From today’s Seattle Times: Feds seize WaMu in nation’s largest bank failure
WaMu’s 43,200 employees won’t feel any immediate impact, though it’s likely JPMorgan will drastically shrink the thrift’s headquarters staff. More than 3,500 people work at WaMu’s 42-story headquarters at Second Avenue and Union Street, along with 800 people elsewhere in Seattle and 1,500 people elsewhere in Washington state.
WaMu is also downtown’s largest office tenant, with about 1.6 million square feet in the central business district. It put some space on the market in recent months, helping raise downtown’s vacancy rate.
JPMorgan reportedly sent e-mails to all WaMu employees asking them to report for work as usual today.
Not surprisingly, I’ve got a few friends that work at WaMu corporate downtown. I really feel pity for them. The fact that WaMu put itself into such a dangerous position was not the fault of the rank-and-file corporate employees, but they’ll be the ones to feel the brunt of this failure.
I’d like to be clear that I do not take any pleasure in knowing that 4,300 people in Seattle are likely to lose their jobs, or the effect that will have on Seattle’s economy.
Another interesting bit from the article:
JPMorgan, which earlier this year offered to buy WaMu for $7 billion in stock — a deal former CEO Kerry Killinger turned down in the belief he could salvage the company — was the high bidder in an auction the FDIC conducted Wednesday, Bair said. Three other banks submitted bids for WaMu’s banking assets.
So four banks were bidding on WaMu’s assets, and $1.9 billion was the highest bid. Dang.
(Drew DeSilver, Seattle Times, 09.26.2008)
Off topic but way cool -
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Eleua made the front page of the Kitsap Sun!
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NK Blogger: Oppose Bailout, Stop Living ‘Debt Fantasy’
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I use only credit unions and I have accounts at 4 different ones, in different states.
That’s my point. Saving that money and you refuse to help others.
In my little life I’ve paid off two personal residences starting from scratch. By paying them off rather than using the principle of one to pay down the other.
if you don’t know what a network is at this point in time, 2008, well, what can I say except DUH!.
This is a job that in 1995 probably exsisted on a limited basis. Today it’s a new industry. There are thousands, millions, and billions of new industries that people can do in the home, if they chose.
You have a job, why?
Is what you are doing meaningful?
The point is about talk of a Great Depression or the comparison to a Great Depression. The world has expanded in the past ten years. The technology has made a huge difference in the way business is done. We will survive without a WaMu, Goldman Sachs. or Merrill Lynch. These people were having the last hurrah. They grabbed all the cash they could. They have cash, they can survive without giving them more.
Credit Unions are the banks today, banks are deregulated into Investment Institutions. Get your money out, start a business, help other people start businesses, and grow. You have the opportunity today to be the Lehman Brothers of tomorrow.
This is my personal philosophy, this is what I do, it’s my choice. What you do is your choice. This post has to do with what impact a WaMu will have. People are talking about savings accounts. This WaMu thing stopped being a bank or friend of the family a while ago. Good riddance, it is a tool to steal money, legally, that’s all. We are discussing how to help a bunch of crooks, we know they are crooks, but we want to say they have control over the economy. Those days are over.
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WTF does this mean?
“That’s my point. Saving that money and you refuse to help others.”
No one helped me save the money I’ve earned, and it’s not like I’ve got a lot of it. I came from a family of modest means; hard-working blue collar. I didn’t grow up with some sort of entitlement mentality other than I believed this was a nation of free people in a free market and that bad behavior is not rewarded. I was dillusional.
What my firm does is none of your business. But, I will say that the business we are in only gets better as the ecomomy gets worse. We are not in finance or technology. It’s been around nearly 30 years with great success and a great reputation.
Then you go on to say, “They have cash, they can survive without giving them more.”
Um, huh? Nevermnd, I’ve got a headache just trying to figure out what you mean.
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Billions of new industries? What Universe are you from? There’s only 6 billion people on the planet. What, a different industry for each of them?
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why WM is such a big deal for seattle RE? Every body knows the jobs in branches are safe. The headquarter only has 3500 jobs. Let’s say it will cut 2000. How many of the 2k people really have to sell house? None of them can find a job?
