Interesting story from NPR: Washington Mutual Executive Predicted Collapse
For casual observers, bank collapses like this one [WaMu] may seem to have appeared out of the blue. But for executives like William Longbrake, who worked at Washington Mutual for 26 years before September’s tumult, the collapse looked more like a slow unraveling.
Longbrake served as the savings and loan’s chief financial officer from 1982 until 2002 and as a senior executive until a few weeks ago. He says he’s free to talk now about the trouble he saw coming, because no one is left at the thrift to sue him for breaking nondisclosure agreements.
“There was something that disturbed me deeply, and it actually was a long time ago. It was probably about 2003,” he says. “And that’s when home prices began to rise at a rate that was much faster than people’s incomes were rising. Housing prices felt good when they were going up. Everyone was giddy with all the wealth they were accumulating, and a lot of them spent it. The problem was that, all the time, as housing prices were getting higher and higher and higher, the affordability was declining. Eventually, the ability of a lot of people to buy homes just disappeared, and we had too many houses.”
Unfortunately, nobody wanted to hear that kind of sentiment during the boom. Anyone that tried to warn people that home prices were rising too quickly and all the perceived wealth was an illusion was derided as a “doom and gloomer” or outright mocked as a lunatic.
Sometimes it sucks to be right.
Nice to hear about someone who actually saw the bust coming back in 2003, as opposed to all the geniuses who “saw it coming” in 2007.
WAMU’S SLOGAN IN 2006:
“Growth is Good”
WAMU’s SLOGAN IN 2008:
“The Pink Slips are Coming”
In case anyone is interested, Robert Schiller is supposed to be on KUOWs The Conversation today. So are Rob McKenna and Richard Hagar. They’re talking about buying and selling homes in the current market. http://www.kuow.org/program.php?current=TC
Gee, that’s interesting. NPR and all the other media outlets were there 6 months/1 year/2 years/etc ago. Why didn’t he speak up sooner if he was so knowledgeable?
That non-disclosure he signed is just as valid today as it was a year ago. Courage is speaking up when you have something to lose, not monday morning quarterbacking, like this guy is trying to do.
I can’t believe you are lapping that up.
“Nice to hear about someone who actually saw the bust coming back in 2003″
Unless that person sat on the information so he and his company could keep collecting bonuses and stock increases based on short term profits, knowing he wouldn’t be the one losing his shirt in the crash.
Also, as a director of the WaMu board, this guy had a legal obligation to speak up if he knew there were problems. It’s called ‘fiduciary responsibility’.
If he knew, and did nothing, he should be sued and go to jail.
Revisionist history. “I was right back then, even though I didn’t say anything until it was too late for anyone to sue me.” anony @ 5 has it right.
If I was a large (former) shareholder of WaMu, I think this statement would be admittance of guilt and grounds for a lawsuit. He got millions of dollars in compensation while withholding this info. Non-disclosure is trumped by legal responsibility to the shareholders that own the company.
[...] Seattle Bubble: WaMu Executive Warned Board of Pending Collapse Years Ago: [...]
LOL. Now he is a hero. Knew all about it. But didn’t say a word to keep the checks coming.