Biggest U.S. bank failure to date is non-event for our reporter

Last night my bank failed, the latest casualty of the national financial crisis. Washington Mutual, the nation’s sixth-largest banking institution, which claimed $307 billion in assets on its books as of last June, was sold to JP Morgan Chase for $1.9 billion in a transaction facilitated by the Federal Deposit Insurance Corporation and the Office of Thrift Supervision.

As a Baby Boomer raised on my parents’ tales about the Great Depression, I admit I was worried about what I might find when I woke up to the news this morning. But so far, for me, the biggest U.S. bank failure to date has been a non-event, according to five quick tests:

• Branches. My WaMu branch in Albany, Calif., opened promptly at 9 a.m. without incident or long lines of depositors clamoring for their money. My regular teller said the only thing difference is, “We’re JP Morgan Chase now.”
• ATM. The WaMu ATM machine dispensed cash to me, as usual.
• Debit card. My WaMu debit card purchase at Starbucks went off without a hitch.
• Online banking. I had the same access to my account information via the Internet, and all appeared normal in that virtual ledger—my deposits were all still there and a check had been paid last night.
• Credit card. My WaMu credit card credit line had not been reduced, frozen, or closed.

I had known of WaMu’s financial troubles for months and last week wondered if I should find another bank. Because of the FDIC protections, I didn’t fear losing my checking and savings deposits. Rather, I considered switching to avoid the possible hassle of having to go without the convenience of my debit card in a sudden and unexpected bank shutdown. I also wanted to get ahead of the time-consuming process of switching over several direct deposits and electronic payments to a new bank in the midst of a crisis.

As it turned out, I never did change banks. The takeover agreement arranged by the FDIC and OTS required a seamless transfer of all bank services to JP Morgan Chase, so none of my bank services was disrupted. So far, so good. As a consumer money reporter, I look forward to seeing if my checking and savings fees and account terms will change. —Jeff Blyskal

Comments

[Mike]

Oh, you can bet on a rise in fees. The money has to come from somewhere...

[Russ Hodes]

Bank failures are a worry, if you've ever been affected.

With Washington Mutual, in particular, since so much capital had been secretly pulled out of the bank prior to the news, the local branches in Austin, Texas, forced all their depositors to make limited withdrawals AND to get them from 2 or 3 different branches, and in some cases, over several days time.

Nobody lost their money - it just took them hours and days to recover it!

OK, then the poor folks who trusted them to do their banking on-line. BIG mess. Bills didn't get paid, and all the automatic features were disabled. Big mess trying to figure out what got paid and what did not.

So, even if you got all your money out of the bank (which I would not have done, myself, because I trust the FDIC insurance), then you still risked missing payments and damaging your own credit ratings. (Oh, sure, you can always write a letter of explantation to the 3 Credit Bureaus - for more fun and games that only they know how to impose on us.)

I say you spoke too soon.

Bank failures affect everyone, not just those low wage tellers who lost their jobs.

It sucks, big time!

The Savings and Loan crisis in 1989 wasn't nearly this bad.