A welcome new addition to the increasingly crowded shelf of books about banking failures during the past five years.
Wall Street Journal reporter Grind began covering Seattle-based Washington Mutual while employed at the Puget Sound Business Journal. When WaMu went out of business in 2008, it qualified as the largest bank failure in American history. Grind chronicles the mostly proud 110-year performance of the bank, tracing the failure in large part to the increasingly reckless management decisions of chief executive Kerry Killinger. The author begins in 1981, when WaMu's outside lawyer Lou Pepper reluctantly began running the daily activities of the troubled bank. Pepper was a likable man, perceived as a smart, fair boss. He helped save WaMu by converting it into a publicly held stock company, owned by its shareholders. When Pepper retired, Killinger stepped in as his predecessor. For a while he was a cautious steward. As the housing market heated up, however, Killinger and his management cohorts decided to ride the bubble by making unwise home loans. As at other mortgage lenders, the decision makers seemed unreasonably optimistic that the bubble would never burst. Despite warnings from his staff and from two federal bank regulatory agencies, Killinger continued to expand the mortgage-loan business despite the poor credit ratings of borrower after borrower. Grind takes readers inside the Federal Deposit Insurance Corporation and the Office of Thrift Supervision, sometimes-warring U.S. government agencies, as their top executives argued whether WaMu could be saved. During that debate, Jamie Dimon, chief executive at JPMorgan Chase, agreed to purchase the diminishing nontoxic assets of WaMu.
A detailed, instructive account of a bank failure far away from the power centers of New York City.