R.I.P WaMu…

September 26, 2008

Less than three weeks after WaMu CEO Kerry Killinger “retired” from the bank, it was seized by federal regulators, making it the largest bank failure in this nation’s history. What remains was sold to JP Morgan Chase (JPM), which wasted no time putting up a welcome banner on WaMu’s web site.

As footnoted regulars know, WaMu has been something of a frequent flyer here and that’s not usually a good thing. The company first came to our attention when we spotted this employment agreement with JP Morgan executive Stephen J. Rotellla back in late 2004. Because it was filed during the dead-zone time between Christmas and New Year’s, there had to be some juicy stuff in it. And sure enough, there was, as we footnoted here. So for Rotella, at least, it’s back to where he came from.

Fast forward to earlier this year when WaMu, Countrywide and IndyMac all filed their 10Ks late on a Friday. It’s probably just an odd coincidence, but the three failed in reverse order to the time they filed — Countrywide was last that Friday and imploded went first (technically speaking, it didn’t fail, so implode was too strong of a word), followed by IndyMac and now WaMu. Our favorite line from WaMu’s filing was this: “Given the lack of liquidity in the secondary mortgage market at December 31, 2007, significant management judgment was necessary to estimate the fair value of loans held in portfolio. It’s the significant management judgment phrase that really sticks out here. Talk about an understatement!

That same late-Friday 10K included this employment agreement with outgoing Chief Legal Officer Fay Chapman, who under the contract was going to make $1,325 an hour to consult with the bank over the next two years. It’s not clear from the contract whether JP Morgan will still be on the hook for this.

Another highlight from the past few months? The controversy and subsequent retreat on the company’s controversial bonus program and the “We’re not Next” press release they issued in mid-July after influential banking analyst Richard Bove put them on a death-watch list.

So long, Washington Mutual. Not to get all Richard Nixon on you, but we won’t have you to kick around anymore.

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