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I was perusing the Queen Anne neighborhood’s local rag the other day. It was 46 pages long and it appeared to me that 22 pages were legal notices for foreclosures. Anyone care to comment?
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First, the 3,500 number is inaccurate. It’s closer to 5,000.
Second, the jobs at headquarters are high paying executive, accounting, legal, etc. jobs. These are the people most able to buy homes in a tight credit market. Tellers and branch managers don’t make enough money to buy houses at current Seattle prices. Additionally, people that had the executive jobs have more disposable income than a branch manager, hence able to spend more, which means higher revenue from sales taxes.
Third, some may choose to move to NY to continue their career in banking, but those that do stay will have a hard time finding a like job, paying the same pay since Seattle isn’t a financial hub.
Fourth, all the money that use to flow into region is now gone. WAMU owns a lot of property in and around Seattle. Those rents and revenues now go to New York and not Seattle.
Fifth, the accountants, consultants, law firms, etc. that supported WAMU are now without a large client.
Sixth, the tax revenue gained from having WAMU in Seattle and Washington is now gone.
I can go on and on, but you get the point. Putting even 500 new homes on the market due to WAMU’s failure would not be good for the housing market in Seattle.
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Thomas B. // Sep 27, 2008 at 12:17 pm
The headquarter only has 3500 jobs. Let’s say it will cut 2000. How many of the 2k people really have to sell house? None of them can find a job?
First, the 3,500 number is inaccurate. It’s closer to 5,000.
Second, the jobs at headquarters are high paying executive, accounting, legal, etc. jobs. These are the people most able to buy homes in a tight credit market. Tellers and branch managers don’t make enough money to buy houses at current Seattle prices. Additionally, people that had the executive jobs have more disposable income than a branch manager, hence able to spend more, which means higher revenue from sales taxes.
Third, some may choose to move to NY to continue their career in banking, but those that do stay will have a hard time finding a like job, paying the same pay since Seattle isn’t a financial hub.
Fourth, all the money that use to flow into region is now gone. WAMU owns a lot of property in and around Seattle. Those rents and revenues now go to New York and not Seattle.
Fifth, the accountants, consultants, law firms, etc. that supported WAMU are now without a large client.
Sixth, the tax revenue gained from having WAMU in Seattle and Washington is now gone.
I can go on and on, but you get the point. Putting even 500 new homes on the market due to WAMU’s failure would not be good for the housing market in Seattle.
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Don’t wake them up Thomas…. let them keep dreaming….the pink pony…
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Demersus:
I could be wrong, but my interpretation is David Losh’s posts are not critiquing you.
“I use only credit unions and I have accounts at 4 different ones, in different states.
That’s my point. Saving that money and you refuse to help others.”
By saving your money in a credit union and overseeing your own investing, you cut out the middle-man bankers whose intentions are against their own depositors. Why should you pay bank CEO’s to live like kings when you can keep that money for yourself?
There are lot’s of newly emerging ways to make money, whether network consulting, internet marketing, etc. These are new models of business can survive without the need for gigantic monopolistic banks.
Your choosing to live fiscally conservatively is a wise decision, and more people should aspire to live in a similar manner.
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Ok, ok, I think I see David’s point now and I apologize for jumping into defensive mode. It’s just that sometimes his writing leaves a lot of room for interpretation, but other times I find him to be very clear. I was trained to do technical writing, so I always read my work as if I’m not the one who wrote it, not the one with the inate understanding of it’s intent.
I guess the thing that really threw me was his statement in #96, “I came at the right time”. I read that as him saying that he needed to straighten out my point of view for me. But, maybe that was his way of saying that he concures.
Either way, sorry again for getting up-in-arms about it.
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This blog is a great example of a small business. This guy quit a job that I understand was good. He is frugal, has savings, and tracks his expenses. It’s internet based from his home, again from what I understand.
He’s spending money in what may be an irresponsible manner by providing us with this forum.
Many people here talk about saving money or investing in 401Ks. Many more talk about employment figures for the region.
