WaMu & The Loyalty Asterisk™
filed in Banking & Cards, Customer Experience, Loyalty Asterisk™ on Jul.13, 2009
Poor WaMu.
They failed as a financial institution, were acquired by Chase, and are now being disrobed of their innovative Occasio branch designs. In my 
neighborhood, the evidence of Occasio is rapidly being wiped away by construction crews. While not everyone agrees on the wisdom of dismantling of the retail-like branch layouts, many will concur that WaMu fooled us badly.
Before the financial crisis of last fall, the bank had received consistently top customer satisfaction ratings and was on track to remake retail banking through a consumer friendly delivery channel more similar to Atlanta Bread or Starbucks than a bank. Distracted by these indicators of success, many investors took their eyes off the fundamentals of a flawed mortgage business.
Not intending to pile on while WaMu is quickly fading into the sunset, I can’t help but document a vivid example of the Loyalty Asterisk™. Around the holidays, the bank ran a promotion to encourage customers to use their debit card with higher frequency.
The message was strong and simply stated on the front of an 8 1/2 x 11″ flyer posted around local branches:
“Just use your WaMu Debit MasterCard or WaMu Business Debit MasterCard for anything you buy this holiday season – for you, your business or someone else.”
“You could win $1,000 a day”
“Or the 50,000 grand prize”
“It’s easy: Swipe, sign, and score a daily chance to win”
The Debit Card Rewards promotion was designed to change cardholder behavior and drive lots of incremental transactions over the next few weeks. I w
as pushing the flyer into my bag, when I noticed the phrase “see reverse for details“. I flipped the paper over and look at what I found.
If you can’t read the mice-type on the picture on the right, don’t worry, you don’t need to buy a larger monitor or hit “Ctrl +” a bunch of times to increase the resolution of the one are staring at. I held the piece in my hand and was mystified that I should even have to consider reading the myriad of conditions on the back page.
Every customer-centric bone in my body tells me that a simple URL linking to the terms and conditions of the promotion might have been a more elegant way to address the need for legal disclosure. If in fact some federal regulation requires the full disclosure of the promo as it appears on this page, then as a marketer, I would have just elected to punt on this tactic and find another that could be delivered to the customer without the Loyalty Asterisk™ attached.
“Discretion is the better part of valor” goes the saying, and sometimes marketers have to stand their ground and skip promotional offers whose delivery is led by the legal department. I’m giving WaMu the benefit of the doubt, as I hope the marketers didn’t knowingly produce this piece of customer-repelling communications.
I know it is all too late for WaMu, but I continue to see similar examples of this type of promotional communications in banking, retail, airline, and hotel rewards programs. There must be a better way…
Bill Hanifin on 
July 13th, 2009 on 10:54 am
[...] mortgag.. http://bit.ly/fRyEB mortgage newsAdd to del.icio.usDigg ThisSubscribe to RSS feed WaMu & The Loyalty Asterisk™ – blog.hanifinloyalty.com 07/13/2009 Poor WaMu. They failed as a financial institution, were [...]
July 13th, 2009 on 8:01 pm
Actually if you do a little research you’ll come across a heck of a story. WaMu didn’t actually fail. The Office of Thrift Supervision even admits WaMu was well capitalized when they were seized. So ignore the bank run story, it’s a mirage.
“WMB met the wellcapitalized standards through the date of receivership.”
http://files.ots.treas.gov/730021.pdf
It would appear as if collusion between the Fed, FDIC, and JP Morgan is the reason the bank was seized.
WaMu’s holding company has launched multi billion dollar lawsuits against JP Morgan and the FDIC.
WaMu was a 300 billion dollar bank that JPM bought for 1.9 billion dollars. Not only did JPM get the banks and all it’s assets, including a 6 billion dollar credit card division, prperties, atm machines, etc. they also claim to have purchased 4 billion dollars in cash, all for 1.9 billion dollars.
The FDI Act requires the FDIC to maximize assets they sell, not to pay people (JPM) to take them, as they did in this case.
http://wamuqd.com/WMIFDIC.pdf
That’s not even touching the JPM suit which equated to well over 18 billion in damages. Planting moles at WaMu to bring the company down, fake buyout negotiations to get ahold of data to leak, along with fabrications to the press, JPM knew 3 weeks before WaMu was seized that it would be taken over, Paulson threatened Killinger to sell to JPM or it would get ugly… etc etc
Check it out. It’s like courtroom drama on TV, only it’s real.
http://blogs.wsj.com/deals/2009/06/30/jp-morgan-wamu-lets-go-back-to-the-beginning/
August 1st, 2009 on 12:00 pm
Wamuqd is not someone who understands what can cause a bank to fail. It is not all about capital. A bank needs both capital and deposits in order to function on a day-to-day basis. It takes deposits from people (and pays them interest) and makes loans to other people (and charges them interest). As George Bailey explained in “It’s a Wonderful Life,” it does not keep the deposits in a vault, it lends them out. So if way too many people show up to withdraw their deposits — as happened to Wamu — a bank can get to the point where it is scary low on cash, or even run out. That’s called a liquidity event. A bank can’t function without a certain amount of deposits, no matter how well capitalized it might be.
