The bankrupt holding company for Washington Mutual has sued the Federal Deposit Insurance Corp., alleging the agency has improperly denied potentially billions of dollars in claims against WaMu’s former banking unit.
The suit, filed late Friday in federal district court in Washington, D.C., also claims the FDIC improperly sold WaMu’s banking assets to JPMorgan Chase for $1.9 billion, rather than conducting a “straight liquidation” that could have produced more money for creditors — including the holding company.
According to these accounts, pressure to keep lending emanated from the top, where executives profited from the swift expansion – not least, Kerry Killinger, who was WaMu’s chief executive from 1990 until he was forced out in September.
Between 2001 and 2007, Killinger received compensation of $88 million, according to the Corporate Library, a research firm. He declined to respond to a list of questions, and his spokesman said he was unavailable for an interview.
During Killinger’s tenure, WaMu pressed sales agents to pump out loans while disregarding borrowers’ incomes and assets, according to former employees. The bank set up what insiders described as a system of dubious legality that enabled real estate agents to collect fees of more than $10,000 for bringing in borrowers, sometimes making the agents more beholden to WaMu than they were to their clients.
WaMu gave mortgage brokers handsome commissions for selling the riskiest loans, which carried higher fees, bolstering profits and ultimately the compensation of the bank’s executives. WaMu pressed appraisers to provide inflated property values that made loans appear less risky, enabling Wall Street to bundle them more easily for sale to investors.
Earth to Congress, come in Congress. You got a bunch of regular people turning blue out here.
While it’s great fun to grandstand over AIG, and lord knows AIG has deservedly been a flash point, this is pretty nuts, too. The Banksters are now going after the surviving New Deal financial regulations. I honestly don’t know how much more the American public will take.
As Barry Ritholtz writes:
At what point do you just liquidate every last one of these sons of bitches — and throw their management in jail?
Everyone has the right to due process, of course. While conservatives spent decades disparaging “trial lawyers,” the corporate world is full of them and they are just fine with going to court. But justice requires that bad actors be held accountable, no matter their class or philosophy.
Justice often happens when people are charged with some kind of crime, to put it simply. So far only the most obvious individual Ponzi scheme offenders are being dealt with. The institutional corruption endemic to corporate America has received a complete pass.
The Obama administration and Congress have now been issued an historic challenge: either let the Banksters try to destroy the FDIC’s authority, or stand up on behalf of the American people. Obama has been pretty cautious to this point, but this would seem to force the issue. Either we have a government of, by and for the people, or we don’t. It’s really that simple.
There is popular sentiment for more severe punishment of the corporate criminals who have stolen trillions from the American people.
Just check out these Google results:
Results 1 – 10 of about 12,900 for AIG “firing squad”. (0.22 seconds)
Results 1 – 10 of about 2,650 for WaMu “firing squad”. (0.27 seconds)
Results 1 – 10 of about 5,960 for “Bank of America” “firing squad”. (0.19 seconds)
This could prove to be a much stronger deterrent than a 90% income tax.
And not so unconstitutional.
At least for now.
The banksters provide one of the strongest arguments I’ve seen for keeping Guantanimo open.
Just declare the crooks a threat to national security and ship them off to gitmo.
Arguably, the people behind the “economic meltdown” are a much greater risk to national security than any of the terrorist categories mentioned in the media except maybe hackers.
Ultimately any anti-terrorism security we have in the states is paid for by taxes, as is our military. The more people out of work, the more foreclosed homes, the more people in poverty the less taxes that are collected and the more drain on the budget for social services.
The less taxes, the less money to spend on security even if you ignore the families without food and shelter. The less spent on the military and security the more chance that something bad will happen.
Of course, it could just all be a conspiracy of the economic ‘elite’ to tear down America. That would make it economic terrorism.
“The Banksters are now going after the surviving New Deal financial regulations. I honestly don’t know how much more the American public will take.”
This statement is almost certainly untrue. First of all, the ex-WaMu bankers aren’t even in this picture, they’re long gone. This is simply a CYA suit brought by a trustee with fiduciary duties to creditors who is trolling for any money that might be extracted from third parties. It doesn’t target federal regulations; nobody involved in this lawsuit gives a rat’s ass about the regulations, except insofar as they may serve to prop up one legal argument or another. This is merely a fight among a flock of buzzards over whatever meat is left on the dead carcass of WaMu, nothing more or less.
@2 Anyone who thinks a firing squad is more “constitutional” than a 90% income tax has got to be a Republican.
The problem isn’t with capitalism per se. The problem lies with unethical people who don’t respect rules. Ultimately, this crisis was caused by a political ideology that believes medical use of marijuana calls for government police intervention but systemic financial fraud doesn’t. Reasonable people could argue that was poor judgment, misplaced priorities, and just plain stupidity.
I think Chase got a crony good deal because they were buddies with the people at the top. I’m not defending WAMU, but they got sold at firesale prices because someone connected wanted to do Chase a favor.
Look at how Lehman failed, while Paulson’s buddies at AIG are protected. Look how much that cronyism is costing us.
Hey Rog, you are a lawer – what do you think about the premise that Washington’s Supreme Court justices are corrupt because deep-pocket entities effectively can prevent their reelections if those politicos don’t ensure favored parties win:
http://www.freewebs.com/gogop1/
???
Maybe it doesn’t matter as long as the progressive side is winning those cases . . . .