When you dumb it down, the possibilities are endless. You have a computer, you are meeting millions of people, OK thousands, and if you turn out a good product you might make money.
We are in a time of opportunity much different from any other recession.
The exception I take is with responsibility.
Investing in yourself, your community, or other people is irresponsible, it’s risky.
I take exception to the idea that giving your money to a bank is responsible.
Corn is today’s smart money. Put your money in corn, it’s going up every day, but I find putting money in corn irresponsible. It drives up the price of food.
Oil, I made money in oil, biotech, gold, and other things that are less uplifting. I had a Merrill Lynch account for years.
What I prefer is investing in people in my community.
Now, this guy provided this forum, he’s been kicked around a lot today, but he did something. Good, bad, responsible, or irresponsible, he’s out there, taking the risk.
Give him the credit.
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David, are you drinking?
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No, just stupid.
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bailout agreement “tentatively” reached.
http://online.wsj.com/article/SB122257682963083173.html
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i hear that a disproportionate share of bankers and lawyers live on bainbridge.
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“why WM is such a big deal for seattle RE? Every body knows the jobs in branches are safe. The headquarter only has 3500 jobs. Let’s say it will cut 2000. How many of the 2k people really have to sell house? None of them can find a job?”
Why in the world would JPM keep 1500 high paying downtown jobs?? Every downtown job is gone. Disappearing or relocated to NY.
Yes, the teen wearing braces and a shirt 2 sizes too big around is neck, making $10/hour as a teller, will get to keep his job.
But the domino effect, as expressed by victorchai, will be even bigger. I can see legal council, accounting, marketing; third party jobs loosing their biggest account.
I am not sure how soon it will be, but everyone should be gone in 6 months…
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Washington Mutual Inc. owns its portion of the 42-story high-rise tower it built in partnership with the Seattle Art Museum, or approximately 944,000 square feet of space, according to its annual report.
Greg Johnson, president of real estate development and management firm Wright Runstad, thinks there would be strong interest among foreign and domestic institutional investors in the building should it be put on the block.
“They would view it as a terrific opportunity at the right price,” Johnson said. “To own a really high-quality asset in a long-term, high-quality market like Seattle, with fabulous views, attractive architecture — that would compete very favorably with other downtown office buildings.”
An acquisition of WaMu appeared increasingly likely as this edition went to press. The company was reportedly assessing its options, including raising more money or finding a buyer.
Completed in 2006, the headquarters building — WaMu Center — is located in the 1300 block of Second Avenue. Washington Mutual officials were not immediately available for comment.
The split ownership of the property is not likely to bother a potential buyer. Mixed-use ownership has become relatively common in recent years, said Johnson.
More troublesome is setting a price on the property.
The most recent office building sales in Seattle occurred before the economy soured. Boston-based Beacon Capital paid what brokers estimate was $450 per square foot for the Equity Office Properties portfolio of properties in downtown Seattle and Bellevue.
That would put the value of WaMu Center at as high as $425 million, brokers estimate. At the time it was built, the estimated construction cost for the 42-story tower was $350 million.
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would make a nice building for condos.
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Thats Just Washington Mutuals portion… The Building is bigger.
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GOOD Write up.. Front Page Seattle times online
The events of the past week leave a crater in the Puget Sound economy. It may well widen.
Safeco, founded in 1923, was absorbed Monday into Liberty Mutual of Boston. The home-business-auto insurer was a victim of the equivalent of a financial drive-by shooting: fears about its portfolio, though unfounded, in the credit crisis, and the Wall Street addiction to mergers, helped along by rootless chief executives, highly compensated for selling off their firms.
By Friday, the largest bank failure in U.S. history leveled Washington Mutual. The 119-year-old institution’s headquarters helps define the city’s skyline; its leaders helped precipitate the worst financial collapse since the Great Depression. Depositors will be protected as JPMorgan Chase takes over. The same can’t be said for its thousands of employees and Northwest shareholders who loyally supported the hometown thrift.
Yet the danger to the dwindling number of Fortune 500 companies in the Northwest is not over. Whatever one calls this economic distress, it is putting companies under stress they haven’t seen in years — even decades — and shows no sign of letup. Two companies that must be on every local chamber of commerce’s worry list are Alaska Airlines and Weyerhaeuser.