September 10th, 2009 on 11:08 pm
So what you’re saying is that you think it’s ok for WMI, the holding company to have a bank account with 4 billion dollars in it seized in the sale. You think it’s ok for WaMu FSB to have had 20 billion dollars in CASH on hand which was slated to be moved to WMB in days if not hours, meanwhile a “bank run” of less than 20 billion dollars was the supposed catalyst for the bank’s seizure… as per any of dozens of interviews with Sheila Bair.
What you don’t understand is that the FDI Act REQUIRES the FDIC to recoup FAIR MARKET VALUE for any and all assets seized. 300 Billion in assets, plus 4 billion in cash + 20 billion in cash does not equal 1.88 billion dollars.
Also note, before you tell anyone this is on the up and up because JPM took on massive debt, they did write down 30 billion in loans which just a few months later was then written back up 29 billion dollars.
If you take some time to actual READ JPM’s quarterly documents you’ll find they made well over 2 billion from WaMu’s assets and consumer base by the end of 2008 and are expecting to make between 4-6 billion per year off of those assets.
Regardless of if the bank was seized or not, JPM was gifted 300+ billion in assets at the expense of the holding company, bond holders, and shareholders. WMI did NOT receive fair market value for their assets. In truth, they didn’t get a dime for anything. Not even a stinking penny.
The US Constitution stipulates that the government cannot simply take property without paying for it. In WaMu’s case, this is exactly what happened.
JPM took down Lehman. They were gift wrapped Bear Sterns. They were gifted WaMu. Without the addition of WaMu they’d still have lost money last year.
So clearly it is not me that knows nothing of how banks fail. Sadly, I know all too much about it. You’ve just been programmed to believe misinformation about the details surrounding WaMu.
I’m sure you are likely unaware of three lawsuits pending that have the FDIC and JPM on the hook for the complete value of WaMu Bank with the potential for treble damages.
I’m sure you don’t know that WMI has been granted 2004 Discovery in bankruptcy court because there’s reason to believe that there was not only collusion between government entities and JPM prior to the seizure of WMB and JPM may well have planted moles in the company who were there leaking information back to JPM and who were working to destroy the bank.
Then there’s the little confidentiality agreement JPM signed prior to looking through WMB’s books… This was SUPPOSED to keep JPM from leaking damaging information to the press. Go back to September of 2008 and see how many stories popped up with rumors attributed to unspecified JPM employees.
And then there is the little exclusivity contract JPM signed just months before they purchased WMI from the FDIC. Before they were granted access to WMB’s records they signed a contract specifying that they wouldn’t buy any of WMB’s assets from anyone but WMI for 18 months. Ooops… They did it anyway.
Do some research. Seriously… It’s all there in the court filings.
I’m sure this means nothing to you either, but JPM has ow openly declared WMB was solvent at the time of it’s seizure. When you take all of the other tidbits into account, seeing something like that is like rubbing salt in an open wound.
I lost nothing in the collapse of WaMu. But I’ve made some really great friends in those that were hit hard. I’ve done what I can to try to help them get the truth out there. Forget George Bailey. Spend some time ACTUALLY LOOKING AT THE FACTS HERE and you’ll see the FDIC and JPM are on the hook here. Who knows how it’ll play out, surely not I. But the world isn’t being told the truth about any of this… and the best part is, NO ONE is willing to ask the simple questions just because they THINK they know the answers.
Wrong!
February 19th, 2010 on 12:06 am
I was not happy when Chase (you once tried to tell me I didn’t pay my mortgage) took over WAMU. I liked the branch manager, so I stayed and watched the transformation from a friendly place to a drab, lifeless corporation. I went into the branch last week and to my surprise the bank manager of 20 years was gone. I said outloud “what happened to Mike?” I would chat with him and he was always there when I needed him.
The new bank manager walked over and shook my hand. I asked “what happened to Mike.” I looked him straight in the eyes and he calmly said “I, don’t know!” I deserved a better answer after 20 years of knowing the man. I felt like I was talking to a robot.