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Uneasy customers pull cash from Washington Mutual(Oregonian (Portland, OR) Via Acquire Media NewsEdge) Sep. 27--Ari Okano waited in line Friday morning at a Washington Mutual ATM to conduct one last transaction with the giant thrift: She withdrew much of what remained in her checking account. The 26-year-old Portlander, increasingly unnerved by the Seattle company's deep troubles, had withdrawn most of her money several days ago and put it into a new account at Wells Fargo. Thousands of other customers had similar worries this summer, withdrawing untold hoards of cash from WaMu and helping seal the fate of the more than century-old Seattle institution. Government regulators seized control of WaMu on Thursday night and sold the assets to huge New York bank JPMorgan Chase. The remains of the nation's sixth largest financial institution fetched a paltry $1.9 billion. On Friday, Okano was mostly cleaning out her account for fear that the survival of JPMorgan Chase might become a question. Welcome to the U.S. financial industry, circa 2008, when bank failures, scattered bank runs and loss of depositors' confidence are recalling the start of the Great Depression. A survey of customers outside a downtown WaMu branch aired some sadness at the thrift's ignominious end. Jovan Wiggins, a 20-year-old cooking student and Seattle native, was shocked to hear that his hometown institution was dead. "I can't believe this; I'm not happy," he said, after emerging from cashing his paycheck (his bank teller did not tell him about WaMu's expiration). "They're the best bank around." But the overriding emotion was anger, even rage, at all of the decisions that led to WaMu's demise and the notion of a taxpayer bailout of Wall Street. "My daughter is 2 years old," said Kevin Coughlin, 42, of Portland. "At this point, she will pay about $9,000 for the various bailouts. It's just not right. I feel a huge sense of betrayal." Coughlin said he intends to close his accounts at WaMu-Chase. "I don't want to reward this kind of behavior with my money," he said. "I'd much rather go to a credit union." Robin Edwards, 30, of Milwaukie said the bailout amounts to a reward for Wall Street players. "We're bailing out these financial institutions after they've pillaged the economy," she said. It's ironic that WaMu, which for years cultivated a folksy, unassuming image, will go down as one of the villains in the crisis. The institution worked with many elementary schools across the Northwest to help kids open their first savings account. But as it grew through acquisition, well beyond its Northwest roots, to become a national player, WaMu became one of the leading purveyors of unsound, unsafe mortgage loans. The thrift dispensed with traditional notions of sound loan underwriting and instead jumped into subprime loans, made to people with checkered credit histories, and into other exotic, high-risk mortgages. Wall Street then bought the mortgages, knowing the highest-risk and therefore highest-interest loans would fetch the highest sales commissions upon resale. From there, the loans were repackaged into mortgage-backed securities and resold to institutional investors. The underwriting practices, increasingly widespread in the industry during the housing boom, led to rising defaults and foreclosures. The condition of WaMu's loan portfolio was illustrated by JPMorgan Chase's announcement that it intends to write off $31 billion of WaMu's loans -- nearly 10 percent of its portfolio. But mortgage defaults hurt not just lenders. They also reduced the value of the mortgage-backed securities held by innumerable investors. It is this toxic debt that U.S. Treasury Secretary Henry Paulson says the U.S. taxpayer should now buy to bail out the beleaguered current owners and avert financial disaster. William West, 32, of Portland shook his head at the notion. "If they are going to buy these assets for 60 cents on the dollar, or whatever, why wouldn't they spend some of that money to help out the homeowners, to help them stay in these homes and prevent some of these foreclosures?" he said. How to help homeowners was one of the questions Congress debated Friday as the bailout proposal sat stalled in Washington, D.C. Democrats have proposed that some money go to struggling homeowners and federal bankruptcy judges be allowed to rewrite the terms of onerous mortgages. Geordie Humphrey, 40, Portland was one of several WaMu customers who said he's considering moving his money to credit unions, which he perceives as safer, smaller and friendlier. The concentration of the banking industry, he said, also worries him. JPMorgan Chase already was the product of a merger between huge investment banks JPMorgan and Chase Manhattan. Its acquisition of WaMu's assets comes six months after it bought faltering investment bank Bear Stearns in another emergency deal facilitated by regulators. JPMorgan Chase doesn't come into this deal with entirely clean hands, either. Its lenders swapped tips on how best to game its own internal mortgage underwriting software -- known as Zippy -- to approve unqualified borrowers for loans. As recently as early this year, a memo titled "Zippy Cheats and Tricks" circulated within some offices of the bank. It recommended a number of steps to get a bad loan approved. If all else fails, the memo advised, loan officers should simply inflate a borrower's income in $500 increments until the software approved the loan. To see more of The Oregonian, or to subscribe the newspaper, go to http://www.oregonian.com. Copyright (c) 2008, The Oregonian, Portland, Ore. Distributed by McClatchy-Tribune Information Services. 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