WASHINGTON – March 21, 2011 – Federal bank regulators are suing three former top executives of Washington Mutual, accusing them of allowing risky mortgage lending.
In the civil lawsuit, the Federal Deposit Insurance Corp. accuses the three former executives of risky lending practices that caused the bank to make mortgages “with little or no regard for borrowers’ ability to repay them.”
Washington Mutual, which was the largest U.S. bank ever to fail, collapsed in September 2008. It was later sold for $1.9 billion to JPMorgan Chase & Co. WaMu held $307 billion in assets at the time.
The bank officials named in the lawsuit are former WaMu CEO Kerry Killinger, ex-Chief Operating Officer Stephen Rotella, and David Schneider, who headed the bank’s home loans division.
The former bank officials have released statements calling the lawsuit “baseless” and “political theater.”
The lawsuit marks the first high-profile legal action the FDIC has taken in attempting to recover losses from failed banks, the Associated Press reports. The FDIC has shut down 347 banks since January 2008, the height of the financial crisis.
Source: “FDIC sues 3 former top executives of failed Washington Mutual, biggest U.S. bank failure,” Associated Press (March 17, 2011)
© Copyright 2011 INFORMATION, INC. Bethesda, MD (301) 215-4688
In the civil lawsuit, the Federal Deposit Insurance Corp. accuses the three former executives of risky lending practices that caused the bank to make mortgages “with little or no regard for borrowers’ ability to repay them.”
Washington Mutual, which was the largest U.S. bank ever to fail, collapsed in September 2008. It was later sold for $1.9 billion to JPMorgan Chase & Co. WaMu held $307 billion in assets at the time.
The bank officials named in the lawsuit are former WaMu CEO Kerry Killinger, ex-Chief Operating Officer Stephen Rotella, and David Schneider, who headed the bank’s home loans division.
The former bank officials have released statements calling the lawsuit “baseless” and “political theater.”
The lawsuit marks the first high-profile legal action the FDIC has taken in attempting to recover losses from failed banks, the Associated Press reports. The FDIC has shut down 347 banks since January 2008, the height of the financial crisis.
Source: “FDIC sues 3 former top executives of failed Washington Mutual, biggest U.S. bank failure,” Associated Press (March 17, 2011)
© Copyright 2011 INFORMATION, INC. Bethesda, MD (301) 215-4688
I hope they bring charges on thousands more who put people in this situation. Fraud is Fraud. Upper management should also be held accountable.
ReplyDeleteBanks are an established business. THey know about market cycles. We should not give money in any way shape or form to companies that are well established like banks. If they fail then they fail.