Why Washington Mutual will go under

No, they will not die because of lack of liquidity, they have a much bigger problem at their hands. This may end up being the most controversial blog post I have ever written but I like it that way. I think Washington Mutual deserves it after all the trouble I went through today with them resolving banking issues and still wasn’t able to do so.

So the long story short, I went to the WaMu branch today to open the 5% CD they are marketing and while in the branch found out my free checking account is closed and I have service charges on my (also presumably free) savings account. On top of that there is an overdraft warning in the account.

The branch officer was incapable to do anything to clarify why this happened (reasoning that the account was opened online) and for some reason gave me a Forgery and Bill Pay number, which ended up being a wrong number to call, and I was eventually redirected to the customer support.

What turned out is that my checking account was closed due to inactivity and after that happened they started to charge a service fee for the savings account since it didn’t meet the minimum balance requirement (waved with checking). Since there was very little money in the savings account, it went negative and now I have an overdraft warning.

So what went wrong?

The problem is that they never notified me that my account was closed, nor can I see it when I go online. The account is in the list and looks just as usual. In fact I can still see online statements for it (including one for the last month) and nowhere on the statement it says it is closed. The only way to find it out is if you attempt to transfer funds to/from it or if you go to a special link called ‘About this account’ where you will find that the Account Status field is set to ‘CLOSED’.

The situation didn’t improve after more than an hour on the phone today. They cannot reopen my checking nor will they reverse the service fees. My only option to avoid future fees is to fund the savings account over the minimum balance requirement, or open new checking account and somehow bind it with the existing savings.

I have been so much frustrated over this mess that I feel like abandoning WaMu altogether. During my customer service calls I have encountered on several occasions that the automated system is not able to access my account information, at which point I am thrown back to the main menu to type my a/n and pin over again. Also the inability of the branch manager to clarify (or solve) this mess is very puzzling to me. I would so much rather talk to a branch representative when dealing with complicated issues like this.


If anything, I have given up on the 5% CD deal because I strongly believe a company with the customer service record like this will not last long, and even if it does - I don’t want to have business with it.

Do you have an account at Washington Mutual? What is your experience with them? Are you a happy / frustrated customer? Pour it out in the comments!

See also:

34 Responses to “Why Washington Mutual will go under”

  1. 1 jack Aug 27th, 2008 at 5:53 pm

    haha.. you think WAMU will go bk.. because are you lame and dont know your account balances.. brillian!

  2. 2 idiot Aug 27th, 2008 at 5:55 pm

    Wow, your comments here are very insightful and provide sound reasoning for why this bank’s going bankrupt. Thanks for clearing that up for me.

  3. 3 Yan Aug 27th, 2008 at 6:35 pm

    I just had a bad day and had to speak it out. Thanks for cheering me up!

  4. 4 Matthew Aug 27th, 2008 at 8:26 pm

    Let me make sure I understand.
    You opened a checking and saving account. The accounts were free – the savings was free based on the existance of the checking account.

    Your checking account was closed due to inactivity. Due to that closing the savings account entered a fee status and depleted or diminished both accounts.

    If there was no provison for the inactivity fee (and I see none in what few disclosures they have online) I would file a complaint with the Office of Thrift Supervision. I would also send a copy of the complaint to WaMu in your state in care of their registered agent in your state.

    The Secretary of State can usually provide this information.

    I have never not had a satisfactory response when doing so.

  5. 5 EN Aug 27th, 2008 at 11:12 pm

    The most irritating thing is that they didn’t notify you outright that your account was closed. To think that a simple letter or email would have sufficed and yet they failed to do so. I was seriously considering opening a joint checking and savings online for the higher interest rate and ATM presence around me, but this story has put that thought on hold.

  6. 6 Yan Aug 28th, 2008 at 12:46 am

    Matthew, you described the scenario absolutely correctly. I am not really concerned about the money I lost – it is insignificant. I value my time though and I am outraged about this situation and the fact that the bank is not willing (or incapable) to resolve it.

    The true irony is that it happened on the day I came to them to give them more of my money.

    I dug some more today and I found a few WaMu ’supporters’ on the web. It looks like WaMu is famous about their customer service. Here, check this out:

  7. 7 Alex Aug 28th, 2008 at 8:41 am


    I like most jumped on the high interest savings account at WAMU end of last year, and quickly ran into similar issues as yourself. For one their promotional 5% rate quickly dropped, without any notification to me. When I inquired about that I was told that the interest rate is variable and they are not going to notify all their customers every time it goes up or down. So to me these high interest rate promotions are just a bait and switch trick to get you in their door.

