Well, that was a long way down...

Well, it finally happened. Washington Mutual has gone the way of many other financial institutions that had questionable management: Continential Illinois, Riggs National, et al. However, I can't help but feel WaMu was a root cause of much of the current fiscal crisis.
I was with Whammy through much of the 1990's before my layoff in 2004, and I think I can point to the day the fall began. It started with the appointment of one Mr. C. Davis as the head of the mortgage lending group, coming in from the failed American Savings (that should have set off some warnings right there.) The day he was appointed to his post, WaMu stock showed a drastic fall; apparently even the market knew it was bad news.
From then on, Mr. Davis proceeded to remake this once well managed regional bank into a national 'mortgage banking' franchise, no doubt using his script from American Savings. WaMu soon became a residential lending powerhouse and innovator, coming up with new ARM products that would eventually place more borrowers at risk. And he loosened underwriting, assuring more loans were made to enhance profit.
WaMu had a very low non-performing asset base for a long time, and it was felt they could expand their lending and take on more risk. Hence, the move into subprime and the lackluster oversight of their wholesale lending business. Can anyone say "bite me on the tush?"
By the time management wised up and removed Mr. Davis, the damage had been done. (Don't get me started on his platinum parachute he got when dismissed; look it up on the SEC website.) From here on, WaMu was not going to recover. Kerry's goal of getting the ROA up to competitor levels would never happen without something being done. What to do? Of course, layoffs!
One of the easiest ways to enhance the balance sheet is to reduce expenses, and one of the fastest ways to do that is employee overhead, i.e., salaries. Hence, the start of the ongoing saga of layoffs at WaMu, where they started, ironically, by letting go some of their best people because their salaries were too high. And, ironically, Kerry got raises and bonuses because of his 'effective managing' of the bank through tough times, that is, reducing expenses. Tough management - let people go to save the ship and your own gold mine. The Board is/was as culpable in the failure as any one individual, but they kept Kerry too long. He was a regional bank manager trying to manage a national franchise; he didn't have the savvy to do so. Then, neither did the Board.
I've been thinking since 2004 that WaMu would be bought out. They should have been; they stupidly turned down JP Morgans first buyout attempt this year. They did finally part ways with Kerry; I'm sure he refused a big bonus and compensation package because he couldn't turn around WaMu's fotunes. HA! Not Likely! I'll be honest, I respected Kerry when I worked there in the regional bank times, and a bit into our foray into the national market. But he soon showed he too was consumed by greed and the largess of a Board that was not about to perform its own fiduciary duties.
Now where are they? A part of JP Morgan! And the interim CEO that replaced Kerry Killinger? For a 16-day stint at a failing bank his removal package is obscene. And the OTS in all their glory is letting him take it, not that he has any more conscience when a windfall comes his way than Kerry or Mr. Davis did. But for 16 days? Shame is too kind a word, and again the Board shows it has no sense of responsibility to the Bank, the shareholders, the employees, anyone.
WaMu is where it should be, where it was destined to be from that fateful day Mr. Davis was brought in. Nothing could have stopped the downfall because the egos and greed were just too big. Rest in peace, WaMu. You deserved better.

International ponderings...

What an interesting world this is, and how it seems to prove that history repeats itself.  Vladimir Putin has either never bothered to study world history or, more likely in keeping with his much inflated vision of himself, doesn't believe it exists prior to his birth.  However, Russia and Putin are going much the same way as others, and the similarities are striking.

At the end of the "soviet" era, Russia was essentially bankrupt, and by the time the newly minted Russian Federation was ten years old it was bankrupt, the RF having defaulted on government bonds and the ruble fell like an Aeroflot plane.  Russians acquired a chip on their shoulders and a humiliation at being unable to cope in a capitalist market.

So, what happens?  Putin basically takes a one-man rule approach to RF government, including a puppet president, and sets it on a 12-year development plan.  The soviets called them "5-year plans" or the like, but there it is again.  And he raises the likelihood of national financial ruin to continue to drive his view of the world and Russia in particular.

Mr. Putin also uses brawn over brains in his Georgia adventure and resorts to mikhail mouse type of theatrics, i.e. a "found" American passport, to show the US and western countries were behind the original Georgian actions.  Never mind the previous owner of the passport, which was reported lost, was in China teaching at the time.  It still makes good press at home to raise the fears of the Russian people that the US is now the dominant world evil out to get them and only Mr. Putin is brave enough to stand up to the West and lead the brave Russian Federation to its place of glory on the world stage.

Let's move to the 1930's, and here's probably why Putin doesn't recall history - it happened in Germany, against whom Russia still holds a grudge.  Germany established one-man rule with the election of Adolph Hitler with a puppet Chancellor in the elderly Bismarck.  Hitler preyed on the feelings of the German people because of their humiliation at the terms of the conclusion of the first world war.  See any similarities yet?

Any guesses who was inclined to use brawn over brain?  Hitler and his German army, invading the Rhineland,  Austria, the Sudetenland then Poland.  And let's see, who did Hitler blame for the problems of Germany?  I'll give you six million guesses, who became the scapegoats for the German escapades and reasons for their actions.  All this to assuage German "humiliation" over the end of WWI, pretty much originally caused by Germany to begin with.

So what do we have here, two instances of imposed one-man rule after "free" elections; military interventions to bolster the self-image of the nation and bully others to go along with them; a "cause" or "scapegoat" for these actions and a source for an element of fear with which to play on their citizens imaginations and feelings.  Germany and Russia; Hitler and Putin.

Oh, and let's not leave out the sub-players of British Prime Minister Chamberlain ("Peace in our time!") and French President Sarkozy ('stop what you're doing or we'll have to have another meeting about it!').  Like Chamberlain, it appears the EU needs a strong dose of Viagra!

Fortunately, I don't see this heading to a war as it did in the 1930's.  The Russian Federation, for all the pride it shows itself, will likely self-destruct again, while blaming the West, and will again be bailed out by them.  And Russia, and the Russians, will continue to believe the world just can't exist without them - just like the Nazis, Fascists and Japan's Imperial Way Faction.

Perhaps Russian nationalism is the cover for an underlying self-loathing they can't escape, a feeling they can't really be better than this.  Yes, they are a complex people, but ones who tend to act and react the same way in any given situation since Stalin.     

History is repetitious, and Mr. Putin is giving an excellent history lesson.