About a month ago, news of WaMu's demise brewed. I was slightly alarmed since I bank with them. Then news about Lehman Brothers' bankruptcy blew up over a week ago. Wachovia was taken over by Regions Bank. Morgan Stanley & Goldman Sachs are in trouble. In fact, the U.S. banking system looks like it's about to collapse bringing to mind the memory that was the Great Depression.
Today, I learned that WaMu was taken over by J.P. Morgan. WaMu was already struggling for a while due to the mortgage crisis. News about Lehman's prompted WaMu's customers to pull out about $16 billion of deposits. Although this only represents about 9% of the bank's assets, it was enough to worsen their already struggling state. J.P. Morgan's bailout will make the transition pretty seamless to WaMu's customers but it only fuels the fear that we the worst is yet to come.
WaMu's demise is currently the largest bank bust in the history of the U.S. That in itself is a lot to ponder. Are we in such a state of corporate greed that banks are failing left and right?