really liked it
THE LOST BANK tells the story of biggest bank failure in this country's history and it tells it well. It compliments TOO BIG TO FAIL. In TOO BIG, that book tells the story of the flashy investment bankers of Wall Street as they fight for their financial lives, and it features dramatic story lines and outsized egos. In THE LOST BANK, it's the story of Main Street, of homeowners and mortgages and local branches where people put their savings. This book presents a scenario that the housing bubble THE LOST BANK tells the story of biggest bank failure in this country's history and it tells it well. It compliments TOO BIG TO FAIL. In TOO BIG, that book tells the story of the flashy investment bankers of Wall Street as they fight for their financial lives, and it features dramatic story lines and outsized egos. In THE LOST BANK, it's the story of Main Street, of homeowners and mortgages and local branches where people put their savings. This book presents a scenario that the housing bubble was the patient zero in the 2008 financial crisis, often told from the point of view of ordinary homeowners and bank employees.
Yet, it's all the same story. Greedy and incompetent management who gave themselves bonus even as the bank lost billions. Toothless and bickering government regulators. Complacent and star worshiping media that praised WAMU at the height of the bubble. Clueless and careless citizens who apparently didn't understand the meaning of ''too good to be true'' when buying a house with no money down.
This book is not flashy, but it's a welcome contribution to help understand what happened in 2008.
May 11, 2013 Liam rated it it was amazing
"'Business got casual when dress got casual.'" (quoting Kerry Killinger, 51)
"Killinger would later refer to the Countrywide chief executive [Angelo Mozilo] in an e-mail as the 'great orange-skinned prophet from Calabasas.'" (127)
"'I was trying to torture them [JP Morgan] -- to smoke them out,' Fishman said later. 'They're torturing me, I'm torturing them. Everyone thinks we're kind of muttonheads. You're playing a weak hand, the world's coming to an end, and you're trying to run an auction on a "'Business got casual when dress got casual.'" (quoting Kerry Killinger, 51)
"'I was trying to torture them [JP Morgan] -- to smoke them out,' Fishman said later. 'They're torturing me, I'm torturing them. Everyone thinks we're kind of muttonheads. You're playing a weak hand, the world's coming to an end, and you're trying to run an auction on a band when no one knows where the bottom is. So you torture people.'" (291)
"Because the bank held a large charter in Nevada, the FDIC was required to deliver a notice of its failure to this obscure location. The branch was WaMu's official headquarters. Since there were no WaMu executives in Henderson, the FDIC official delivered the paperwork to a distraught and confused young employee. Shaking she signed her name to the document indicating the government's monumental decision to take over her company. Later, the FDIC sent her an apologetic bouquet of flowers." (302-3) ...more
Mar 04, 2013 Cheryl Knowlton rated it it was amazing
My husband and I listened to this audio book as we took a lengthy driving trip. We were both riveted!! This book was recommended to me by a good friend. I thought I knew the mortgage meltdown from most angles, as I've read at least 10 books on the subject. How wrong I was! I was missing the WAMU'S piece entirely.
Having lived in the mortgage world from 1999-2008 as a mortgage broker as well as a wholesale account executive from 2003-2005, this book brought back many memories, as well as a fair My husband and I listened to this audio book as we took a lengthy driving trip. We were both riveted!! This book was recommended to me by a good friend. I thought I knew the mortgage meltdown from most angles, as I've read at least 10 books on the subject. How wrong I was! I was missing the WAMU'S piece entirely.
Having lived in the mortgage world from 1999-2008 as a mortgage broker as well as a wholesale account executive from 2003-2005, this book brought back many memories, as well as a fair amount of anger at WAMU's reckless practices in churning out pay option ARMS and sub-prime loans. In the end, I felt angry at how the FDIC swooped in pre-maturely and shut them down. (This is revealed in the preface, so I'm not acting as a spoiler!) I'm going to have to re-read Hank Poulsen's version of these events in his book, "On the Brink."
Excellent book!!! Loved it!!! ...more
Sep 06, 2012 April rated it really liked it
Kristen Grind did ALOT of research and has written it in simple english, not alot of finance phrases that us normal people don't understand. :)
I was surprised to see people I know/knew quoted.
Kristen also writes about Doug Wisdorf, his career and his suicide.
"Wisdorf, like Glaze, was a longtime WaMu employee. He had worked at the bank for more than two decades and had even met his wife at WaMu."
