The story of WaMu's bankruptcy, as told by data

2 months ago by James Mattone in Facts, Features

Ten years ago, Washington Mutual Inc. — known in colloquial terms as WaMu — was crumbling. The "Wal-Mart of Banking" was one of the many banks that failed during the sub-prime mortgage crisis of 2007-2008.

Many know what happened to WaMu, including its employees who took to Glassdoor, a website that was just going into public beta in June 2008, to report their grievances, disappointment, and even memories anonymously. From the middle of WaMu's fall in May 2008 to the present day, here's what its former employees thought about the company:

WaMu's History Pre-Glassdoor

Months and years before Glassdoor officially launched its website for company ratings, there was a bank founded in Seattle, Washington with over a century of history.

On September 25, 1889, four months after a fire engulfed the entire central business district of Seattle, Washington, the Washington National Building Loan and Investment Association filed its articles of incorporation. The association gave out its first home loan, a $700 loan with monthly installments, to a Norwegian seaman to build a house.

It soon made 2,000 more similar loans of that type, and in 1917, had more than 16,000 depositor-owners. By that time, it reconstituted and changed its name to Washington Mutual Savings Bank. It escaped World War I with its assets expanded by 68%, a financial feat few companies managed during the minor recession of 1919. It also made its first acquisition during the Great Depression of Continental Mutual Savings Bank on July 25, 1930.

Several decades later, the country fell into its first major period of negative economic growth with the early 1980's recession. Despite yet another period where other financial institutions were failing, Washington Mutual Savings Bank made its move to acquire Murphey Farve Inc, whose founder once served on Washington Mutual's board back in 1912. It then transitioned to a capital stock savings bank on March 11, 1983 and raised $72 million on the common stock market.

Technically, it was no longer a "mutual" bank, but it kept the name for the sake of brand recognition.

The fall of Kerry Killinger among his employees

During this time period, Kerry Killinger started moving his way up the company to eventually become its CEO in 1990, and also became Chairman the year after.

As CEO, Killinger oversaw WaMu's expansion across the country. While also acquiring banks in its founding state, it moved down the West Coast to Oregon, Utah and California with the purchase of subprime mortgage lender Long Beach Financial in 1999.

By 2001, WaMu was regarded as the largest mortgage company in America after acquiring Fleet Mortgage, a unit of the collapsing FleetBoston Financial Corporation. Fueled by the Power of Yes and an Aaa rating from Moodys for most of its mortgage-backed securities, Killinger boasted that in five years, WaMu would become a major industry leader.

We hope to do to this industry what Wal-Mart did to theirs, Starbucks did to theirs, Costco did to theirs and Lowe’s-Home Depot did to their industry. And I think if we’ve done our job, five years from now you’re not going to call us a bank.

— Kerry K. Killinger, 2003

That quote was attributed to him by the New York Times at the end of 2008, right when WaMu was going bankrupt.

The first Glassdoor review for Washington Mutual Inc., dated for May 5, 2008, was from a former teller who worked in the Bronx. This teller was relatively pleased with working for WaMu, saying that it was a, "great place to start out, if you are looking for experience in the professional workforce."

The second from May 13 showed a bit more telling sign of concern among employees.

A banking loan consultant in Chicago who wrote a review while still employed said the company was in "survival mode," which, "has caused many bad decisions being made." At this point in time, WaMu was two years removed from laying off 10,000 jobs due to slowing mortgage applications at the peak of housing prices and its subsequent collapse. It was a year since it posted a 20% decline in first quarter profit, six months removed from its shares hitting an 11-year low, and 117 days out from reporting its first annual loss since the Reagan administration.

In other words, it was in survival mode.

Within the first week of Glassdoor's beta going public on June 11, WaMu and its CEO Killinger, who was ousted as chairman a little more than a week prior, were given 37 reviews, 44 in total when factoring in private beta reviews. By this point, Killinger's rating was heading into the basement.

During Glassdoor's launch week, there were only 5 reviews that approved of Killinger, 8 with no opinion, and the rest — 65 percent of those reviews — disapproving him. And it only got worse as layoffs continued to mount, its shares dropped to less than $4, and its margin for the second quarter was posted as a $3.3 billion loss.

By the time he was forced out of WaMu on September 7, 2008, most employees who publicly rated him bid him good riddance. At an 18.7% approval rating, he would be considered among the worst-rated CEOs on Glassdoor if scored alongside today's chief executives.

Bankruptcy

Much like its CEO, WaMu's rating fell quickly once employees started posting anonymous reviews on Glassdoor.

Back then, there was no "business outlook rating" that was being tracked — an unfortunate thing for this feature, but even so, it would probably also not look good. Instead, overall rating for WaMu's provides a good measuring stick of publicly known internal opinion. Out of a 5-star rating, WaMu never came close to a 4/5 once a solid number of reviews trickled in, as former employees hammered the company with 3, 2, and 1 star ratings for a variety of reasons. 

A day after federal regulators seized WaMu's assets on September 25, 2008 and sold them to J.P. Morgan Chase, who promptly laid off 9,200 jobs that December, WaMu filed for Chapter 11 bankruptcy. By the end of the year, it sat with an overall Glassdoor rating of around 2.74.

Employees were upset about the failures of the company and, in some cases, being laid off. Some were unsure of what the sale to Chase would mean for their jobs, or criticized a lack of communication and disorganization at the highest levels of the company. One reviewer, a then-first vice president in San Francisco, lambasted the company, writing, "Even before the JPM takeover, senior management communication was poor, and the overall level of leadership from the VP-level up vs. other financial companies has been mediocre at best."

Others praised WaMu anonymously, touting the company's benefits and positive memories from working there before its demise. "They understood the value of it’s employees and treated them fairly and with respect," wrote one former Project Manager from Pleasanton, California. "I am just sad that the company as it was is gone."

Remembering WaMu years later

Nearly ten years after it filed for bankruptcy, Washington Mutual's overall rating has seen a steady climb from former WaMu employees, including some who filed Glassdoor reviews while working at their new employer J.P. Morgan Chase, who saw their pain ease over and began rating them more favorably.

Four of the last five ratings filed on Glassdoor were a four or higher, with the most recent one — coming in on September 11, 2018 — giving the company a three in retrospect.

The other recent ratings read much like a eulogy for the fallen bank, such as one anonymous former employee who simply titled his review, "Great Company."

"This was a great company to work for," the reviewer wrote. "You were challenged, but always felt very supported. They were a company that cared."

(Note: Trends and analysis are based off of raw Glassdoor data starting from May 5, 2008)

James Mattone

James is a recent Boston University graduate who calls the world of esports and video games his home. As a young journalist, he has already covered two E3 expos a...

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