TOPICS > Economy

Amid Financial Crisis, WaMu Collapse Hits Hard in Seattle

October 15, 2008 at 6:20 PM EST
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The banking crisis has been hitting all parts of the American economy, including the local banking sector of Seattle, where Washington Mutual went from a solid industry to a nonexistent entity. Lee Hochberg reports.
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LEE HOCHBERG, NewsHour correspondent: Washington Mutual was one of Seattle’s largest homegrown companies. It rose from the ashes of Seattle’s great fire 120 years ago. Today, its office tower soars 42 stories over downtown Seattle.

Its nickname, WaMu, is all over Seattle, on a downtown theatre, at concerts, at the zoo. Seattle residents celebrating the Fourth of July go to the WaMu Family Fourth.

So when the bank collapsed last month, it concerned more than just depositors and stockholders. Washington Mutual had donated $50 million annually to organizations involved with affordable housing, community building, and education, including cash grants to schools in 15 states; $8 million a year has gone to 250 nonprofit and civic groups in the Seattle area alone.

JON FINE, United Way: They were a generous donator in this community, and one has to be concerned when they go away.

LEE HOCHBERG: Jon Fine is CEO of United Way of King County.

JON FINE: Yes, an organization like that matters.

LEE HOCHBERG: Seattle’s United Way chapter is the largest in the country. Last year, it raised $117 million; $2.1 million of that came from Washington Mutual and its 43,000 employees.

JON FINE: The fear that that money won’t be replaced is quite real. And you’re talking about people who are very much in need and very much suffering.

We spend that money on ending homelessness, getting kids ready for school, helping domestic violence victims, helping seniors, helping youth graduate. That money goes directly to those services. And if we don’t replace that money, those services will need to be cut.

LEE HOCHBERG: Washington Mutual is being taken over by New York-based JPMorgan Chase, a company that has shown its own largesse, giving $100 million a year to nonprofits. It says it will be a good corporate citizen in Seattle, but it’s too early to know specifics.

Chase may be closing 400 branches and says it will lay off some of the 3,500 employees at Washington Mutual’s Seattle corporate headquarters.

JON FINE: Companies that are laying off employees have fewer employees to donate and they also have more insecure employees when they’re laying people off who are less likely to donate their dollars and their time.

Many groups may be financially hurt

LEE HOCHBERG: Arts groups, too, are very concerned. Washington Mutual contributed liberally to Seattle's symphony, ballet, theatres, and art museum, and gave more than $100,000 a year to ArtsFund, which raises money for local arts.

ArtsFund president Jim Tune fears JPMorgan Chase won't have the same commitment to Seattle. He notes Seattle-based Airborne Express contributed $50,000 a year to his group until it was bought out by DHL, with U.S. headquarters in Florida.

Since then, ArtsFund hasn't received a penny.

JIM TUNE, ArtsFund: JPMorgan Chase is headquartered in New York. And while we had access to top management at WaMu, we will not have access to top management at Chase. That is the concern.

A remote set of senior executives may not understand how it actually works in the community.

LEE HOCHBERG: And then that translates...

JIM TUNE: And that translates into some loss of support, I think.

LEE HOCHBERG: Seattle's Repertory Theatre, the largest nonprofit resident theater in the Northwest, may struggle to replace WaMu's $50,000 annual contribution.

But managing director Benjamin Moore says it's more than money that's at stake; it's personal interest in activities like this high school theater next door, sponsored by the Repertory Theater.

BENJAMIN MOORE, Seattle Repertory Theater: Members of the WaMu staff that have served on our board became advocates to preserve that kind of activity. They saw that as something that is at the core of our mission and were able to help me sustain those activities.

That's 30 kids every year. It's very concentrated work, but over time we know that makes difference.

LEE HOCHBERG: For now, Seattle is wondering who will make those differences in the future.