"...Doug Wisdorf, the deputy in charge of WaMu's investor relations department, had committed Kristen Grind did ALOT of research and has written it in simple english, not alot of finance phrases that us normal people don't understand. :)
"...Doug Wisdorf, the deputy in charge of WaMu's investor relations department, had committed suicide--he hanged himself in the basement of his Seattle house....In a police report followin his death, deputies noted that Wisdorf had lost his job, and that this had created 'significant increasing financial pressures' over the last several months."
It's not a hard read. ...more
Mar 16, 2013 Sauparna Sarkar rated it liked it
For a former employee, a revealing but depressing read. A very well researched book, it provides a great historical background of the rise of the company and how market forces changed the company culture as management turned aggressive in the rush for higher margin products and ignored numerous warning signs. What was revealing to me was how early on these warning signs were exposed, but how clueless most people inside the company were about the issues. It was also disappointing to read how For a former employee, a revealing but depressing read. A very well researched book, it provides a great historical background of the rise of the company and how market forces changed the company culture as management turned aggressive in the rush for higher margin products and ignored numerous warning signs. What was revealing to me was how early on these warning signs were exposed, but how clueless most people inside the company were about the issues. It was also disappointing to read how in-fighting between regulators led to non-action when corrective measures could have been taken early on. ...more
Dec 09, 2013 Amy Wolf rated it really liked it
I was there. Yes, sitting in the middle of the new corporate office in Seattle when Sheila Bair spoke and the whole edifice (which was founded in 1889) came tumbling down. I followed Grind's reports in the Puget Sound Business Journal, and she has put together an excellent book about the whole sad affair. One caveat: she deals almost exclusively with the major execs (Killinger; Rotella) and does not cover the minions (like me) whose entire lives were impacted (read: ruined) by the Bank's I was there. Yes, sitting in the middle of the new corporate office in Seattle when Sheila Bair spoke and the whole edifice (which was founded in 1889) came tumbling down. I followed Grind's reports in the Puget Sound Business Journal, and she has put together an excellent book about the whole sad affair. One caveat: she deals almost exclusively with the major execs (Killinger; Rotella) and does not cover the minions (like me) whose entire lives were impacted (read: ruined) by the Bank's failure. I understand that a Seattle Repertory company is going to turn this into a play! For that, I will gladly fly back up to Seattle! ...more
Jul 17, 2012 Robert Boyd rated it really liked it
Shelves: finance, business
An ok job--it tells the story at a rapid clip. Grind is hampered by a lack of good sourcing--so many people would not speak with her, and insanely, a lot of correspondence between the FDIC, WaMu, JP Morgan and the now defunct and discredited OTC have been redacted, as if they were from the CIA. Still, there is enough here to show that the top guys at WaMu were liars, were reckless with OPM, turned the other way so as not to witness fraud being committed by their employees and agents, etc. The An ok job--it tells the story at a rapid clip. Grind is hampered by a lack of good sourcing--so many people would not speak with her, and insanely, a lot of correspondence between the FDIC, WaMu, JP Morgan and the now defunct and discredited OTC have been redacted, as if they were from the CIA. Still, there is enough here to show that the top guys at WaMu were liars, were reckless with OPM, turned the other way so as not to witness fraud being committed by their employees and agents, etc. The only downside (from an entertainment standpoint) is that they weren't colorful characters like, for example, Don Dixon of Vernon Savings and Loan infamy. ...more
Economics > Finance
About Kirsten Grind
Kirsten Grind
I live in New York City, but I'm a West Coaster at heart. I love the outdoors - running, biking, hiking, backpacking - and I am deeply obsessed with the ocean, particularly Swami's in Cardiff, Calif. I've always been a newspaper journalist, covering a variety of business topics until I landed on finance, now at The Wall Street Journal. I am a huge bookworm - when I was 13, my father feared I was I live in New York City, but I'm a West Coaster at heart. I love the outdoors - running, biking, hiking, backpacking - and I am deeply obsessed with the ocean, particularly Swami's in Cardiff, Calif. I've always been a newspaper journalist, covering a variety of business topics until I landed on finance, now at The Wall Street Journal. I am a huge bookworm - when I was 13, my father feared I was on the verge of a nervous breakdown from reading too much. ...more
Trivia About The Lost Bank: Th...
Quotes from The Lost Bank: Th...
"So far, only a mortgage trader from Goldman Sachs has been criminally charged. As Fay Chapman would later observe about the financial crisis in general, "There is no law against stupidity." — 0 likes
"WaMu's patchwork of systems for making mortgage loans did not help. A homeowner would lock in a low interest rate through" — 0 likes