New WaMu CEO called a savvy, scrappy exec

Alan Fishman, the new chief executive of Washington Mutual, has seen this movie before: A solidly performing retail bank yoked to a floundering mortgage business.

Back in the fall of 2003, when he was running Brooklyn-based Independence Community Bank, Fishman cast his eye on a tempting target. Staten Island Bancorp, a $7.5 billion institution, had fallen on hard times by trying to take its mortgage operation national, and was looking for a buyer.

SIB's big deposit base and extensive branch network could help fuel Independence's growth. But the dog of a mortgage business caused several other New York-area banks to think twice before bidding.

Fishman charged ahead, buying SIB for $1.5 billion — more than most observers had expected it would fetch. But he had an ace in the hole: Before bidding, Fishman cut a side deal with investment bank Lehman Brothers to take the bulk of SIB's mortgage business off his hands.

"We were competing against banks that probably could afford to pay more for (SIB), but they couldn't filter out the risk in the national mortgage business," said Terry Mitchell, Independence's head of consumer banking. Via the Lehman deal, he said, "the risk in (SIB) was essentially eliminated, and that allowed us to spend a little bit more on the core bank."

Today, Fishman's task at WaMu is similar: Realize the value in WaMu's nationwide retail-banking franchise while preventing the mortgage unit from sinking the company.

Former colleagues agree that the blunt-speaking Fishman has the self-confidence, brainpower and decisiveness needed to separate the wheat from the chaff at WaMu.

"If WaMu can be fixed, he can fix it," said Charles Hamm, Independence's former chairman and CEO. "If he can't fix it, he would not be reluctant to get the best value for shareholders he can, by whatever means."

Added Harvey Gillis of Sunrise Capital in Bellevue, who knew Fishman when he was at New York's Chemical Bank and Gillis was with Seafirst Bank (now part of Bank of America): "He's going to have to go in there and analyze the whole (loan) portfolio, and I'll tell you, he's got the analytical smarts and knowledge of the banking business to tell within two weeks whether they can survive or not."

On Friday, speculation grew that a sale of WaMu might be near. Fishman brought in Independence's former chief financial officer as an adviser, and American Banker, a trade publication, reported that WaMu was talking with JPMorgan Chase.

Fishman was formally announced this past Monday as WaMu's first new CEO in nearly two decades. He succeeded Kerry Killinger, who built WaMu from a Puget Sound-centered thrift into a nationwide financial powerhouse.

But under Killinger, WaMu also plunged headlong into the murky world of subprime mortgages, no-documentation loans, and option adjustable-rate mortgages. When the U.S. housing market began to crater, WaMu was stuck with billions of dollars in dubious loans nobody wanted to buy.

WaMu has recorded $4.5 billion in losses so far this year, with billions more expected. The stock, which stood at $35.53 a year ago, closed at $2.73 on Friday; the bank has repeatedly tried to reassure nervous investors it has sufficient access to capital to stay in business.

"I never could have created the modern WaMu," Fishman told The Seattle Times this past week. "But I do think I have the skills to take it to the next level."

"He's scrappy"

Fishman's confidence was evident 40 years ago on the college basketball court. Despite standing just 5-feet-8 — no one on the team was shorter — Fishman scored 835 points over three seasons as a guard on Brown University's varsity squad; he was team captain his senior year and received the equivalent of the Most Valuable Player award.

"I think he was the shortest, best basketball player that ever lived," Hamm said. "He's scrappy, and he doesn't let size get to him."

In 2000, after a career that included 19 years at New York's Chemical Bank, Fishman was recruited — or, perhaps more accurately, recruited himself — as Independence's CEO.

"He came up to me one day and said, 'Look, you've been talking about retiring for a year or two. If that's true, I want to apply for your job,' " recalled Hamm, who had known Fishman both professionally and socially in Brooklyn.

Independence already had grown substantially, said Hamm, but "I felt that what we needed was someone with bigger-bank bones. He added risk management and IT management at a level that we previously did not have."

Under Fishman, Independence reduced its concentration in multifamily mortgages and built up its commercial real estate and business-banking divisions.

"He transformed our bank into a truly broad-based, albeit real-estate oriented, commercial bank," Hamm said.

The SIB deal, Mitchell said, showcased Fishman's ability to think creatively and find ways to eliminate risk.

"You talk about thinking outside the box," he said. "I'm not even sure Alan sees the outline of the box — he can think so far beyond that."

Fishman did ruffle some feathers along the way: Some investors criticized him for keeping details of the SIB/Lehman deal under wraps. And the 2006 deal in which he sold Independence to Sovereign Bancorp for $42 a share in cash was widely considered a coup for Independence's shareholders, but an expensive misstep on Sovereign's part.

Hamm recalled one Independence board meeting at which "sensitive strategic issues" were being discussed. At one point, he said, Fishman implied that the board didn't have enough trust in him.

"I don't know if you've ever been a board member, but that's enough to piss off the Good Humor man," Hamm told The Times. "I had to step in right away and say 'Wait a minute, gentlemen. It's normal to have some friction between the board and the CEO.' Alan thanked me later and said, 'That's what I meant.' "

It can be hard for a CEO to come into a new company — particularly one as big and troubled as WaMu — and take charge without alienating people.

Mitchell, who'd been at Independence for 27 years before Fishman's arrival and already was running the consumer-banking division, said Fishman knows when to dig into the details and when to step back.

"He spent a lot of time with us when he first got to Independence," Mitchell said. "But once he got a comfort level with your competency, he didn't bother you with day-to-day stuff."

Fishman himself isn't too worried about his ability to get a handle on WaMu.

"Does it concern me? Sure," he said. "Does it concern me a lot? No. This is what I do."

Drew DeSilver: 206-464-3145 or ddesilver@seattletimes.com