The Lost Bank by Kirsten Grind

Author:Kirsten Grind
Language: eng
Format: epub
Publisher: Simon & Schuster

Killinger, caught off guard, replied haltingly to his former executive team member.

“Well, as I said in my comments, we take responsibility for what we are doing, and we’re in the process of turning it around,” Killinger said.

“Why should we expect that the people sitting here, who have made some damn stupid decisions over the past four or five years, can make any better decisions going forward?” Lannoye demanded. “Why wouldn’t we be better off with the stock of JPMorgan, which is a well-run organization, than stock in a company being managed by people who obviously don’t know how to run a lending operation?”

“Thank you,” Killinger said.

“You are not being held accountable,” Lannoye said, ignoring his cue. “You haven’t answered that question.”

“Well, thanks. I understand the question. I’m telling you, we do take accountability, and we’re working hard on turning this around.”

Lannoye sat down. Killinger was shaken. He hated confrontation. Now shareholders, employees, and even former executives were berating him, one after another, in a public forum. His hands began to tremble again. Another shareholder threw him an easy question, asking Killinger to explain WaMu’s current problems compared with the Savings and Loan Crisis. “Are we going to get out of it like we got out of that one?” the shareholder asked. This question gave Killinger the chance to flip the meeting back in his favor. He could have reminded the audience that, yes, WaMu had emerged mightily from that earlier crisis, just as it would emerge from this one. Instead, he gave a convoluted response, ending with what seemed a scolding of shareholders.

“I just want people to calm down,” Killinger said, agitated. “Have a little faith. I know it’s tough. I know nobody likes a one-cent dividend. Nobody likes the stock price where it is. Nobody likes dilution. Nobody likes to have to raise capital now. I’ve never had to do any of that, except we have to, because we’ve got to do it now. And if we do it correctly now and manage ourselves through… again, it was because this is the worst housing market since the Great Depression. And we’ve had to deal with it.

“And if we just stay with this for a few more quarters, I think… again, I said in my remarks earlier, this is a turning point. I expect us to stand here next year and look back and say, April of 2008 was the turning point. Yes, we can see why it was a tough time. But I think we will have seen a better time by then.”

The shareholder who had asked the question didn’t immediately respond. Killinger’s answer had stunned the audience. Many of WaMu’s employees, and even the bank’s senior managers, had never seen Killinger lose his composure.

“Excuse me—I was wondering,” the shareholder said, “could you just kind of answer? Is this similar to that situation? You’re kind of rambling on now.”

“I am, but it’s similar in terms of the difficulties—caused by different things, but it was a very tough period. This is a very tough period.

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