In the two months since federal regulators seized and sold Washington Mutual’s banking operations to JPMorgan Chase & Co., WaMu employees have been resigned to the likelihood that thousands of them would be out of work.
On Monday, they found out just how many: 3,400 employees, out of 4,300 the company had in Seattle at the time of the takeover.
Bowing to aggressive lobbying — along with assurances from banks that the troubled mortgages were OK — regulators delayed action for nearly one year. By the time new rules were released late in 2006, the toughest of the proposed provisions were gone and the meltdown was under way.
“These mortgages have been considered more safe and sound for portfolio lenders than many fixed rate mortgages,” David Schneider, home loan president of Washington Mutual, told federal regulators in early 2006. Two years later, WaMu became the largest bank failure in U.S. history.
In more ordinary times the failure of WaMu would be the business story of the year. Instead it’s basically a tragic footnote, although it’s not a footnote to the 3,400 “lucky duckies,” to borrow a phrase from Atrios.