    The second problem that turned me off to them was their on line banking. After it repeatedly failed to allow me to access my account, I called customer service and went to their local branch to try and resolve, I was told I need to wait 7 business days before I can again access my on line account. What? Do they only have 1 IT person and he was on vacation that week?

    I promptly took the $32K I put in their account out and closed all my accounts with them (except the unused $30K CC they gave me, I’ll keep that as an emergency CC). Never again will I step foot in a WAMU office.

    I went back to my local credit union and have never been happier with my decision. Their rates are average, but they actually care about keeping me as a customer.

  8. 8 Oleg Aug 28th, 2008 at 5:31 pm

    Contact WaMu Executive Customer Service
    I did not have any experience with WaMu but had a good one with Chase Executive Customer Service. I’ve tried to resolve an issue with a regular one 6 times unsuccessfully .
    Good luck

  9. 9 Bob Aug 28th, 2008 at 7:09 pm

    That’s no surprise that WaMu is a terrible company. WaMu has an unsatisfactory record with the BBB (see http://alaskaoregonwesternwash.....m=3001582). Also, there have been numerous horror stories about doing business with WaMu (see

  10. 10 Bob Aug 28th, 2008 at 7:13 pm
  11. 11 Matthew Aug 28th, 2008 at 9:06 pm


    I assumed the amounts were small insofar as inactivity fees depleted the accounts fairly quickly, and I too probably would have simply chalked it up to a lesson learned if the staff at the bank had at least attempted to clarify the issue, or resolve the problem would be more irritating than losing a few bucks.

    What kind of bank does not allow its branch managers to take care of simple problems like this and pawns them off on clerks at the end of a telephone line. I would still file the complaint so they can see how annoying it was for you, and so they can replicate the unpleasantness of dealing with an unyielding force embodied by the OTS.

  12. 12 Yan Aug 28th, 2008 at 10:03 pm

    I will sure do. How else will they know they are going under! ;-)

  13. 13 Debbie Aug 28th, 2008 at 11:28 pm

    I’d look at the fine print to make sure that each call you make to customer service is not costing you more money. I recently opened a checking account at Wachovia so that my mother could get a referral fee. Wachovia states that it charges for more than two calls to customer service in any one month, if you speak with a human being. (Automated inquiries are free.) I verified this information with my local Wachovia Branch Manager. He said to avoid those fees I should call directly to the branch with any questions rather than dialing the toll-free customer service number.

  14. 14 jack Aug 29th, 2008 at 11:54 am

    What does any of this have to do with their sovlency or liquidity or BK.. absolutely nothing!! Just retitle your entry.. I had a bad day at the bank and wamu has shitty customer service.

  15. 15 Alex Aug 29th, 2008 at 3:39 pm

    Well if a company mistreats its customers long enough they start going to greener pastures. If all of WAMU’s customers began doing what myself and Yan have done (taken our money elsewhere) then I would like to see how it’s liquidity will hold up.

  16. 16 Jim Aug 30th, 2008 at 3:07 am

    Wow, I had exactly the same problem with
    them closing my checking account with
    no notice. I didn’t mind them closing
    the account but I had scheduled an online
    transfer to put money in and it disappeared
    into thin air. They closed the account
    and still executed the transfer which had
    no account to go to.
    From the experience I learned everyone
    there is clueless, customers are a total annoyance, no one really knows or cares.
    While they may dangle a really good rate,
    ask yourself how many ways they could
    screw it up. Like, they may not calculate
    the interest right, give you the wrong rate,
    lose your principal when you close the CD,
    mail your check to the wrong address, etc,
    etc. With Washington Mutual, if it can go
    wrong, they’ll find a way to do it.
    It took a month and a lot of time and calls
    to finally recover the missing transfer.
    Don’t ever call customer dis-service.
    Call the secret executive customer service
    800-225-5497 option 1 x467

  17. 17 Rohin Aug 30th, 2008 at 9:56 am

    brother i know how you feel , I too got hit with 40 dollar excessive fee , for CHECKING MY BALANCE 6 TIMES IN ONE DAY , they say you are only allowed to do it 4 times within a month.

