Washington Mutual Failed Because It Wasn’t Part of the Cool Crowd, Says Former CEO

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Photo: Mark Wilson/Getty Images

For two years, former Washington Mutual CEO Kerry Killinger has been smarting at the fact that in September 2008, the bank he had worked at for 30 years, 18 as CEO, was suddenly taken away from him and handed over to JPMorgan Chase and its CEO, Jamie Dimon, at a fire-sale price. Two years! And has anyone asked his opinion on the matter? No. Most likely because they were so focused on Dimon — smooth-talking, popular Dimon, with his smirk and that insouciantly wavy hair, the kind of hair, if you ask Killinger, that has no respect for the job, unlike his own intensely neat comb-over. But yesterday in front of the Senate Permanent Subcommittee on Investigations, he finally got the chance to give his version of what went down.

The thing was, he told the committee, Washington Mutual was never as cool as the other banks. It wasn't run by a bunch of people from "Goldy." It wasn't as slick-looking on the logo front. It had a dorky nickname, "WaMu," and its executives would rather perform skits and musical numbers for each other than go out drinking with models. And for this — because it wasn't part of the "club," not because the bank joyfully racked up $52.9 billion of subprime loans and literally refused to consider the possibility that housing might be overvalued, that the people they were lending loads of money to might not be able to pay once their rate shot up, or because the stock lost 88 percent of its value in like a month amid questions about the CEO's competence — the Big Men On Campus decided to just get rid of it. Which was, in a word, unfair.

The unfair treatment of Washington Mutual did not begin with its unnecessary seizure. In July 2008, Washington Mutual was excluded from the "do not short" list, which protected large Wall Street banks from abusive short selling. The Company was similarly excluded from hundreds of meetings and telephone calls between Wall Street executives and policy leaders that ultimately determined the winners and losers in this financial crisis. For those that were part of the inner circle and were "too clubby to fail," the benefits were obvious. For those outside of the club, the penalty was severe.


And off the record, by "severe" he means wedgies, butt cheeks taped together with masking tape, the whole nine. That scene in Sixteen Candles when the jocks trapped Anthony Michael Hall's character under a glass coffee table? That actually happened.

Former WaMu CEO Blames Wall Street 'Club' [WSJ]