Excerpt
Chapter One
FRIEND OF THE FAMILY
Not only will we succeed financially, we will succeed as human beings.
--Lou Pepper, speech to Washington Mutual employees
In 1951, Lou Pepper arrived in Seattle after World War II with no job prospects and lackluster interest from the law firms where he tried to find work. Now, thirty years later, he held the position of senior partner of a firm with sixty lawyers, a title that he, as a boy growing up in a farming town during the Great Depression, could hardly have fathomed. He had a lovely wife named Mollie and four children, almost all grown up. At fifty-seven, he was nearing retirement.
But now, in the summer of 1981, Pepper had a problem. He was beginning to realize, as he sat in a stuffy conference room at the Westin Hotel downtown, that the problem was about to become his own. Sitting around a boardroom table, as the July sun poured in through one of the windows, were an impressive array of men running Seattle businesses. Many of them would only grow more powerful over the next two decades. Among the men: an executive of Boeing; the head of the local power company, who would later represent the city's baseball team; and the president of a college, who would be elected a U.S. senator.1
The men went around the room discussing their schedules. All of them were busy. No one had time to run a scrappy little bank called Washington Mutual. As trustees,* however, they were in a desperate situation. The bank, after nearly 100 years in existence, was on the verge of failure. It was losing $5 million in capital a month, a rate that would put it out of business within three years, assuming the situation didn't get much worse.2 Faced with this prospect, Washington Mutual's senior management team froze. Instead of finding ways out of the problem, they did nothing at all.
None of the trustees, and especially not Pepper, wanted to lose the bank. Pepper had developed a fondness for Washington Mutual. It had been his client for much of the last three decades at his law firm, Foster Pepper & Riviera.