Mrs. Carton on WaMu and the FDIC

[SidneyCarton]

Some of you may remember me talking about my "Lucie." She's a registered independent and her parents are very conservative. So one of her most recent Blog posts, dealing with the collapse of Washington Mutual is very telling:

FDIC Insured

Today was a day much like any other. My husband went to work. I and our young daughter stayed home and worked on the apartment and played. I spent an hour tutoring this afternoon. My husband came home, we had dinner, and we turned on the news.

The news, if you haven’t paid attention lately, is currently replete with the crisis of the financial world. Banks and mortgage companies failing, Wall Street taking large dips followed by small gains, and the top leaders of our political world engaged in a dramatic debate over how best to try to bail the country out of the problems it is facing.

Just a couple of days ago, I was remarking to my husband how fortunate we have been to be in the position we are. We own no home, have no mortgage, and have no money invested. We have thus far escaped unscathed from the financial world that is weakening around us.

Tonight on the news, we heard news that we considered a sigh of relief. Our bank, WaMu had been purchased by JP Morgan Chase. Now, we knew WaMu had put itself up for auction. We knew that it wouldn’t be too long until someone laid claim to it. So, after the ever so brief news story, we both said…good.

And then we went online and a story about the bailout debate occurring in Washington caught my eye. Upon reading the AP article, it noted something that caused my stomach to lurch. WaMu had not just been bought by JP Morgan Chase. No. The news story had left out one very important detail.

WaMu had failed.

Failed.

Such words bring to my head images all Americans have grown up with. Images of runs on banks. Scenes from Mary Popping and characters like George Bailey. The words that your bank failed sends shivers down your spine.

Yet, I knew all would be all right. Thankfully. The failure and takeover are relatively new, and will be official tomorrow morning. As it is so new, news is scarce, and the little I could find says that the customers won’t feel a thing. They’re probably right.

But my bank failed. And it feels like it should hurt more than that. And yet, I am so grateful that it does not. I’ve always seen the little sign on my statements and such that said FDIC Insured, and always taken it for granted. I never in my wildest dreams thought that that little phrase would ever mean anything to me.

Maybe too many of us took that for granted.

But, I’ve never been so thankful for the New Deal in my entire life. Many people criticize the New Deal and FDR for his reforms and changes. Tonight, I could kiss him. Because of those, we’re gonna be okay. Our money is still there, and all will be well. We’re still considering switching financial institutions (and taking well informed opinions…if anyone has any…), but I think that’s understandable.

And, so, our bank failed today. And unlike 80 years ago where we would have been left with nothing, we lost nothing except the feeling that somehow we were escaping all that was going on around us. That feeling is gone. Probably for forever.

[RB TexLa]

1. WaMu was sold to JPM, the FDIC doesn't have to pay anything on the accounts

[SidneyCarton]

2. Understood. Yet it could have been worse.