Alaska Airlines is eliminating 1,000 jobs starting in November. Ultimately, it may fall victim to the same misplaced dynamics of consolidation. High fuel costs and a litany of structural woes have hit nearly every airline save Southwest on the merger watch list.
Then we have Weyerhaeuser, a company that literally built the Northwest economy from the forests up. It’s not in danger of being acquired. In the last year, it has sold off large divisions and announced that 1,000 headquarters jobs are being eliminated.
Already sliced in half from its former dominant size, Weyerhaeuser is destined to become a Wall Street play called a real estate investment trust (REIT). It may be good for investors. Yet it will certainly mean a smaller engine in the regional economy.
Regular readers of this column know I am obsessed with the importance of major headquarters companies. These are the ones with large, well-paid employment bases, where decisions of national and international reach are made, where talent and capital flow.
These companies not only support a quiet universe of vendors, but they produce ranks of experienced executives that leave to start new firms. When the chief executive lives here, he or she can knock heads and write checks to make the kind of great community that will attract the best and brightest. At their best, these companies have deep roots of stewardship and philanthropy. I don’t know of a successful city without them.
Loss of headquarters
To be sure, Boeing moved its headquarters, but the heart of its business — building commercial airplanes — lives here. The loss of headquarters jobs was a small percentage of the well-paid work force that remains in the region.
Boeing workers continue to be the top givers to United Way, in total dollars. The Chronicle of Philanthropy reported that in 2006, Washington Mutual employees pumped $50.5 million into various organizations; Weyerhaeuser employees gave $15.7 million.
In the cases of Washington Mutual and Safeco, the damage will be severe. It includes the loss of paychecks, talented workers, giving to arts and charities, and power in world capital markets.
Most cities lost their major financial headquarters in the 1980s and 1990s. Seattle, while losing the likes of Seafirst, happily preserved two significant players for years, but now even they are gone.
Downtown office space
For downtown Seattle, the loss of workers with disposable income and the vacating of vast tracts of office space will present a major challenge. Washington Mutual owns or leases 1.6 million square feet of space downtown — more than any other company.
More than 3,500 workers report to WaMu jobs downtown. I know of no successful city without a healthy center-city downtown.
But the real and potential fallout from Alaska Airlines and Weyerhaeuser is also great. For example, having a major airline hub is a big part of the revenue flowing into Seattle-Tacoma International Airport.
And Weyerhaeuser, sawed down to a REIT from an integrated timber company: It’s difficult to see it reaching its ambitious promises of innovation when most revenue must pass directly to shareholders, rather than go to research and development.
Another consequence of these losses is a body blow to the region’s enviable economic diversity. One-trick ponies don’t do well: Ask Houston in the 1980s or Phoenix now.
A healthy mix of sectors ensures that at least some businesses will be prospering. Now Seattle, which has seen the pain that can come from over-dependence on aerospace in the 1970s and technology in the late 1990s, is more vulnerable.
This turning point comes at an unsettling time, and not just with the sea changes in the capital markets. Part of Seattle’s genius has been reinvention. Like most U.S. cities, it lost iconic companies. Unlike them, it kept growing new ones. But now Microsoft, Starbucks and Amazon.com are maturing. And a cohort of growing firms has been snapped up by outside companies this year.
We’re net losers in the critical game of mergers and acquisitions. For example, Getty Images and Pyramid Breweries were sold. While some operations will remain, the decision-makers will be based elsewhere. Tully’s Coffee sold off its wholesale business. Meanwhile, promising technology and biotech firms are being pinched by the credit crisis.
Fortunately, Seattle and the Puget Sound area are blessed with so many assets and advantages. So many, indeed, that we might be tempted to be complacent about becoming a branch-office town. Or we might try to cleverly say we’ve transcended all that, thanks to technology, become a postmodern whatever.
Don’t kid yourself.
