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We’ll come to you.

This week on Capitol Hill, Congress was grilling Kerry Killinger, former Wamu CEO, about what he knew regarding the toxic loans that brought down the 119 year old savings & loan which he’d run for 18 years. As you might imagine, the bulk of his testimony amounted to the Ollie North defense – it wasn’t my fault and I didn’t know that much – blah, blah, blah. (I really don’t know what they expect to learn from these guys when they have the threat of criminal charges looming over their heads).

I had become used to hearing about aggressive financial risk taking as the culprit behind the meltdown. But as I read some comments on this week’s hearing made by Dan Kirkpatrick and Liz Moyer it suddenly occurred to me that we’ve had it backwards. Risk taking wasn’t the cause of the meltdown - it was a symptom. It’d be like saying the Titanic went down because it had a hole in its side. Yeah, so, what caused the hole!?

The real culprit of failure at Wamu (and likely others) was risk aversion. They took excessive financial risks largely because they were averse to the risk of backlash from shareholders and employees who were watching other firms ride the bubble. They were scared to stand up for what their decades of experience could only be telling them was right – keep the risk in check. The fact is, you don’t successfully run a major bank for 18 years by being blind to risk. Heck, Fitzpatrick points out that Killinger himself made the case in a March 2005 email, "I have never seen such a high risk housing market as market after market thinks they are unique and for whatever reason are not likely to experience price declines….This typically signifies a bubble."

In the end, for all the risk they took, they didn’t take the one risk that would have mattered most - not following the herd and following what was right for their business. That’s the real risk of leadership.

Doug Sundheim is an organizational consultant, author, & speaker. To learn more about his services visit him online at