WaMu’s failure offered some useful lessons. But how many took hold?

The natural human reaction to a disastrous event, once it’s done, is to total the damage to see whether it was as bad as it first appeared, and to see if there are lessons to be applied, either to prevent a reoccurrence or to lessen the destruction should it happen again.

That’s what happens after natural disasters.

In the East, the aftermath of Hurricane Florence will include some discussion of what not to do in anticipation of a next time, such as not building houses in exposed coastal zones. Out here in the West, wildfires and earthquakes serve to jolt (sometimes literally) people into action, whether it’s clearing forests of accumulated dry tinder or reinforcing structures.

The same approach applies to financial disasters.

A stock-market reversal, a once-successful company’s tumble into failure, a regional or national economy’s stumble, those are events to inspire soul-searching and resolve to make changes.

That would seem to make this coming week’s 10-year anniversary of the collapse of Washington Mutual a prime opportunity for reflection for cogitating on its significance and long-term ramifications.

Except that … what if it turns out that WaMu’s demise on Sept. 25, 2008, when federal regulators took over the bank and sold much of the operations to JPMorgan Chase, wasn’t in retrospect such a big deal, and that not a lot changed as a result?

It will certainly come as news to at least two groups that the end of WaMu wasn’t as significant as originally advertised — the employees and the shareholders.

JPMorgan Chase was a new entrant to Washington banking, and thus there wasn’t the issue of overlapping branch networks to consolidate and jobs to be cut. But WaMu’s coast-coast ambitions put it in many markets where JPMorgan Chase already was, so in those locations employees did lose out.

The big employment impact came in WaMu’s headquarters town, Seattle. Once WaMu became just another regional outpost of a much larger bank headquartered elsewhere, instead of an independent publicly traded company, there was no need for many of the administrative and managerial people who ran the place.

Then again, lots of employees had already lost their jobs before the takeover as WaMu tried to stem the losses.

That was true as well for long-time shareholders, who had seen almost all of the value of their WaMu shares melted away long before 9/25/18. It traded above $44 a share in 2007. By the time it folded, the stock was down to about $1.70. (Depositors, by contrast, felt only the inconvenience of dealing with a new bank.)

WaMu, even though it officially was the largest bank failure ever, was only a piece of a gargantuan crisis that was playing out across the country and that involved financial institutions across the country.

Eventually that crisis claimed 18 banks in Washington alone, according to an FDIC list, including such local names as Rainier Pacific, Westside Community, Pierce Commercial and Venture.

Nor was it just a banking crisis. The financial crisis started in housing finance, but like a wildfire spreading far from the spark of origin, it wound up torching industries such as home construction and building-products manufacturing.

So did anyone learn anything or do anything as a result of WaMu’s demise, or because of the financial crisis?

The easy conclusion would be, why yes, everyone’s become more frugal, more cautious, more dedicated to the principles of sound banking, including adequate capital levels and diversified portfolios of carefully vetted loans.

The problem is there’s no way to verify just how well renewed dedication to those principles was carried out, or for how long, until the next crisis hits. For that matter, we have no way of knowing whether the procedures to prevent a repeat of the chaos that characterized the government’s reaction to the last crisis will work in the next one.

Reading the FDIC’s table of bank failures since the 1940s is instructive. They tend to come in clusters separated by long gaps. Washington had no bank failures from 1940 to 1982, a slew of them in the 1980s and early 1990s (a period that included the savings and loan crisis), then nothing from 1993 to 2009.

Much like the motorist who, having narrowly escaped a collision, vows in a cold sweat to pay more attention to safe driving, bankers, regulators, politicians and the public swear they’ve learned important lessons from the last financial crisis to put off or soften the next.

That’s human nature. So is this — the tendency to, over time, let the attention wander, to forget the pain and misery of the disaster and what caused it. When attention wanders, so does the car … or the bank’s lending portfolio.

We might need to wait yet another decade to find out if the lessons of the WaMu debacle lasted — if indeed they were learned to begin with.

This story was originally published September 22, 2018 at 7:00 PM.