It's in vogue these days for banks to suggest that they could have survived without the TARP funds they were forced to accept. Goldman Sachs (GS) and Wells Fargo (WFC) have each played variations on that theme over the past few months. A new article from Portfolio.com raises a related issue regarding Washington Mutual. It suggests that the bank could have survived and perhaps spared shareholders and bondholders.

"If regulators had waited just six business days, WaMu could have been helped by the government's $700 billion Troubled Asset Relief Program, and by an increase in bank deposit insurance limits to $250,000 from $100,000, a move that helped stop panic withdrawals at all banks. Those changes almost surely would have further quelled a bank run that struck WaMu in September and had already slowed," Portfolio.com reports. 

Sheila Bair is cast as the bad guy in part because she doubted the viability of the bank. You do have to wonder if the bank's portfolio of low-quality mortgages would have made some sort of shut down inevitable? Would a bailout of a severely troubled institution have stuck taxpayer's with large losses? It seems it would have ended up more like Citi (C) than Goldman Sachs.    

For more:
- here's the article

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