By JESSICA TOLEDANO
Staff Reporter
Washington Mutual Inc., suddenly L.A.’s largest financial institution with its recent string of acquisitions, is already breaking local tradition.
Virtually all major banks and thrifts statewide regularly report their interest rates for comparative surveys that are published in various newspapers, including the Business Journal. The institutions see the practice as a way of maintaining consumer awareness.
But WaMu has decided not to release its mortgage rates, certificate of deposit rates or any other rate information for inclusion in the charts. In addition, it recently decided to stop releasing such information for Home Savings of America, which it acquired last year.
“We feel that having individuals call and come into the branch is a better relationship for us that is not solely based on rates,” said WaMu spokesman Adrian Rodriguez. “It amounts to the fact that we do not lead with rates, but lead with service. We are one of the leading mortgage providers on the West Coast we are doing something right.”
As it turns out, WaMu’s rates are among the most competitive in the industry. Its adjustable-rate mortgage rates start at 2.95 percent, with one point. (A point is a lump up-front payment, equal to 1 percent of the loan amount.) Its fixed-rate mortgage rate is 6.875 percent with 1.125 points.
The company’s CD yields are also competitive. For a $100,000, one-year CD, Wamu pays 4.75 percent interest annually, slightly less than Bank of America’s 5.0 percent.
Nonetheless, Katie Smith-Sloan, spokeswoman for the AARP, the nation’s largest consumer group, is critical of WaMu’s decision, calling it “a disservice to consumers.”
“Our feeling is that any comparative information is very valuable to enable consumers to make informed choices,” said Smith-Sloan. “Those kinds of tables are only as valuable as the participation of lenders providing the information. It is doing a disservice to consumers not to provide as much information from as many institutions as possible.”
WaMu’s competitors warned that its refusal to release rates for newspaper surveys may backfire because customers are skeptical of financial institutions and their motives.
“It is interesting in this time of mergers, when the public perception is such that they think banks are unfeeling and just out to make fees off transactions, that you would hope to draw customers without mass advertising your rates,” said Keith Karpe, spokesman for Los Angeles-based Sanwa Bank California. “They run the risk of people thinking they are not competitive, and they also run the risk of running off people’s radar screens.”
Sanwa began releasing its rates more than a year ago, and has found it to be a successful means of attracting new customers, Karpe said.
Denis Wolcott, vice president of public relations firm Stoorza, Ziegaus & Metzger Inc., which represents City National Bank, said WaMu’s marketing decision is probably the first of many steps that will differ from the institutions it acquired.
“The whole thing about banking today is that there is an incredible struggle for customers, so there is an effort to be different and distinctive,” said Wolcott. “But if you are willing to do something as radical as not publishing rates, you better be able to have a good game plan in place to say at the end of the day that you have more customers than fewer.”
Rodriguez said WaMu has used the strategy in other markets and has been very successful at getting customers into the bank.
