WaMu fallout remains widespread

The navy-blue and yellow Washington Mutual signs have been gone for months, replaced by Chase’s lighter blue logo. But the fallout from the biggest banking collapse in U.S. history shows no sign of ending soon.

Shareholder lawsuits: Two suits alleging securities fraud by WaMu management are pending in federal district court in Seattle. One, brought by employees who participated in WaMu’s retirement-savings plan, was allowed to move forward this month. For the other, brought by outside investors, a federal judge in Seattle last week threw out a few claims against former WaMu bank officers, directors, accountants and underwriters, but refused to dismiss any of the defendants from the case.

Federal probe: A grand-jury investigation of whether fraud played a role in WaMu’s collapse continues. The inquiry, led by the U.S. attorney’s office in Seattle, involves agents from the FBI, Securities and Exchange Commission and Internal Revenue Service.

Bankruptcy: WaMu’s holding company, now in bankruptcy, has sued JPMorgan Chase to regain what it says are deposits Chase improperly took after it acquired WaMu’s banking operations; Chase has denied the claim. The holding company also has sued the Federal Deposit Insurance Corp. over the way it handled the seizure of the banking units; the agency has denied the allegations against it. Groups of bondholders and other creditors have weighed in on varying sides.

Job losses: WaMu employed about 43,200 people (including 4,200 in headquarters jobs in downtown Seattle) when Chase acquired it. Chase has since eliminated about 12,000 of those jobs, mostly through layoffs but some through attrition; the layoffs include about 3,400 former headquarters workers.

CEO payout: When Kerry Killinger was ousted as WaMu’s chief executive, he was due to receive a $16.5 million cash severance payment. But WaMu collapsed less than three weeks later, and it’s not known whether Killinger actually got any of the money; neither he nor Chase has said. According to a regulatory disclosure dated July 15, 2008, Killinger owned 315,662 shares of WaMu stock directly and 1,001,095 shares indirectly through two trusts. It’s not known whether he sold any or all of those shares before the collapse.

Postscript: In August, WaMu’s former New York Stock Exchange ticker symbol, WM, was adopted by another company: Houston-based trash hauler Waste Management.

Seattle Times