Barely 10 pages into the first chapter of Kirsten Grind's The Lost Bank comes the first of many elaborate musical interludes. The year is 1987, the theme is a modified Wizard of Oz, and the occasion is the 63rd birthday of the bank’s universally beloved, unbelievably benevolent and comprehensively folksy CEO Lou Pepper.
"You'll want to go to the land of corporate values! All you have to do is follow the WaMu road!" Glenda the WaMu Witch cheerfully tells the anxious customer sales representative “Dorothy,” pointing the employee in Lou’s direction. A sea of (Wa)munchkins donning paper masks bearing Lou’s face emerge from the woodwork to join in a rousing chorus of “Louie Louie.”
By ’87 Lou had two years to make up his mind whom to pick as his chosen successor, and he’d narrowed the candidates down to two. And—spoiler alert!—He picked the wrong guy. But there are so many irresistible elaborately choreographed song-and-dance routines on the WaMu road to Just Big Enough To Fail! There's the brand rally anthem I think of as “(Wam)Oops I Did It Again" (I made you believe we're more than a bank …), performed by a guy in a blond wig. There’s the brand rally at which a much younger female employee leaps onto the stage to grind with Pepper’s protégé Kerry Killinger during a performance of “Taking Care of Business” while another woman in the crowd faints. And the obligatory Sir Mix-a-Lot-inspired ode to “big bucks” performed by a group of elite mortgage sales staffers during the very last gasp of the bull run at the beginning of 2006:
You mortgage brothers can't deny
that when the dough rolls in like you're printin' your own cash
and you gotta make a splash, you just spends, like it never ends
Cuz you gotta have that big new Benz
For the vast preponderance of its perpetrators, the financial crisis seems to be something considerably less profound than a Katy Perry video. And while former Puget Sound Business Journal reporter Kirsten Grind, despite being billed by her publishers as the author behind the "first detailed stories about Washington Mutual," is not even responsible for the first detailed accounts of Washington Mutual's in-house Sir Mix-A-Lot cover band’s performance—that, along with about 90 percent of the substantive material on WaMu's demise in the book, was compiled by Sen. Carl Levin's permanent subcommittee on investigations, whose excursions down the WaMu road yielded a much more lucid (also: free) account of WaMu's collapse in 2011—she is an admirably thorough chronicler of the relentless obnoxiousness editors call “color.”
There are exhaustive discussions of Killinger’s evolving attitudes about corporate jet travel; details of the company’s ever-more-rock operatic culture-building initiatives; and what passes for “perspective” from employees of a company that hosted a “revival” in Atlanta featuring a white-suited “evangelist” who punctuated every line with “WaMu-lujah!” and a gospel choir performing a hymn to the bank’s official slogan (“The Power of Yes”).
“When the music stops, from a liquidity perspective, things will get complicated,” former Citigroup CEO Chuck Prince famously put it in August 2007. “But as long as the music is playing, you’ve got to get up and dance.” But at WaMu, when the music stopped, the sales team just got working on a new song: The star of the mortgage wholesale division composed a rousing finale score commemorating liquidity’s death to be sung to the tune of “American Pie":
I can't remember if I cried
When I read about poor Countrywide …
Which brings us to the defining disingenuousness that seems to have been this bank’s truly exceptional trait: It seems to have contaminated just about every document the institution ever touched, and Grind’s toxicology report is no exception. There is an exceptional story here, but not because it happens to be the “biggest bank failure” on the historical record, as her title reminds us—that distinction rightfully belongs to Citigroup, as the regulator widely perceived by WaMu loyalists to be one of the bank’s two primary malefactors, FDIC chairman Sheila Bair, would gladly concede. But Citi was, as Kerry Killinger put it in his comically un-contrite testimony before Levin’s committee, "too clubby to fail."
What does seem to have been truly extraordinary about WaMu was the sheer brazenness of the pyramid scheme at the heart of its business model. The mortgage division did everything within its power not to originate traditional fixed-rate mortgages—pretty much the only non-predatory home loans on the market—preferring the fatter profits that came with catering to house-flippers, professional con artists, and naive first-time buyers that other lenders (even in 2004-05!) had turned away. In 2003, after an internal audit of 4,000 loans found only 950 qualified to securitize, the legal division temporarily shut down the whole business. By the time it reopened, the market had gotten so hot that standards sunk still lower. Year after year, even as housing prices surged, mortgages securitized by WaMu's Long Beach Home Loan subsidiary consistently scored among the highest default and delinquency rates in the business—worse even than Ameriquest, the subprime lender run by the original founder of Long Beach, where the movie Boiler Room was an actual part of orientation.