The world is not flat. More than ever, it’s sorting itself into big winners and big losers, and the key units of competition are metropolitan areas. Last week, we lost wealth that had taken decades to create. Last week is history. Going forward, the region will need to take stock of what it must do to compete in the street fight that is the world economy.
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But I thought our economy was different? I thought our job market was robust and would forever shield us from housing declines!?
Has someone been hunting pink ponies???
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When I lived in LA in the early 90′s, they lost a ton of HQ. Security Pacific, Crocker Bank, Arco, Unocal, Northrup Grumman, + some other aerospace I can’t remember all disappeared in the space of 5-10 years. That really prolonged the downturn there, IMO – and as a matter of fact things didn’t really seem to come back until the housing boom. Wonder what will happen down there now?
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WM close is the last hope for people here waiting for seattle RE to crash. Most likely they will be disappointed . Just pray.
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As a previous senior administraive assistant for WaMu, I can honestly say that the company morale was low, the employees were arrogant, cruel, and incompetent. That’s why I quit after three months. I just wanted to blow my head off.
Perhaps they will turn WaMu headquarters into low-income apartments units for the poor. Now that would be ironic! LOL
You know what they say: “Pride comes before the fall.”
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Wakeup- nice blogger name….now that might be something you might need to do.
You notice in the Article the Writer Referred to Seattle Being a City, near the Beginning of the Article, Towards the End it was Switched TO TOWN..
World Class Town?? MAYBE..Huum
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WM closing is our last hope for affordable RE?
LOL
Plenty of toxic loans out there waiting to reset.
Time is on OUR side.
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when Boeing headquarter moved to Chicago, anybody saw a housing crash in seattle? At the same time we had a .com bubble. I know you guys will never wake up. Assume you have been waiting for the bubble burst since this forum began in 2005, how many additional years are you going to wait? I know even if the housing crash 50%, people here will still wait for 80% crash. Keep dreaming.
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It’s not all about jobs Wake up…It’s demand and supply…
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wakeup -
you really should read a newspaper one of these days. here is a hint: the worldwide credit collapse and subsequent severe recession won’t magically miss Seattle and its precious Ballard chocolateboxes.
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.com bust was just private investors Gambling with Actual Dollars.. I never saw much fallout from That Or Boeing Headquarters, personally…
What you mean, You got yourself in a Expensive Mortgage the Last 3-4 years and now you want to justify your actions..you have found yourself overexended in Housing is about the Only Reason We get your type on this website.. IN FACT I CANT THINK OF ANY PEOPLE….Throwing out the remarks you haven’t… Or housing is what all your net worth is In..
Now Your Probably going to Lie and throw out some Balony how you been in a Mortgage/House since 94..
Didn’t you Know Nobody really Owns a House… ONLY THING THATS REAL IS CONTROL= Hopefully at a Reasonable Price.
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THIS MESS WAS CREATED OUT OF BORROWED- DOLLARS… Let me get that straight to you… Borrowed Money is Leveraged many-many-many times over in the Financial World.. ITS THAT LEVERAGE THAT IS CREATING THE MESS..
The mathmaticians in the Banking System thought there Math accounted for Human Behavior..
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Uh, Wakeup- guess you missed it. The bubble has already burst. Seattle prices are down 10% or so and continuing to fall.
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imagine this: Renting Makes Financial Sense Than Homeownership:
http://realestate.yahoo.com/promo/renting-makes-more-financial-sense-than-homeownership.html;_ylc=X3oDMTFta3Jqcjk3BF9TAzI3MTYxNDkEX3MDOTc2MjA0NjUEc2VjA2ZwLXRvZGF5BHNsawNyZW50aW5nLWJldHRlcg–
NOW that is a wake up
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http://mortgage.freedomblogging.com/2008/09/30/requiem-for-a-heavyweight/1880
“According to the Fed’s Home Mortgage Disclosure Act database, WaMu nearly quadrupled its investment in high-risk subprime (and to a lesser extent Alt-A) loans after the housing boom ended.”
In comment #3 of that post, the reporter is looking for help in how to sift through all the data he has from the Fed’s Home Mortgage Disclosure Act database. Maybe some private equity firm that blew through $7B would be interested in that for a lawsuit?
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