Founded in Seattle in 1889, Washington Mutual (WaMu) began as a mutual savings and loan institution that went public in 1983 and as a result of lending practices, underwriting techniques and other poor decisions failed in 2008. A leader in bank acquisitions from 1983 to 1992, the organization reached 2,200 branches before its bankruptcy. Offering innovative technologies, such as ATMs and variable-rate loans in the mid-1970s, and techniques of the era, the company eventually succumbed to the culture spawned by Killinger, the president until WaMu's downward spiral began. , cultivated by Killinger during Project Occasio in 2000, sought to focus on "... relating to and selling to customers..." and, in turn, took questionable actions in lending practices. (Dewar, 2006, p. 6) Prior to Killinger's efforts, WaMu had attempted to service lower-middle class customers through the “adjustable rate” loans of the 1970s and relaxed identification requirements in specific markets. “For example, most banks required a driver's license for identification...WaMu also accepted the Mexican ID Metricula.” (Dewar, 2006, p. 4) During Killinger's tenure, the company sought to hire people for “brand” rather than skills and banking acumen. Rallies and morale-building exercises, as well as community relations, were the normative behavior, as the organization sought to increase sales of loan products to customers. “WaMu offered exotic pay-off loans (that) allowed borrowers to shift many of their interest payments onto principal instead of paying them off.” (Palmeri, 2008) Combined with sales strategies related to selling loan products to unqualified and underqualified applicants, this was a recipe for disaster. The source...... middle of paper ...... and the risks associated with specific investments and implied support from the FDIC where inappropriate. Managers' incentives posed an agency problem, as their compensation was directly linked to this questionable practice. Hiring was done under the incentive system to overemphasize the impact of sales personalities, rather than basic banking skills and ethics in lending practices paving the proverbial road to low quality loans. Quotas to maximize manager pay, combined with corporate culture, contribute to the agency problem. Works Cited Dewar, R. a. (2006). Washington Mutual: A very old bank can grow – a lot! Harvard Business Review. Palmeri, C. (2008, September 26). JP Morgan Chase will buy Washington Mutual. Businessweek .WaMu Stock Group. (n.d.). The history of WaMu. Retrieved November 11, 2011, from WaMu Story: http://www.wamustory.com