tagged w/ Washington Mutual
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Not that they'd listen, but I'd counsel Republicans along the same lines as the Democrats when they came to power...keep the fist pumps, terrorist or otherwise, to a minimum. Refrain from the siren call to rub it in, lest you be treated to the swirly next election cycle.Not that they'd listen, but I'd counsel Republicans along the same lines as... more
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There is growing evidence that fraud was at the heart of the current financial crisis. But so far, no high-level bank executives have been hauled off to jail. One of the reasons may be that key bank regulators, who are counted on to root out fraud from the companies they regulate, have largely left it to the banks to report suspicious activity themselves. In this story one veteran bank regulator and a fed-up Senator try to answer the question many have pondered since the beginning of the crisis: why haven't more bank bosses been held responsible for this mess?
http://www.youtube.com/watch?v=PR-8uVu4lPIThere is growing evidence that fraud was at the heart of the current financial crisis.... more
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lagan
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2 years ago
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The former CEO of Washington Mutual, the biggest U.S. bank ever to fail, told a panel of skeptical lawmakers Tuesday that government regulators acted rashly when they seized the institution in September 2008.
WaMu "should have been given a chance to work its way through the crisis," Kerry Killinger, who led the Seattle-based thrift until it was shut down amid in the depths of the financial crisis, told the Senate Permanent Subcommittee on Investigations.
His testimony follows an 18-month investigation by the panel that found WaMu's lending operations were rife with fraud and that management failed to stem the deception despite internal probes.
The panel's documents, made public Monday, show that Washington Mutual was repeatedly criticized over the years by internal auditors as well as by federal regulators for sloppy lending practices that resulted in high default rates. WaMu was one of the biggest makers of "option ARM" mortgages — they allowed borrowers to make payments so low that loan debt actually increased every month.
The Senate subcommittee investigation focused on the thrift as a case study on the financial crisis.
READ MORE AT LINKThe former CEO of Washington Mutual, the biggest U.S. bank ever to fail, told a panel... more
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Washington Mutual, the bankrupt, seized and "under investigation" financial institution which saw some operations forcibly sold off to JPMorgan Chase in 2008, is suing the agency that guarantees Americans' deposits, and that agency is running low on funds.
Washington Mutual (WaMu), formerly one of the nation's most prestigious banks and alleged holder of over $307 billion in assets, is suing the Federal Deposit Insurance Corporation for more than $13 billion over the roll-up of its banking division into JPMorgan Chase & Co.
Washington Mutual was seized by federal regulators in Sept. 2008; the company filed for bankruptcy immediately thereafter. The ensuing investigation "one of the largest and most complex federal investigations ever undertaken in Western Washington," a US Attorney told the Seattle Times
"In a complaint filed with the U.S. District Court for the District of Columbia, the thrift's former parent accused the FDIC of having on January 23 made a 'cryptic disallowance' of its claims, prompting the lawsuit," reported Reuters.Washington Mutual, the bankrupt, seized and "under investigation" financial... more
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WaMu Insiders Claim Execs Ignored Warnings, Encouraged Reckless Lending
With Americans reeling from a global financial crisis, dozens of former Washington Mutual insiders have come forward to expose what they claim were calamitous executive decisions that led to the biggest bank failure in U.S. history.
These former WaMu employees, 89 of them who worked throughout the company and around the country, described a bank eager to profit from a housing boom and lending frenzy that seemed to have contributed to the credit crunch and housing bust now plaguing the economy. Some of them spoke to ABC News, all of them are confidential witnesses in a recently filed shareholder class action lawsuit against WaMu.
In court documents, the insiders said the company's risk managers, the "gatekeepers" who were supposed to protect the bank from taking undue risks, were ignored, marginalized and in some cases, fired. At the same time, some of the bank's lenders and underwriters who sold mortgages directly to home owners said they felt pressure to sell as many loans as possible and push risky but lucrative loans onto all borrowers, according to insiders who spoke to ABC News.
And this is "only the tip of the iceberg,"a former high-level executive claimed in the lawsuit.
A company representative told ABC News that Washington Mutual Inc. would not comment for this story.
