Wachovia and Washington Mutual Customers: Moving on
by Byrne Hobart
While employees of the former Washington Mutual and Wachovia are busy fixing embarrassingly apt broken signs and fairly awkward ads, their depositors are wondering: what next? Although their deposits are protected by the FDIC, many people would just prefer not to be a customer of JP Morgan Chase or Citigroup — they want their old bank back!
I can’t offer that, but I can offer a few tips on choosing a new bank:
- Try to find someone a little less trendy. Wachovia bought one of the biggest providers of adjustable rate mortgages, at the peak of the property boom. And WaMu cleverly reasoned that, at a time when people are beginning to mistrust big financial institutions, and to worry that these companies were not exercising careful stewardship over their customers’ money — it was time to sink millions of dollars into an ad campaign associating WaMu with the phrase “Whoo hoo!”. As in, “Whoo hoo, we lost $14 billion before before being taken over by the government and sold to a competitor!”To avoid this, try to find a bank that’s un-trendy, or better yet, anti-trendy. Forget about subprime — think about the last incredibly stupid financial bubble. A company like Crazy Woman Creek Bancorp (an actual company, located Buffalo, Wyoming) is clearly too stubborn to follow any kind of trendy new nomenclature. But a bank with a dot-com in the name? Probably not so safe.
- Be careful what you wish for. Although both WaMu and Wachovia got into trouble for services most of their customers never asked for or used, going the other way can get you in trouble, too. Big banks bend over backward to come up with new spins on traditional banking services, so if you’re used to hyper-convenient high-interest checking accounts linked to reward-program credit cards and low-fee brokerage accounts, expect to lose some or most of those perks with a smaller company.You don’t get less, of course, but what you get is different. For example, the President of the bank is likely to live down the block, rather than in a penthouse on Park Avenue. And he’s more likely to drive a used car than a Gulfstream. For whatever reason, the used-car drivers of the world seem less likely to lend to shaky third-world governments, dodgy real estate deals, or complicated credit derivatives dealers.
- Ignore all the advice you get. WaMu was legendary in the banking business. Not just for becoming a huge company pretty quickly, but for sidestepping the subprime mortgage business until they were sure it was a sure thing. Wachovia was considered a rock-solid company with very conservative management. And if someone had told you to avoid them earlier, you wouldn’t be reading this now.
It’s surprising how all this turned out. The average banker has lost the six-figure job, the stock, the stock options, and a lot of reputation (and probably some friends). The average customer needs to deal with the paperwork of moving an account from one FDIC-insured bank to another. You might even start to suspect that the customers are better at banking than the bankers.