    I go to the bank and the manager is like sorry sir just call customer support they will refund the money.

    So i call the number and some moron in india at a call center is like trying to explain how hey do not do those kinds of things and no one ever gets reversals done for their fees.

    I’ve been happy as hell at chase ever since

  18. 18 dave Aug 31st, 2008 at 4:32 pm

    Don’t know what you are talking about. As if by leaving WAMU you are going to see angles:-) Problem in this country is that either honest people were ripped off their jobs, left the country, died or working as stocking Clark in middle of nowhere locations. Thugs have taken over businesses and politics. What you see is scams scams and scams. People are so contended with this that they have started believing what they want to believe. When you put your dollar account, your wall street and legislation only favoring you then that is what you get. And despite all these that you ever wanted and you fail then you have to live with it. There is a Sanskrit saying that Trader will trade everything for profit, even the motherland. In the past nobility, intelligence and inner strengths were highly regarded and revered by the individuals, families and communities. Today no one give those things a dame against $$$$$$. America is supposed to be a land of the free and home of the braves but sorry to say is just left to be a street of well dressed, soft spoken beggars, thugs and day light robbers. Is there any micrometer of space left in this country were any honest person would go and have live with peace?

  19. 19 Yan Aug 31st, 2008 at 4:59 pm

    Dave, you sound like a preacher. What you are talking about has no place in the financial/banking world. All these guys care about is money and if there were no government imposed regulations and fees they would eat you alive to make a buck.

    Thanks this is not the case and we do have people in senate who realize that the system will not work if not regulated and ordinary folks do get protection in a from of agencies like OTS and FDIC.

    Are these agencies doing enough or not? It is a whole different discussion, but I think you over-idealize America and humankind overall. In some sense humans are a hoard of “smart animals” and they need a “shepherd” to survive.

    By the way, WaMu came middle ground in this particular dispute. When I checked my account yesterday I found that my negative balance is zeroed and the account is closed.

  20. 20 James Sep 1st, 2008 at 12:46 pm

    You are obviously passing the buck for your own inattention to detail. Read your rules and regulations from when you opened your account. It will tell you all about where you went wrong. There wouldn’t be an Overdraft warning if you account was closed due to inactivity, and the most your savings account would go negative before closing would most likely be somewhere between 10-30 depending on what type of savings account you had. Based on how informed you seem you probably either have an account somewhere else that charged off due to OD’s or misunderstood the reasoning behind your current account closing. Take a look in the mirror. You can’t be as irresponsible as you have been by letting your accounts close on you, and blaming everything on everyone else, and expect to get good customer service. The customer always deserves respect and attention to detail, but the customer is no always right and more then often need to be schooled in how to be a customer.

  21. 21 Erin Sep 2nd, 2008 at 2:54 pm

    James, I whole heartedly disagree! The number of times I’ve been charged a fee for doing nothing wrong is absurd. Companies these days will send you updates to their “Privacy Policy” 20 times a year, but never send an update regarding changes to account fees/rules. I actually had one company representative tell me they knew a newly imposed fee would affect a lot of customers and were told to reverse it for those that called to complain. She also said the company was expecting less than 25% of their customers to catch new fee.

    This type of thinking by companies is appalling to me. Although I don’t agree with Yan’s reasoning that his experience is an indication of a WAMU bankruptcy, it does point out what seems to be the banking industry’s standard operating procedure. They hit you with fees every chance they get and if you don’t catch it on your monthly statement (that is if your bank is still willing to send them on paper), then too bad.

    I am a hard working, honest, diligent attorney, customer, and citizen and I feel like the country is running out of honest businesses, especially banks. I understand the need to make money, but the least they could do is communicate with us so we have a chance to avoid the fees.

  22. 22 Chris Sep 2nd, 2008 at 6:20 pm

    Erin, when you talk about “fees for doing nothing wrong” and “companies” are you talking specifically about WaMu or banks in general. Because I am very happy with my experiences at WaMu and actually switched to them due to the fees and fees for talking to people about fees that I experienced at another bank. Since switching over to WaMu I have had nothing but good experiences. I had my first account at another bank, and had to learn the hard way how things worked. I kept making the same mistakes and when I tried to talk to someone about it, not only would I get charged, but I would also not learn what I was doing wrong. I went to Wamu and the people helped me understand how things work and I didn’t get charged for talking to someone. In 8 years I have not had a single problem, and have saved a ton of money on fees.