WaMu Insiders Claim Execs Ignored Warnings, Encouraged Reckless Lending
With... more
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Some nice visualizations of the crisis:
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WASHINGTON - The House of Representatives seemingly rejected a $700 billion bailout today following extended debate where many members, including some who brokered the deal with it, was highly unpopular.
The preliminary vote was 185-197. Members had a limited amount of time to change their votes. Following the deadline, the margin was growing for those opposed to the measure.
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"Many of us feel that the national interest requires us to do something which is, in many ways, unpopular," said Rep. Barney Frank, the Financial Services Committee chairman, before the vote. "It is hard to get political credit for avoiding something that has not yet happened."
The bill was the product of marathon bargaining over the weekend among various House and Senate representatives.
President Bush urged the bill's passage, saying in a White House appearance Monday morning that "every member of Congress and every American should keep in mind that a vote for this bill is a vote to prevent economic damage to you and your community."
"With this strong and decisive legislation," he said, "we will help restart the flow of credit so American families can meet their daily needs and American businesses can make purchases, ship goods and meet their payrolls."
As debate opened, Frank, D-Mass., called the measure "a tough vote," but a necessary one to stave off a financial meltdown. It lets the government buy sour assets — mostly mortgage-backed securities — from struggling financial institutions in a bid to clear out clogged avenues of credit for businesses and individuals alike.
At the White House, spokesman Tony Fratto confirmed vigorous efforts to get the bill through.
"We're going to keep working with them right up until the vote," he said.
Fratto also said that Bush, Vice President Dick Cheney, Treasury Secretary Paulson, White House chief of staff Josh Bolten and other top officials were contacting House members in an effort to rally support, and that the president himself had call list of "a couple dozen members."
Fratto said Bush was telling aides some of those he'd talked to were committed to voting for the bill while "others remained skeptical."
With their dire warnings of impending economic doom and their sweeping request for unprecedented sums of money and authority to bail out cash-starved financial firms, Bush and his economic chiefs have focused the attention of the world and the markets on Congress, said Republican Rep. Paul Ryan of Wisconsin. Without the bill, Ryan added, "the worst is yet to come."
"We're in this moment, and if we fail to do the right thing, Heaven help us." he said.
As Democratic and Republican leaders hunted for votes, leaning on lawmakers to take a political hit for the good of the country, Ryan said, "We're all worried about losing our jobs. ... Most of us say, 'I want this thing to pass, but I want you to vote for it — not me.' "
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Critics on the left and right said Congress was being stampeded into hasty action on a plan that wouldn't make a dent in the nation's economic woes, which have at their root a subprime mortgage meltdown and the bursting of the housing bubble, followed by a wave of foreclosures.
The legislation does not require any federal action to prevent foreclosures, although it mandates that the government try renegotiating the bad mortgages it acquires with the aim of lowering borrowers' monthly payments so they can keep their homes.
"Like the Iraq war and the Patriot Act, this bill is fueled on fear and hinges on haste," said Democratic Rep. Lloyd Doggett, R-Texas.
FOLLOW LINK FOR MORE IN DEPTH STORYWASHINGTON - The House of Representatives seemingly rejected a $700 billion bailout... more
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Sudeep Reddy writes an informative article for the Wall Street Journal discussing the $1 trillion cost of recent bailouts.
"That sum [$700 billion] amounts to about a quarter of the U.S. government's annual spending. It's more than the Pentagon's annual budget, more than the nation pays out each year in Social Security benefits and more than the federal government's cost for Medicare and Medicaid.
Members of Congress then asked the questions that continue to be on many Americans' minds:
* How will the U.S. pay for this program and the previously announced aid to Bear Stearns, Fannie Mae, Freddie Mac and American International Group?
(The Washington Mutual seizure doesn't add to the U.S. tab because the bulk of WaMu's operations are being taken over by J.P. Morgan Chase without cost to the Federal Deposit Insurance Corp.)
* And what will these efforts end up costing us all in taxes?
(Part of the answer is known today but other aspects -- including the ultimate tab for these rescue programs -- may not be clear for years or even decades.)
$1 Trillion Commitment
The total government commitment so far in its current and proposed bailouts: $1 trillion. But most of that money would give the government a claim on assets -- such as home mortgages and insurance operations -- that have actual value...
