"We hope to do to this industry what WalMart 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 Killinger, CEO, Washington Mutual Bank, 2003
It turned out that in saying that Washington Mutual Bank would no longer be called a bank by 2008, Mr. Killinger was indeed prophetic, though not quite in the way he had imagined.
This week, Killinger appeared before a U.S. Senate committee to answer questions about WaMu's collapse in September 2008.
I have wondered occasionally what Killinger has been doing since Washington Mutual's demise. Killinger took home $88 million between 2002 and 2008, and a $25 million golden parachute at the end. So I guess he hasn't been flipping burgers at Burger King or delivering parcels for Fed Ex, like some former WaMu employees have.
But it turns out Killinger hasn't been wasting his time. He has been figuring out who was to blame for WaMu going under. And, surprise, it wasn't him. It is that ever-popular, all-purpose fall guy, the federal government.
(Have those who seem to want to get rid of government altogether considered this: with government gone, who would they blame? Here's a "revenue enhancement" idea: instead of taxing people, let's start charging them a few bucks every time they say that it's the government’s fault.)
When Killinger sat before the Permanent Subcommittee on Investigations this week, he told senators that Washington Mutual had been treated unfairly. Sounding like a kid who lost out on his at-bat on the playground to the bigger kids, Killinger complained that other banks had been helped out, why not WaMu?
Maybe the lack of help was because nothing that Killinger or other WaMu higher-ups were doing suggested they had the slightest idea how precarious the bank's condition was. The production and sale of bad mortgages kept on apace until the feds said, "Sorry, no more drinks for you, buddy."
True, Killinger began his testimony with the ritual incantation, "I accept responsibility." But it wasn't clear what that meant, since everything he subsequently said indicated that either he had no knowledge of actual bank operations or the federal government had been mean and unfair by excluding WaMu from the bailout game that included Bank of America, Chase, and Citibank, among others.
In a case of interesting journalistic juxtapositions, the same day the Seattle Times reported on Killinger's testimony on page one, there was another story at the top of the local section about a 14-year-old who had assaulted a Metro driver. The boy's mother told the court, "My son is a victim." She accused the bus driver, who had been knocked unconscious and suffered facial injuries that she (the driver) was to blame. “If you had handled it differently,” said the mother to the bus driver, before being cut off by the court. From CEOs to youthful offenders, it's the same story, "I am a victim. Someone else is to blame."
Washington Mutual's marketing slogan in its halcyon days was, "The Power of Yes." The idea was that a bank was no longer a bank, that is, a business that does due diligence, counsels customers against unwise risks, and maintains a balance sheet with numbers that correlate with reality. WaMu was to be a money store, saying in effect: "Tell us what you need, what you want. We're all 'Yes,' all the time."
Have we learned anything from the current economic mess? Have we derived any serious lessons?
The Washington Mutual saga seems a good place to start. Maybe lesson number one is that there is a difference between the illusions that sound good and that we'd like to believe, and reality. Just because you want something to be true, doesn't make it so. Just because something sounds exciting or positive doesn't mean it really is. The recession is a moral and spiritual wake-up call. Are we listening?
Clearly not listening were bank CEOs who wanted to believe that bubbles never burst and that they had assets when they didn't. But it wasn't limited to the economic realm. President Bush wanted to believe there were WMDs in Iraq when there weren't.
And it doesn't end there. It includes our single-minded devotion to the rhetoric of positive-thinking and "self-esteem," and only telling kids how wonderful they are, even if they aren't. It includes pseudo-preachers who have reduced religion to a Home Depot slogan, "You can do it; we're here to help."
The era will go down, if we survive it, as one where hype, slogans, and wishful thinking trumped reality, common sense, and honesty about the human condition.
All these months later Killinger, for one, seems not to have learned this or really any other lesson at all.
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