The Human Cost of WaMu's (and Wall Street's) Failure

Apparently, we're in some sort of financial crisis.  My wife does the bills, so I'm just catching up.

One of the big headlines, currently, is the government seizure and sale of Washington Mutual...the largest bank failure in history.  Here in Seattle, we are still wondering what the fallout from WaMu's failure will be.  Of course, this has a huge affect on the US economy and Wall Street.  But, I wanted to take a moment to talk about what this could mean to the people of Washington Mutual and the people of Seattle.

I spent 2 years in the Recruiting department at WaMu.  In fact, it's where I took my first steps into corporate recruiting.  Despite the bad (terrible, pathetic, often unethical) decisions made by some of the brass at WaMu (can you say bad appraisals and Golden Parachutes?), the company, on the ground, is made up of some great people, 4,800 of whom work in downtown Seattle, itself.  Add to that another 1,800 in Washington State, and suddenly, we don't care so much about how awful the Mariners are (okay...I still care...stupid Mariners). 

For the city of Seattle, this is a huge blow.  And the potential loss of jobs isn't the only reason.

Washington Mutual had one of the best Employee Giving programs in the Northwest, possibly in the US.  Any contribution by an employee was matched by the company, up to $10,000.  On top of this, WaMu paid their employees to volunteer, and then turned around and donated money to the organization the employee volunteered with. 

In 2006, Washington Mutual donated almost $50 million to charitable organizations across the country.  Due to falling profits, that number was down from $94 million the year before.  Washington State charities received $8.3 million of that.  Here at Microsoft, our Employee Giving Campaign leaders have already heard from local non-profits asking us to help out even more than we usually do because of the money that will not be seen after Washington Mutual's downfall.

The people and politicians in the area are taking a "wait and see" approach.  JPMorgan hasn't yet said what they will do with the former headquarters of what was the nations largest savings and loan, including the new WaMu Center, which still has that New Skyscraper smell.  Seattle economist, Dick Conway, says "every WaMu job lost will likely result in another 1.5 jobs lost in the area economy."  This includes the Starbucks on the corner, the local restaurants and bars that regularly receive the patronage of WaMulians, downtown daycare providers, and many others.

WaMulians are troopers...and smart ones, too.  They'll bounce back.  In fact, last week, one of my buddies who works over there, on Facebook, listed her status as, "Sad about WaMu, but excited to watch The Amazing Race!" 

As for the rest of Seattle...we survived a fire, an earthquake, and Kenny G.  We can survive this. 

But, I will miss the commercials.

Editor's Note - Jason Pankow is a Senior Recruiter for Microsoft’s Xbox LIVE and Xbox Software groups.  Jason supports the Interactive Entertainment Business at Microsoft, bringing in technical, as well as creative, talent to Redmond.  Look him up on Xbox Live, where he'll ring you up for a triple-double as Steve Nash on NBA 2K8 or kick it old-school via a 7-digit score on Galaga...

Comments

[Joshua Letourneau]

JP, your post here hit home with me. I'll be honest that I don't know anyone who works at WaMU personally, but the way you described the job losses really got me thinking. Frankly, you're right - the trickle effect of these losses are more than just data and stats on this month's jobless report. Here in Atlanta, we've had losses and I can see the effects of less people in coffee shops, less people watching the game at the local pub on Sunday (excluding the real drunkards - they'll loyal no matter what the consequences!), shopping carts only filled halfway at the grocery store, etc. In my eyes, it's the market psychology that takes a hit as well. We hear it called 'consumer confidence', but it's deeper than that. Most normal people feel pretty bad after getting out of a long relationship - well, it's the same with work. There is a part of us that we leave behind with major life changes - sometimes for the better, but that loss can still be felt in our own psyche. When you're in your early 20s', it's fun to turn a new chapter in life . . . but that gloss can wear off when the pages keep turning.
I wonder how the FOT crew (and our market in general) feels about the inevitability of certain business models. In Atlanta, there was an ongoing joke that WaMU would lend to anyone - it was as if you could fill out the paperwork for a stated income, you could get a mortgage (at a ridiculously high rate for going with the stated income, but you'd get approved nonetheless.) I personally had a friend living in a $800k house when he should have been in one probably less than half that . . . with a good ole' stated income mortgage from WaMU. I honestly wonder how the people that work at an institution giving loans out like this feel about their job security in the long run.?.
Anyway, I'm rambling, but paying attention to not only what the media is saying, but also what my friends/family/neighbors are saying as well. I guess that as I get older, I become a better listener (well, I hope anyway!)

[Jessica Lee]

good post, pankow. the point you raise regarding WaMu's corporate giving and the impact of its fall to charitable organizations... this is something that's a huge issue right now for folks who work in the corporate responsibility space. if you add up all the giving by WaMu, AIG, Freddie, Fannie, Bear Stearns, etc., and take a snapshot of it in 2008 versus 2009... i think the drop will be huge. hard times...