Washington Mutual bank collapse back in 2008 is considered as the largest bank failure in U.S history. I would like to know why Wachovia bank collapse that happened at the same time is not considered as a bank failure. Because technically it would have been the largest ever, because Wachovia also failed and it was larger than WaMu by asset size at the time of the failures.
From my understanding, during the Washington Mutual collapse, Chase came and scooped up it’s assets where as in Wachovia’s collapse Wells Fargo merged with Wachovia.
Is that the difference?
Because it almost seems like what Wells Fargo did was purchasing Wachovia than a merger of equals (Wachovia and Wells Fargo) because Wachovia’s name just vanished altogether after the merger.
Additionally, considering both Washington Mutual and Wachovia couldn’t run their day to day operations, how come only Washington Mutual is listed as a bank failure (largest ever) and Wachovia is not even on the list.
In: 8
Wachovia didn’t fail.
WaMu failed in mid-September 2008 due to a bank run; the bank was seized by the federal government and placed in receivership. This was relatively early in the bank-failure part of the financial crisis (Lehman Brothers, which was sort of the first of the big failures that fall, was only 10 days earlier). The same dynamic took a huge chunk off Wachovia too and it was likely headed for failure but, by that point, the federal government was taking a *much* more aggressive role in keeping the financial system afloat (partly because of failures like WaMu).
*If* Wachovia had failed, as you note, it would have dwarfed WaMu’s failure. Wachovia fell in “too big to fail” territory…keeping Wachovia alive was more important to the health of the overall financial system than letting it fail. It was the first bank during the financial crisis that the feds said they’d save at any cost. They basically forced them to sell, first to Citigroup, then later a side deal was brokered with Wells Fargo instead.
So, technically, Wachovia never failed because Citigroup & Wells saved it before it actually failed, in a banking sense.
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