WaMu – the zombie bank that won’t die. One of the many, many class action lawsuits – a multibillion-dollar one – over the WaMu deal may be going to trial, and a Seattle-area newspaper has spent some time digging into both executive misconduct and whether or not Sheila Bair undermined attempts to sell WaMu for realsies by teasing out that it would be available as a distressed asset deal soon enough. Via The Deal:

[WaMu CEO Alan Fishman shopped WaMu around, but] the banks were one step ahead and knew WaMu could probably be purchased as a distressed asset through the FDIC. What ever happened next between Bair and the banks is unknown, but the report basically says the FDIC undercut the WaMu’s sale process:

Bair apparently told Fishman another intriguing piece of information: She said more than one bank had called the FDIC to ask whether there would be an opportunity to buy WaMu as a distressed asset, according to people familiar with the meeting. In other words, was the government planning to seize and sell the bank? If so, potential buyers would rather wait, for the price was sure to be lower in a government sale.
What Bair might have said to the banks remains unclear, and is likely to be a focus of at least some of the ongoing investigations. Bair declined repeated requests to be interviewed about her role and decisions. The FDIC released Bair’s emails regarding WaMu. They were almost completely redacted. Within days, JPMorgan Chase, Wells Fargo and Citibank stopped poring over WaMu’s books.

Days later the bank was shut down, and assets were given over to J.P. Morgan. The government’s action wiped out shareholders, but the FDIC’s deposit fund was unscathed.

The class action suit, which is mostly related to standards and practices (and we all know how those have been at banks in the last several years, so I won’t belabor it), may or may not explore this point, but after reading the Deal article I think it’s worth exploring. Did Bair really sabotage a deal? Or would no one in their right mind have paid eight bil for WaMu regardless?

(Zombair graphic is h/t to the Queen of Spork, the snarkiest pregnant girl you will ever meet.)