Where WaMu went wrong

[Cougar]

Saturday night I was seated next to a person who had just got back from vacation. While away they got news of being laid off at the end of April. They work(ed) for WaMu as a loan processor. I said "didn't you see this coming?" No response. It is estimated 800 in the Seattle area to lose their jobs, Bellevue loan center to close at the end of August. Not only did WaMu not take care of their own but also many of those who were granted a loan that should not have. Why would a mainstay like WaMu get so greedy?

To keep growing rapidly, the Seattle company loosened its lending
standards, took on shaky real-estate loans and lent money to risky
mortgage
brokers.

http://seattletimes.nwsource.com/html/b ... amu14.html

[deejayoh]

[rose-colored-coolaid]

Isn't it weird in retrospect all the reprimands like Finance's that we kept hearing. "I originate loans, so I know more than you", "I show homes, so I know more than you", "I do landscaping, so I understand the industry better than you."

As things teetered on the precipice, everyone seemed to switch on 'fortune teller' mode, with accuracy approaching the level of fortune telling. What concerns me though, is that they should have been right. People like Finance should have been a lot smarter than people like me. But somehow the greed blinded them.

[Ubersalad]

By the way, WAMU stepped way up in 2006 and begin offering very competitive construction and alt-a program. I remember beating any other lender at 80% LTV and no-doc by almost 1%. Their construction lending was also practically giving away money...

IMO, WAMU is where they're at by industry pressure...

[EconE]

In 2006, every WAMU branch I drove by in Los Angeles had their windows painted with "100k HELOCS, no income or SSN verification required"...or something along that line.

Good thing Washington is doing so well. Somebody is gonna have to pay the taxes to bail out So. Cal.

And yeah...what happened to Finance?

[deejayoh]

[Alan]

Finance used to be Finance Guru. He changed his name when people pointed out that he didn't know what he was talking about. If he was responsible for helping Wamu manage risk then I'm not surprised they ended up where they are.

[Ubersalad]

Wasn't he a graduate of WSU business school? How much can he possibly know?

[faster]

[Lake Hills Renter]

HD-DVD, the BetaMax of the new century.

[sniglet]

I have a fairly forgiving attitude towards the management of WaMu, and other financial institutions that are seeing trouble from mortgage finance. These managers didn't have much of a choice during the boom: either you play along and go for the profits and volume that were available or you get fired.

WaMu shareholders would have crucified any CEO who led the firm to underform industry competitors (e.g. CFC) with growth and profits. Back in 2005 any bank manager who had decided to sit out the Alt-A or sub-prime markets due to fiscal prudence would have been out of a job in a matter of days. What choice does that leave? Play the game or switch careers.

[Alan]

A banker's goal is to take risks that make him go broke only when every other banker goes broke too.

[sniglet]

[Alan]

And everyone is fairly forgiving of them all. After all, if no one else could see this coming how could they be expected to?

[deejayoh]