Inside the Biggest Bank Failure in American History

The Lost Bank

By Kirsten Grind

SIMON & SCHUSTER

 

The collapse of Washington Mutual, which the Federal Deposit Insurance Corporation placed in receivership in 2008 near the outset of the Great Recession, was the largest bank failure in US history. Yet in comparison to the crashes and bailouts on Wall Street, it received little in-depth coverage outside its Seattle hometown. Reporting for a small paper in nearby Puget Sound, Kirsten Grind, who now writes for the Wall Street Journal, followed the story meticulously and was named a Pulitzer finalist for her troubles. The Lost Bank, out this week, is the culmination of her award-winning work.

Packaged as a narrative tragedy, the book tells the story of WaMu’s adept transition to a publicly traded company under CEO Lou Pepper in 1983, successor Kerry Killinger’s failed attempt to establish the “Wal-Mart of banking” to cater to Main Street, and a last-ditch three-week effort after Killinger’s ouster that failed to convince the feds to save the company. Along the way, WaMu’s down-home sensibilities and the “frugal is sexy” work ethic that steered the bank back to profitability through the savings and loan debacle succumbed to the allure of the subprime bubble.

A former senior financial analyst at the company told Grind that the day after WaMu failed, executives from JP Morgan, which had snapped up most of the bank’s assets for $1.9 billion, descended on it headquarters. “They were exactly what we were trying not to be,” the analyst said. “The classic stodgy banker.” In the storytelling, Grind manages to make the wonky accessible and portray her characters as fallible human beings, as opposed to the usual Wall Street caricatures. 

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Reclaiming power from those who abuse it often starts with telling the truth. And in "This Is How Authoritarians Get Defeated," MoJo's Monika Bauerlein unpacks six truths to remember during the homestretch of an election where democracy, truth, and decency are on the line.

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SIX TRUTHS

Reclaiming power from those who abuse it often starts with telling the truth. And in "This Is How Authoritarians Get Defeated," MoJo's Monika Bauerlein unpacks six truths to remember during the homestretch of an election where democracy, truth, and decency are on the line.

Truth #1: The chaos is the point.

Truth #2: Team Reality is bigger than it seems.

Truth #3: Facebook owns this.

Truth #4: When we go to work, we're in the fight.

Truth #5: It's about minority rule.

Truth #6: The only thing that can save us is…us.

Please take a moment to see how all these truths add up, because what happens in the weeks and months ahead will reverberate for at least a generation and we better be prepared.

And if you think journalism like Mother Jones'—that calls it like it is, that will never acquiesce to power, that looks where others don't—can help guide us through this historic, high-stakes moment, and you're able to right now, please help us reach our $350,000 goal by October 31 with a donation today. It's all hands on deck for democracy.

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