    I agree with James. The person who wrote this sounds like a spoiled child. It’s simple. Pay attention to your accounts, and don’t overdraft your account, and you won’t have a problem. If you only have a empty checking account to get the free savings, and you’re getting fees in your savings – you find out why. So now you know – they closed an account that wasn’t being used. That’s pretty standard. Now your option is to open an account and actually use have $ in it or use it periodically, pay fees on your savings, or deal with the rules at a different bank. In my experience, you won’t find a bank that has fewer fees. If you were the branch manager, what would you do? Wave fees for everyone? Then you have the same irresponsible people coming back time and time again thinking that they don’t have to play by the rules. Any fees at WaMu are simply in place to encourage people to follow the rules. I suggest that you learn the rules, consider this a lesson learned, and move on. Otherwise, I’m afraid that you will encounter this problem again at a different institution – tenfold.

  23. 23 Dude Sep 10th, 2008 at 7:56 pm

    Most banks have the same tactics as WAMU right now, so you might experience the same difficulties if you participate with their similar offers. All the banks have teaser rates on their CDs and savings accounts. If there are minimum balances to avoid the fee, I advise you allow for a buffer amount above the threshold balance just in case there are incidental charges.

  24. 24 Jeff Sep 13th, 2008 at 12:33 am

    I live in southern california and I have a lot of friends with money who pulled out of wamu today at lunch. (more money than FDIC will cover.) A friend who works for a very familiar financial adviser in LA said that wamu will go under this weekend or next. Many of these friends are unconnected to each other who have at the same time pulled money out today. Is there something we don’t know??? A lot of people pulled out today. A Lot!

  25. 25 Vince Sep 13th, 2008 at 5:22 pm

    You must run in really rich circles then because most people can easily have several hundred thousand dollars insured at the same institution. Anybody who tells you different doesn’t know squat about FDIC. And if they are covered, then they’re just succumbing to the same fear mongering that you’re pushing here. Anybody heard of Indymac? Who wants to tell me whether people still have accounts there and whether their ATM cards still work? As for your financial advisor friend, you should tell them to put their money where their mouth is and short the stock then. All of these people going around and spreading rumors on hearsay and conjecture is just really irresponsible. Next thing you guys will want to tell people is that Lehman Brothers and Wamu are from the same family. As for your comment about ‘A lot’ of people pulling out money from Wamu, I’d only believe you if you didn’t have a job and were standing outside the bank all day for some reason. Otherwise you’re just blowing hot air again. Thank goodness the American public is not always that naive.

  26. 26 A. M. Sep 14th, 2008 at 1:55 am

    ok…Being a WaMu employee, I can understand where you would be upset, however, It is your responsibility to make sure your accounts are in good standings! You had the opportunity to look at the customer account regulations and disclosure booklet/link at the time of account opening, If you opened your account online, there is no reason why you should be hollering at an employee at any branch about OD/NSF charges, along with service charges. You should Have read the statement of fees. WaMu is a great Company to work for and deal with. In this case Sir/Ms, you missed out on a great Rate, and hopefully next time, you will keep better track of your accounts…

  27. 27 Jeff Sep 14th, 2008 at 5:59 pm

    Umm, wow.

    In response to vince, I have a wide variety of friends. Some extremely wealthy, but most moderate and comfortable. There must be a lot of anger associated with that comment to compare my statement with “hot air”. All i’m doing is stating fact. Personally the type of work I do, I am involved with large financial institutions (one is WaMu)and my only interest in this was research and not “fear mongering.”

    I must have hit pretty close to the mark for you to say that. In fact it’s a response closely linked with your own fears no doubt.

    Lets be clear. ALL financial institutions are temporary. They come and go all the time. Large and small. The only individual survivors are those who have enough forethought and courage to make decisions about their own future. As far as shorting the stock, that’s happening on its own.

  28. 28 Chris Sep 15th, 2008 at 1:23 am

    Umm, hey Jeff,

    I don’t think Vince sounds angry at all. I just think you are coming off smug. I don’t really think that your “extremely wealthy friends” have as much of an impact as you may think – outside of your own world.

    I have it on pretty good authority that the retail banking end of Wamu has maintained there deposit amounts despite all of the bad press and stock decline. I think that they have enough capital and diversity with the products that they offer to weather this storm….unless of course there is a run on the bank….which may happen if enough people like you run around claiming that the sky is falling.

