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The New York Times has an intriguing look at the widespread attitude of ‘lending at all costs’ that drove Washington Mutual to incredible growth and, subsequently, disastrous failure.

My favorite quote from the piece:

Yet even by WaMu’s relaxed standards, one mortgage four years ago raised eyebrows. The borrower was claiming a six-figure income and an unusual profession: mariachi singer.

Mr. Parsons could not verify the singer’s income, so he had him photographed in front of his home dressed in his mariachi outfit. The photo went into a WaMu file. Approved.

While in retrospect WaMu’s behavior as an organization was greedy and short-sighted, there is actually very little unique about the seemingly systematic misbehavior at the bank. As I was reading about WaMu, I was struck by how the pattern of increasingly dysfunctional behavior within the organization was, in reality, remarkably similar to other organizational failures.

As Diane Vaughan wrote in The Challenger Launch Decision, there are often very logical progressions within organizations that result in corner-cutting and risk-taking. In the case of Challenger, external pressures and internal culture/politicking led to systematic deviations from procedural norms. In other words, the organization made risky trade-offs to meet its goals.

In WaMu’s case, the motivating factor was even simpler: getting paid. Considering that financial incentive was introduced both at the organizational and personal levels within the company, it’s really not unexpected that WaMu would willingly (or naively) accept unreasonable risk for seemingly greater reward.

The truth is that organizations make fundamental decisions about their own risk profiles on a continuous basis. In the cases of both WaMu and the Challenger launch, clear-headed people would argue that the risk/reward structures were measured incorrectly at an organizational level. WaMu as a company, with all of its risks, was so unlikely to succeed over time that “the bet” was clearly a bad one. In poker, we would say that it was a dramatically ‘Negative Expected Value play’.

And that leaves the question of whether WaMu executives were stupid or just personally greedy. If they made such lax decisions for the organization believing that they would be successful long-term, then we could simply label them as stupid (and incompetent at recognizing risk/reward). Case closed. If, however, they made such lax decisions knowing full well that they could likely result in significant disaster, then the only rational reason for continuing on that path would be their own personal financial gain.

Fundamentally, the issue is proper alignment of incentives – would WaMu executives have operated in the same way if their own personal financial stability was completely tied to the long-term success of the company? One would hope not.

But then again, maybe they were just actually stupid, in which case they probably wouldn’t have changed a thing.

I’m going to be honest, I’m pretty tired of picking games at this point. That’s what happens when your two worst weeks happen to also coincide with two consecutive weekends of placing wagers in Nevada sportsbooks. It was pretty awful.

For completeness though, I’ll go ahead and finish it off this week. Looking forward to doing some sort of actual writing on this site in the next few weeks.

Last Week: 4-11 (no joke. plus forgot to pick the Thursday game)
Overall Season Results: 118-117-4

Sunday

OAK (+13) at TB
Lots of points, even for a team with something to play for.
Pick: OAK

DET (+11) at GB
Is the fear of going 0-16 enough to inspire Detroit to a victory?
Pick: DET

DAL (+1.5) at PHI
The Eagles could very well have nothing to play for by the time this game rolls around.
Pick: DAL

NYG (+7) at MIN
Who knows how much playing time the Giants starters are actually going to get in this meaningless game for them. They did seem to really go after it last year though.
Pick: NYG

CHI (+3) at HOU
Big game still on the line for the Bears.
Pick: CHI

CAR (-2.5) at NO
Carolina still has seeding to play for. They also really should’ve won that game last week – definitely looking pretty good.
Pick: CAR

STL (+14) at ATL
Too many points for OJ not to cover that.
Pick: STL

KC (+3) at CIN
The Chiefs are playing surprisingly well.
Pick: KC

JAX (+11) at BAL
Went back-and-forth on this game, but it’s just too big a game for Baltimore not to clean this off, right (NWE’s going to win in the morning)? And they really do feed on mediocre teams.
Pick: BAL

TEN (-3) at IND
These games are awful to pick. Dungy usually sits guys in end-of-season games and Tennessee has nothing to play for either. Flip a coin, I guess.
Pick: TEN

CLE (+11) at PIT
The Browns are really awful. Ken Dorsey is a complete joke.
Pick: CLE

MIA (+3) at NYJ
I think Miami wins and sneaks into the playoffs.
Pick: MIA

NWE (-6) at BUF
I’d be extremely surprised if the Patriots lost this game with so much on the line.
Pick: NWE

SEA (+6.5) at ARI
Oddly, Cardinals actually have something to prove in this game.
Pick: ARI

WAS (+3) at SFO
Faithful.
Pick: SFO

DEN (+8) at SD
Not really confident about the NTR in situations where something meaningful is actually on the line (and players find automatic motivation), but here goes…
Pick: DEN

The wheels are definitely falling off the bus here. Not only did I get pounded last week on my picks (good week to go to Vegas!), but I completely spaced on getting my pick in for this evening’s game. I’d like to state for the record (like an idiot) that I would have picked the Colts to cover the 6 points, but ah well.

Last Week: 4-10-2 (wow, that’s terrible)
Overall Season Results: 114-106-4

Thursday

Totally forgot to pick. Awful.

Saturday

BAL (+4.5) at DAL
Points, please.
Pick: BAL

Sunday

PIT (-1.5) at TEN
I think this could be the Steelers year.
Pick: PIT

MIA (-4) at KC
The Chiefs are really playing quite well right now. I can’t believe I just wrote that.
Pick: KC

ARI (+7.5) at NWE
Wow, not a ton of respect for the Cardinals, and honestly why should there be. Cold weather game on the East Coast. Cassel playing awesome.
Pick: NWE

CIN (+3) at CLE
I’d just like to state that Cincinnati covering against and beating Washington last week kept me from winning about 2 grand. Awesome.
Pick: CIN

PHI (-5) at WAS
Wow Philly looked good on Monday.
Pick: PHI

SF (-5.5) at STL
St. Louis can be a great remedy for red zone issues. You know, by my count, wouldn’t the Niners be a playoff team right now if 2 or 3 plays went differently this season?
Pick: SF

ATL (+3) at MIN
Atlanta hasn’t played great on the road, and Minnesota’s playing well.
Pick: MIN

NO (-7) at DET
It just seems like the Lions are going to be jacked up. They actually have something to play for.
Pick: DET

CAR (+3) at NYG
Wow, how things change quickly. The Panthers are looking very solid for a Super Bowl run after being the preseason trendy pick for like five years running.
Pick: CAR

NYJ (-4.5) at SEA
Odd line between a first-place squad and a team with three wins.
Pick: NYJ

HOU (-7) at OAK
Raiders suck.
Pick: HOU

BUF (+7) at DEN
That close game last week for the Bills was all about the Jets playing terribly.
Pick: DEN

SD (+3.5) at TB
The Norv Turner Rule, 11-4 I believe.
Pick: TB

Monday

GB (+4.5) at CHI
I’m done thinking Aaron Rodgers and company will get it together.
Pick: CHI

Big weekend for NFL-watching as I’ll be in Las Vegas placing wagers on these games and my fantasy team will be locked in a mortal death match with Kingsley’s:

As you can see, it would be a total travesty if that squad was to lose to CharlesHaleyFanClub. I also have to remember to pack my Brent Jones jersey for Vegas so I can scream obscenities at Dolphins fans and come off as a passionate fan instead of a crazy person.

Last week: 7-9
Overall Season Results: 110-96-2

Thursday posted Wednesday evening