Biggest U.S. Bailout
In the rescue plan Congress was negotiating last week -- at $700 billion the biggest bailout in U.S. history -- a key goal is to remove much of those soured mortgage securities from banks' books, possibly through an auction system.
The government -- taxpayers, essentially -- would then hold those assets until they can be sold off in a more normal market once the economy and housing market recover.
A key point: The $700 billion would come from selling debt to the public, raising the total federal debt, which is approaching $10 trillion now.
But it's not direct government spending, which shows up as part of the U.S. budget. If the mortgage debt loses value over time, however, the U.S. would have to record those losses as spending. That could increase the budget deficit, which eventually must be offset by higher taxes or lower spending.
So taxpayers face the risk of losing some part of the $700 billion -- but could also turn a profit if the U.S. ends up selling those holdings for more than the purchase price...
With all these rescue efforts, even if the U.S. government profits after its expenses, there's still a broader unquantifiable cost: whether bailing out financial institutions and markets will create expectations for more taxpayer support down the road when Wall Street or big businesses get into trouble.
Government officials acknowledge that risk. But they say taxpayers are being helped in the long run because stronger financial markets will translate into more economic growth and higher tax revenue."
Full article at link...Sudeep Reddy writes an informative article for the Wall Street Journal discussing the... more
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SDLN
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3 years ago
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Federal regulators last night seized the massive, troubled mortgage lender Washington Mutual in the largest bank failure in U.S. history, then immediately sold much of the company to J.P. Morgan Chase for $1.9 billion in a deal that will create the largest bank in the country.
Federal regulators last night seized the massive, troubled mortgage lender Washington... more
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Flashback a few years to this Washington Mutual Ad.
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The Federal Deposit Insurance Corp. seized WaMu on Thursday, and then sold the thrift's banking assets to JPMorgan Chase & Co. for $1.9 billion.The Federal Deposit Insurance Corp. seized WaMu on Thursday, and then sold the... more
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In what is by far the largest bank failure in U.S. history, federal regulators seized Washington Mutual Inc. and struck a deal to sell the bulk of its operations to J.P. Morgan Chase & Co.
The closing represents the demise of what once was the largest U.S. thrift but came to symbolize many of the worst excesses of the mortgage boom. Federal regulators said WaMu has suffered an exodus of $16.7 billion in deposits since Sept. 15, leaving the Seattle thrift "with insufficient liquidity to meet its obligations." As a result, WaMu was in "an unsafe and unsound condition to transact business," according to the Office of Thrift Supervision.
While the exact structure of the transaction wasn't immediately known, J.P. Morgan is expected to acquire Washington Mutual's deposits and branches, as well as other operations. The deal isn't expected to result in any hit to the Federal Deposit Insurance Corp.'s bank-insurance fund, according to a person familiar with the arrangement. Some analysts have worried that a WaMu failure could cost more than $20 billion.
Federal regulators have been heavily involved in orchestrating the transaction, which comes as WaMu grapples with its bad mortgage loans. Regulators were hoping to fend off a collapse of WaMu, which, with more than $300 billion in assets, would mark by far the largest banking failure in U.S. history.
Under the deal, New York-based J.P. Morgan, which has long coveted WaMu as a way to secure a footprint on the West Coast, will assume most of the thrift's deposits and branches, as well as some other operations.
Unlike many of the 12 bank failures that the FDIC has overseen this year, the J.P. Morgan-WaMu transaction isn't expected to impact the agency's national deposit-insurance fund. It wasn't immediately clear how the transaction would be structured to avoid the insurance fund taking a hit.
With mortgage losses mounting, and its stock price plunging, WaMu has been scrambling over the past month to find a solution; last week it put itself on the auction block. A number of banks -- including Citigroup Inc., Wells Fargo & Co. and Banco Santander SA -- pored over WaMu's books, but the bank didn't receive any offers. This week, WaMu's outside bankers approached a group of private-equity funds to gauge their interest in a deal, but that was viewed as a last-ditch effort.
