About Washington Mutual Inc

Washington Mutual Inc (WAMU), is a savings bank holding company.  Founded in 1889 as a loan and investment association, the company which later undergo several name chances as well as strategic shifts in it's banking and loan practices through its nearly 120 years of existence.  From it's inception until 1983, WaMu operated as a mutual company deriving profits and gains to be reinvested towards services and products for its existing and future members.  During the time which WaMu operated as a mutual company, a series of purchases of other banks and holdings were made as a way to expand the membership of the bank and it's services.

In 1983 the company went through demutualization following 94 years of operation.  For the first time in it's history WaMu would issue capital stock onto the free market and change it's overal business purpose to "for profit", while it strives to maintain the same benefits and services that it had provided before demutualization.  Shortly after converting over the company, WaMu would see its assets double in just 6 years.  During that time and the years that followed, the company would go on to acquire 29 more banking companies and divisions, adding more assets to the company's portfolio.  WaMu also saw the addition of several mortgage companies and a credit card division into its business plan.  By 2005, WaMu had become the 3rd largest mortgage company in the United State, as well as the 9th largest credit card company.

As early as late 2006, WaMu would begin to become a victim of what would eventually become the worst recession in US history since the Great Depression of 1929.  WaMu's aggressive business strategy would begin to unfold throughout the end of 2006 and become increasingly disastrous through 2007.  As housing rates were at all time highs before the recession began, WaMu would use its considerable leverage and assets to make large amounts of loans in both subprime mortgages and subprime credit cards.  The banking division of WaMu at one point before the end of 2007 had nearly 336 stand-alone branch buildings where various types of home loans were processed and approved.  WaMu would eventually over leverage themselves due to the high number of Adjustable Rate Mortgages (ARMs).  As the US economy slowed down, the number of home loan defaults began to rise in quick succession.  This coupled with the falling home prices throughout most of the US meant that even with foreclosures and the properties back in the hands of the company, they were unable to sell them back into the market, or were not able to derive enough revenue from the sale to cover the loan that was made on them.  In the mean time, the credit card division was also seeing a surge in the number of late and non payments being made.

By September of 2008, WaMu's stock price had fallen to $2 from its previous highs of around $50 just two years earlier.  Amid strong voices from the shareholders, then company CEO Kerry Killinger was dismissed by the company board.  In the meantime, the company went looking for a buyer for part of its banking division. WaMu had been unsuccessful in finding an appropriate buy until its seizure by the FDIC.  Overnight the companies banking division  was bought by JP Morgan Chase in a secret deal brokered by the FDIC for 1.9 billion dollars.  At the time it was believed that the assets sold were worth many multiples more than what it was forced to sell for by the FDIC.  Particularly troubling was that the deal was done by the FDIC as a result of the failure of IndyMac bank earlier in the year.  The FDIC feared that if it did not sell the bank quickly they would not have enough capital reserves in its insurance fund to cover all the accounts should something have gone wrong.  This action by the FDIC resulted in massive losses to WaMu shareholders who felt that their holdings were worth far more than what the government had forced upon them.

Shortly after the sale of WaMu's banking division, the holding company would file for Chapter 11 bankruptcy protection, citing $33 billion dollars in assets and $8 billion dollars in debts.

Presently WaMu is operating under Chapter 11 as it tries to reorganize the company.   A number of lawsuits have been filed by the company and individuals against JP Morgan and the FDIC concerning potentially illegal activities regarding the sale of the WaMu banking division.  The outcome of these lawsuits will have a large impact on the reorganization plan and eventual outcome of WaMu Holding Inc.

Washington Mutual Inc.
1301 Second Avenue
Seattle, WA 98101
United States - Map
Phone: 206-461-2000
Fax: 206-554-2778
Website: http://www.wamu.com