November 23, 2008

WaMu theories flood Internet

Conspiracy theories have abounded since Washington Mutual became the largest U.S. bank failure, observers say.

Although most experts say the bank failed in part because of bad mortgage loans the company made, entire Web sites have sprung up to consider more sinister reasons for WaMu's collapse, The Seattle Times reported Sunday.

Among theories is that WaMu was the financial industry's sacrificial lamb, used to pressure Congress to approve a mammoth bailout of the U.S. financial industry.

Other theories allege collusion between the government and JPMorgan Chase, which bought WaMu's assets, the newspaper reported.

A decent, well-funded (and the country's largest) U.S. savings bank that had served the American people for over 100 years was suddenly killed by the (regulators') premeditated conspiracy, one Web posting says.

The newspaper reported that Washington Mutual failed in November, after depositors withdrew $16.7 billion in 10 days. Even after the run on the bank, deposits were at $129 billion, just $6 billion less than they had been in late July after depositors withdrew $53 billion in one month.