Also this week, the FDIC took the step of reaching out to banks, asking them to express interest in taking over some or all of WaMu, according to people familiar with the matter. Those bids were due at 6 p.m. Wednesday. J.P. Morgan's takeover of WaMu's deposits represents a huge blow for private-equity firm TPG, which led a $7 billion investment into the thrift this spring. The transaction is expected to wipe out WaMu stockholders and holders of the company's senior debt, one person said. A key unknown: the fate of WaMu's bad assets, which include mortgage loans that have soured as housing markets tanked.
...more at linkIn what is by far the largest bank failure in U.S. history, federal regulators seized... more
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Soap
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3 years ago
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Washington Mutual Inc was closed by the U.S. government in by far the largest failure of a U.S. bank, and its banking assets were sold to JPMorgan Chase & Co for $1.9 billion.
The rescue marks a historic step to clean up a U.S. financial system littered with toxic mortgage debt.
Washington Mutual, the largest U.S. savings and loan, was closed by the federal Office of Thrift Supervision, and the Federal Deposit Insurance Corp was named receiver. Customers should expect business as usual on Friday, the FDIC said.
The bailout came after the thrift suffered deposit outflows of $16.7 billion since September 15, the OTS said.Washington Mutual Inc was closed by the U.S. government in by far the largest failure... more
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bshipp
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3 years ago
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The New York attorney general, Andrew M. Cuomo, accused an appraisal company yesterday of inflating the value of homes under pressure from Washington Mutual, one of the nation’s largest mortgage lenders.
The case, filed in New York Supreme Court in Manhattan, accuses a subsidiary of the First American Corporation of defrauding homeowners and investors who bought securities backed by loans that were underwritten with the appraisals it conducted.
The case centers on a central tenet of mortgage lending — determining the value of homes that secure loans. It is an area that many housing specialists have said was rife with abuse and conflicts of interest. The lawsuit also signals that Mr. Cuomo, who was secretary of Housing and Urban Development in the Clinton administration, intends to move as aggressively against the mortgage industry as he has done with college loan providers.
In a telephone interview yesterday, Mr. Cuomo said investigators had spent nine months interviewing hundreds of mortgage industry executives and poring over millions of documents obtained through subpoenas.
“This is the opening chapter of the story, and we have some other points that we are going to make in the coming weeks,” he said, adding that he expects other cases to touch on the secondary market where mortgages are securitized by Wall Street banks.
“We just don’t bring individual cases,” Mr. Cuomo said. “We try to find cases that point to a systemic flaw in the industry”
The New York attorney general, Andrew M. Cuomo, accused an appraisal company yesterday... more
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ivxx
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3 years ago
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The longtime chief executive of Washington Mutual, the country’s biggest savings and loan, has been forced out because of the company’s mounting losses, people briefed on the matter said Sunday night.
The departure of the executive, Kerry K. Killinger, ends an 18-year run in which he built the bank into one of the nation’s biggest financial institutions through a series of acquisitions. But his failure to properly integrate those deals and manage the burgeoning losses from subprime mortgages and credit card loans proved to be his undoing.
Washington Mutual’s new chairman, Stephen Frank, informed Mr. Killinger on Thursday that the new board had concluded that he should retire, according to a person briefed on the matter.
Company representatives did not return phone calls seeking comment on Sunday night.
Mr. Killinger is the latest chief executive in the financial services industry to lose his job as the credit crisis has worsened. Earlier on Sunday, the heads of Fannie Mae and Freddie Mac were forced out after the Treasury Department orchestrated a takeover of the companies. The chief executives of Citigroup, Merrill Lynch, Wachovia and Bear Stearns have also been dismissed as losses mounted.
Mr. Killinger is being replaced by Alan H. Fishman, the 62-year-old former chief executive of Independence Community Bank, a New York-based lender that was sold two years ago to Sovereign Bancorp. Mr. Fishman was widely praised for getting a top-dollar price for Independence.
Washington Mutual, based in Seattle, has been one of the lenders hit hardest by the downturn in the housing market. It has one of the biggest portfolios of so-called pay option mortgages, and had long focused its operations on lower-income urban borrowers. Losses at the bank have been devastating.
The longtime chief executive of Washington Mutual, the country’s biggest savings... more
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ivxx
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