    Let’s be really clear, they’ve been around since 1889. They are the sole surviving Seattle based bank from the saving and loan crisis of the 80’s and 90’s. So to me, your description of a company that comes and goes does not apply here. If your interest is in research and not “fear mongering” than you should actually do some research before you “fear monger.”

  29. 29 jeff Sep 15th, 2008 at 2:22 pm

    let’s meet here again in 30 days.

  30. 30 Michael Sep 25th, 2008 at 12:15 am

    Just my 2 cents.

    Everyone has an opinion, but I think that it is foolish to base whether a company will fail because you or others had a bad experience with customer service. I moved to WaMu from Wells Fargo and Bank of America for the exact customer service complaints you refer to here, yet they remained profitable and solvent because they did not drink the subprime KoolAid.

    WaMu is in trouble because of the KoolAid, but BK … oh no. Come on. BofA bought Merril before it folded and WaMu will likely be bought by the likes of JP Morgan or Wells Fargo for a heck of a deal to them (not so great for the shareholders I’m sure) if it comes to that.

    My last cent. If you are concerned about WaMu’s stability go invest in another bank you like better. You know, one that doesn’t offer free checking, free savings, free ATMs, or free anything for that matter. That’s why the other banks can afford great customer service … because YOU PAY FOR IT!

  31. 31 jeff Sep 26th, 2008 at 5:19 pm

    my one cent… Nothing is certain but death and taxes. Rip wamu. Chris, it wouldn’t have mattered if they were around since 1789. If you live putting your faith in the stability of long term business, there will be a lot of deep distraught when you see it fail. There were a lot of people who repainted the payvment with their bodies when they jumped during the first crash. The only difference between today and then will probably be the day of the week. Anything can crash anyone greedy enough will do it. And if history teaches us anything… It will happen again.

  32. 32 Chris Sep 26th, 2008 at 9:01 pm

    Hey Jeff,

    Like I said….”….unless of course there is a run on the bank….which may happen if enough people like you run around claiming that the sky is falling.”

    Satisfied that enough people listened to people like you spreading fear that the nation’s largest thrift went under?…..Like I said before – smug. So many people were afraid, that it added up to a run of $16.7 billion. This wasn’t a bank that relied on the deposits of the highly wealthy (like your friends). This was a bank that offered free services to the average joe/jane.

    I didn’t say it couldn’t happen. I just think that they were so huge, and not just any financial institution. This wasn’t the fall of one of those businesses that “come and go” as you but it. Heck yeah it mattered that they were around since 1889. This was historic. And this if very unfortunate – especially for the Seattle community and WaMu shareholders. I just don’t get pleasure in seeing a company go down that effects so many people, especially when it could have been prevented if news headlines and malicious people spreading fear didn’t blow them out of the water. If people just listened to the experts and read the entire article, they would know that their money is insured up to $100,00 and that everyone pulling their money out at once would make any bank go under.

    However, having expressed my disappointment for the fall of a great bank with great products. I think their former customers and employees are sitting pretty good (except maybe for those with large amounts in stocks)

    I kept calm, kept my money in, and I’m okay. I’m not going to paint the sidewalks red anytime soon. Sorry if that disappoints. Now my money is backed by JP Morgan and I feel pretty good about that. It’s business as usual for now. All the branches will be as if nothing has changed. It’ll take a while till they even change all of the branding, I just hope they don’t take away all of the great free products and smiles.

    PS – I think you mean if history doesn’t teach us anything….it will happen again. It (I assume you are talking about the great depression) has to have happened more than once for history to teach us that it will happen again.

  33. 33 Sandy Nov 13th, 2008 at 4:17 pm

    President elect Obama just announced the government will now pay off all credit card debt for Washington Mutual credit card holders because people of America deserve that after putting up with the complete idiots at WAMU. It’s only fair!!!!
    Thanks President Obama …you’re the best!

  34. 34 CHarlie Nov 14th, 2008 at 3:11 am

    I work in an IT division, taken over by Chase in September. We are just waiting for the proverbial axe to fall on the good people at the combined companies trying to do the right thing, but it appears that old WaMu management still have control over the good staff. I believe the staff at the old WaMu could have run a better company that Kerry Killinger and Sr exec team, who whored the company to greed and pathetic mismanagement. So sad. Pathetic.

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