Special Series
Economic Turnaround
In a Series
Living Within Our Means
Washington Mutual’s shiny new skyscraper dominates the view from Sightline’s Seattle offices; to me at least, the echoes of Ozymandias are clearly audible: "Look on my works, ye mighty, and despair."
WaMu, seized by bank regulators before it could go bankrupt, had saddled itself with tens of billions of dollars of bad mortgage loans. But WaMu was, just a few years ago, a proud hero of the financial industry. In 2006, I spent two weeks at Stanford Graduate School of Business, where a professor assigned my class of nonprofit leaders to study WaMu as a case study of innovative business practices. The professor lauded WaMu’s mold-breaking techniques for extending credit to high-risk borrowers. What looked innovative then looks reckless now. Still, whatever its failings, WaMu was a dynamic institution filled with whip-smart northwesterners who mostly excelled at their jobs.
The problem, to employ a church metaphor, wasn’t bad preaching, it was bad theology—the theology, in the words of Oregon forester Roy Keene, of "lots now." Like the rest of the financial crisis, the mechanisms and particulars of WaMu’s fall are opaque to me. But the fundamental principle is achingly familiar: the financial crisis is a sustainability crisis. Sustainability, at base, means "living within our means." It means, in Keene’s words, not lots now but "some forever."
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