In its review that summer before the CAMELS rating, the OTS never questioned or raised concerns about WaMu’s strategy to survive with $25 billion in liquidity, bank officials said.

“They didn’t say anything to us,” said one senior manager. “They seemed to like it.”

Other documents also support the view that WaMu had sufficient liquidity to stay open. The last liquidity report from inside WaMu shows that on September 11 the bank could borrow $6.2 billion from the Federal Home Loan Banks in Seattle and San Francisco. It could borrow an additional $8.2 billion from the Federal Reserve Bank, a line that it hadn’t accessed at the time of its seizure, according to two people familiar with the matter.

The 25-page report also shows that WaMu’s capital exceeded all regulatory minimums. The tier-one leverage ratio, one key measure, stood at 7.66 percent of total assets. Regulators consider a level of 5.75 percent to be “well capitalized.”

Typically, regulators will intervene at an institution when this ratio falls below 2 percent of its assets, banking experts say.

Even so, WaMu executives, under pressure from regulators, were exploring ways to raise even more capital, according to people familiar with the matter. The bank, along with investment bank Goldman Sachs, developed a plan in September to convert some of its bondholder debt into equity, boosting its capital levels even more.

TPG, the group that led the $7 billion capital infusion in the spring, cleared the way in mid-September by removing a clause in its contract that would have prevented the bank from finding other investors. It’s likely TPG would have put in more money as well, according to former WaMu executives.

WaMu’s second bank run began on September 11, sparked by a downgrade by Moody’s Investors Service. Coupled with the bank’s payments to other creditors, the run eroded WaMu’s cash pile, as executives anticipated.

But three days before WaMu was seized, the bank run slowed, much like it had in July. By then, Reich, of OTS, had changed his mind and cut WaMu’s CAMELS score to a 4. He and Bair, of the FDIC, were no longer in disagreement.

On September 20, Reich wrote to Bair with a “status report re: WaMu.”

Although Reich’s update was redacted, Bair responds positively to his assessment.

“Glad we are all working toward the same end,” she writes.

“Many thanks for your efforts.”

Bair, through a spokesman, declined numerous requests to comment for this story and explain the process that was going on in the emails.

Reich resigned in February 2009 and is no longer authorized to speak about his agency’s role with WaMu.

Job of a Lifetime

The afternoon private gathering in honor of the late WaMu executive drew an extraordinary group of about 100 people. Pepper, who is widely credited with laying a solid foundation for the bank, attended with several members of his former executive team who helped grow WaMu through the 1980s. Killinger attended with his wife, Linda. Since his ouster as chief executive in early September 2008 just before the bank collapsed, he has remained largely out of sight, spending much of his time at his second home in Palm Desert, California.