They keep dropping like flies.
Merrill Lynch, Lehman Brothers, AIG, Washington Mutual Bank and on Monday, Wachovia, the fourth largest investment bank in the nation with holdings across the country and its name stamped on Philadelphia's sporting centers, met its fate and is poised to be sold to Wells Fargo and Citigroup. All of this while the nation's lawmakers work out the details of a generally accepted $700 billion bailout plan aimed at righting the nation's listing economy.
For months, the state of Washington appeared impervious to the woes of the rest of the nation that was drowning in the subprime debacle. But gradually, as the housing market in Seattle all but stopped, and most notably last week when the iron giant Washington Mutual was taken down at the knees, residents and businesses in the state began to feel the crisis first hand.
"We're seeing a little more desperation out of the people but that's making them smarter," said Gregory Nunn, an agent operating the State Farm Insurance office at 200 Roy St. in Lower Queen Anne. Customers are asking him more detailed questions about the best type of insurance for valuables and sometimes are bumping up the coverage on their homes.
Nunn has worked in Lower Queen Anne for 11 years and was sad to see Washington Mutual's demise. But he was concerned about the intentions behind the government's bailout plan. Nunn recited what many in the community and the nation are feeling, according to local and national reports. And that is that, the little guy would never get such help from the government. He said if his office suddenly failed, he doubted the Treasury Department would cut him a check. So the bailout idea for larger corporations bugs him.
"Who is it for? Another multi-billionaire CEO who gets a fat check or are we trying to do it for the people affected: the workers and the mortgage customers they represent? Who is it ultimately going to benefit?"
Kelsey Erickson, a florist at Metropolitan Market has several friends who bank at Washington Mutual and was concerned for them and about the trickle-down effect of its loss and the hemorrhaging economy.
"It's a little worrisome because I chose a profession that is a luxury," Erickson said as she arranged flowers in the sunlit exterior of the store. She said business has been good lately, and smiled that people might be treating themselves because they're depressed. I know people whose house loans are with Washington Mutual and they're a little unsure." The tough times could mean going part time, Erickson acknowledged.
A hot day in Magnolia
Last Friday in Magnolia Village, business was bustling, the sun was out and people were soaking it up. Corino Bonjrada, co-owner of Mondello, was busy setting up flatware and tablecloths as the Italian restaurant was readying to open. He answered the phone, grabbed a pen, said, "Uh huh, 6:15? Okay very good" and jotted the time and name in the open reservation book. Behind him a staffer was sweeping the floor.
Bonjrada knew a crisis was coming when the subprime fallout began last year. He hasn't kept a close eye on politics but has a sense of what people in the neighborhood are feeling. Business has been good, though he has been more conservative with purchases, buying just what he needs at the time. But he knows people are worried about their cash flow and banking situations.
"Things are more expensive and people worry but I don't want them to worry too much," he said. "I think Seattle can be OK. We might get hit later but hopefully we can adjust by the time it comes to us." Bonjrada has been running Mondello (the beach town outside Palermo, Sicily where he grew up) since July 2005 and also owns La Vita Bella Café in Belltown.
Steven Moore of Magnolia can't wait for Barrack Obama to become president and hopefully instill some economic change into the country. Moore was just finishing up a round of doubles with three of his buddies at the Magnolia Community Center and said the last eight years have been about fear tactics.
"With the war and the environment, this (the economic crisis) is the icing on the cake," he said. "I've had enough. It's over."
Moore is in the health care industry and hasn't felt the economic sting some have because, as he says, the industry, through Medicare and Medicaid, is subsidized by the government. That said, millions of Americans are still without health care, and that riles him. So he's hoping to see change with Obama.
"This is perfect timing for the Democrats because who was it who deregulated the banks?" he asked rhetorically. "And now they want the government to step in?"
On Easy Street
Matt Vaughan, owner of Easy Street Records, the iconic everything-music store in Lower Queen Anne, was setting up the in-store performance for modern rock band Blitzen Trapper. Vaughan has had the Queen Anne store for about seven years and a West Seattle location for 20. His shops have become the standard in an industry that is ever changing and increasingly independent. When he heard about Washington Mutual, he was upset not so much for the bank but for the employees.
"Any time a local company goes out of business, it's a blow to everybody," he said, a mural of musical acts looming behind him. "I've got a lot of friends who work there, so I worry about their jobs and security - and the security of the local community."
Vaughan has noticed a slight downtrend in business at the flagship West Seattle store which, he said, was an indication that people were staying closer to home and limiting their destination shopping. He said there is weighted concern about the economy among his customers and other merchants in Queen Anne who he has spoken with.
That, compounded with the loss of the Sonics, has been tough for merchants. "The Sonics loss was a blow because they were our number-one tenant," he said. "With that, bars and restaurants have suffered - I've heard as much as 20 percent."
He's hoping things change for the better after the national election where a positive attitude can have just as powerful an effect on the economy as money in the bank.
"We just need to gain some hope and positivity in the country so people feel better about things."
That's how Hossein Soleymani, branch manager at HomeStreet Bank in Upper Queen Anne feels. And in the past month, he's has to assure several customers that their deposits were safe.
"People have been understandably concerned," Soleyamani said. "In the last couple of months I've never answered so many FDIC questions."
Customer deposits at HomeStreet are insured through the FDIC and many now have added coverage through the bank's CDARS program. Through CDARS, HomeStreet customers can take deposits that exceed FDIC coverage and place them, by way of HomeStreet, into other banks.
HomeStreet keeps track of those accounts so that the customer feels like all the funds are in one account. The FDIC has rated HomeStreet, as of June 2008, "Well Capitalized." That rating allows Homestreet and more than 2,000 other banks in the country, to participate in the CDARs program.
"We've been busy with it (CDARS)," Soleyamani said.
HomeStreet has avoided the fates of Washington Mutual and Wachovia because it never entered the subprime mortgage business, largely considered by financial experts to be the root cause of the current economic crisis.
He spent 13 years of his 20-year banking career at Washington Mutual and has friends who now might be out of work.
"It's a tough thing to digest," he said. "I feel bad for customers and employees who work there." And Solemani has already received resumes from some.[[In-content Ad]]
