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An interesting read on WaMu's last days, including the fact that WAMU suffered from not just one run on the bank, but two. The initial run on the bank occurred in July after IndyMac's failure.

These interviews show that WaMu suffered through not one but two bank runs in its final months. The first run was many times larger than the run that felled California lender IndyMac in July 2008, though neither shareholders nor the public knew about it. WaMu survived that run, and the second run was tapering off when regulators moved in and shut the bank, citing the run as the reason.

The story also questions at the FDIC's actions in the days leading up to the seizure.

On Tuesday, Sept. 23, a quiet descended on the bank. The run had slowed, but so had interest from potential buyers. Two weeks of shopping the bank across the East Coast produced no takers. Now, banks that had been combing through WaMu’s electronic data room as part of their due dilligence abruptly stopped.

“Suddenly, all the bidders appeared to lose steam all at once,” said a person familiar with the matter.

WaMu executives began to suspect that the FDIC was letting potential bidders know that the bank might soon be sold in a distressed sale. It’s not clear when the FDIC started approaching other banks, but WaMu executives say such a move would have undercut Fishman’s ability to sell the bank. It also appears to conflict with what insiders say Bair had told Fishman only days before — that she was referring potential bidders to him.

“Deep into the process, we learned that concurrent to management shopping the bank, that apparently the FDIC was soliciting bids,” said a person familiar with the matter. “I would say it came as a big surprise.”

To be sure, the FDIC would approach potential buyers of any troubled bank in advance to see if they had any interest and enough capital for a purchase, said a former regulator familiar with WaMu’s closure. Regulators from both the OTS and the FDIC have declined to be interviewed for this story.
“Once it was clear there would be a failure, there would certainly be a real push to find out who was a prospective buyer,” said the official, speaking on condition of anonymity.

But the difference in the two scenarios is substantial. In a private sale, shareholders would receive cash or stock for their holdings, which were worth about $7 billion when Fishman took over in early September. Under the seizure, they got nothing. Thus in theory, at least, the government’s action wiped out $7 billion in shareholder wealth.

What’s unknown: when the FDIC started shopping around the bank.

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