When WaMu Failed

by: Rolfe Winkler, CFA

A fantastic piece from the Puget Sound Business Journal’s Kirsten Grind. It documents WaMu’s final months, noting that the bank suffered two large bank runs that management successfully hid from the press at the time. See chart below.

[On a related note: Have you ever wondered why WaMu's failure -- $307 billion of assets, $188 billion of deposits -- never cost the Deposit Insurance Fund a dime? One reason was that FDIC moved relatively quickly. More importantly, losses on assets were forced onto shareholders and creditors. Common and preferred equity was wiped out, as were subordinated debtholders. Reader Andrew points out in the comments that there was a large buffer of capital (debt and equity) to absorb losses ahead of depositors. (More on that from Kevin LaCroix)]

(Click image to enlarge in new window)


Grind also includes this interesting tidbit:

Each day, Brinks Security trucks pulled up to replenish WaMu ATMs across the country. Before the crisis, the trucks delivered about $30 million in cash a day nationwide, Freilinger said. During the September bank run, they delivered as much as $250 million a day.

WaMu was certainly seeing larger deposit outflows than most, but plenty of folks in “healthy” banks were pulling money out to stuff in their mattress. I wonder how much cash was being delivered to ATMs and bank branches nationwide last September and October…