@9 I’m against letting BIAW use taxpayer funds to buy judges who’ll support their antisocial agenda.
8 It may actually have been more like Chase was the only other bank at that particular moment willing and able to take on the festering mess that everyone knew WaMu had become.
The alternative may have been for the FDIC to simply have taken over WaMu, paid off the depositors and liquidated whatever was left, or tried to continue to run it. If/when more banks fall apart, the latter choice may well be forced.
@12 News reports at the time said FDIC made a preemptive seizure of WaMu and foisted it on JPMC to avoid paying out deposit insurance claims that would have nearly exhausted the FDIC reserves. By doing it this way, WaMu didn’t cost FDIC anything, and the regulators were able to conserve those funds to use for further anticipated bank failures.
WaMu’s failure was extremely swift — literally overnight. The FDIC intervention was triggered by an “electronic run on the bank” when a horde business customers with online banking accounts transferred money out of WaMu within a few hours’ time.
The wheels are already falling off the “deer in the headlights” Obama bus and it will cost us all more $$$ in the long run. Check out Frank Rich venting over the Obama team’s handling of the banksters. I suppose some commenters will claim that Rich is also a right wing stooge? Good luck with that one!
http://www.nytimes.com/2009/03.....ef=opinion
13 – Yeah, McSame would handle this SO MUCH BETTER.
Instead of 42 percent tax cut in the stimulus how about 100 percent?
And ALL for the wealthy and well-connected.
And the banksters would still call the shots on their bailout.
Tell us how it would be different. Go ahead tell us.
Ask Frank Rich, YLB.
@13: And how did Bush and the Paulson team handle it? ooopsie.
Thanks for playing moron.
@13 It won’t cost us anything, because after 8 years of Bush, none of us have any money left.
@18
And that’s just for starters . . .
Friendly fire: NYT hits Obama
“The leading liberal voices of the New York Times editorial pages all criticized—and, in some cases, clobbered—President Obama on Sunday for his handling of the economy and national security.”
[http://www.politico.com/news/stories/0309/20325.html]
Arianna Huffington: Sunday Roundup
“Barack Obama’s Special Olympics line on Leno got all the headlines, but the night’s real money quote was his saying that his administration plans to ’set up a securitized market for student loans and auto loans outside of the banking system’ in order to ‘get credit flowing again.’ Excuse me, but isn’t that what the $700 billion bank bailout was supposed to do?”
[http://www.huffingtonpost.com]
@18 “The leading liberal voices of the New York Times editorial pages all criticized—and, in some cases, clobbered—President Obama on Sunday for his handling of the economy and national security.”
Yep, they sure did, especially Frank Rick in his concluding paragraph of the article linked by our troll friend @13:
“As the nation’s anger rose last week, the president took responsibility for what’s happening on his watch — more than he needed to, given the disaster he inherited. But in the credit mess, action must match words. To fall short would be to deliver us into the catastrophic hands of a Republican opposition whose only known economic program is to reject job-creating stimulus spending and root for Obama and, by extension, the country to fail. With all due deference to Ponzi schemers from Madoff to A.I.G., this would be the biggest outrage of them all.”
(Quoted under fair use.)
Oh, and let’s not forget that it was Bush, not Obama, who gave $750 billion of taxpayer money to the banks and failed to supervise what they did with it.
That quote from Frank Rich is worth repeating:
“To fall short would be to deliver us into the catastrophic hands of a Republican opposition whose only known economic program is to reject job-creating stimulus spending and root for Obama and … the country to fail.”
Lush Limpdick’s popularity ratings are now, what, in the teens? Something like 19%? Even half of the hard-core wingnuts have deserted the pompous drug addict.*
* The hard-core wingnuts appear to comprise about 38% of the base population. Presumably this is the same 38% who voted for cigarette smoke.
@13 (continued) So, how would you like Obama to handle the bankers? The GOP Senate Minority Leader thinks they should be dead. The only question is, should we torture them first?*
* Hey just kidding! Ann Coulter humor!
Bill O’Reilly, never one to miss a chance for a memorable sound bite, said if Cheney ran an assassination ring as NY Times investigative reporter Seymour Hirsch claims he did, Hirsch would already be dead.
Here’s the exact quote:
“The other day, left-wing muckraker Seymour Hersh went on MSNBC and said he had information, provided by the usual anonymous sources, that Dick Cheney was running an assassination squad out of the White House. I have but one simple observation: If Cheney really had such a crew, Hersh would have been dead a long time ago, and so would most everybody at MSNBC.”
http://thinkprogress.org/2009/.....ney-hersh/
Laugh Of The Day
“WASHINGTON – Congressional Republicans on Sunday predicted a doomsday scenario of crushing debt and eventual federal bankruptcy if President Barack Obama’s massive spending blueprint wins passage.”
(Quoted from Associated Press)
@20
The broadsides from the liberal press (and this is only within the last two days!):
“And I fear that when the [Obama] plan fails, as it almost surely will, the administration will have shot its bolt: it won’t be able to come back to Congress for a plan that might actually work.” Paul Krugman, New York Times
“At first, on the nutty bonuses, Team Obama thought it could get away with the same absurd argument used to justify the nearly $8 billion in unnecessary earmarks it allowed Congress to jam into this year’s overdue spending bill: It was written last year; we’re just signing off on it; we’ll do better in the future.” Maureen Dowd, The New York Times
“Barack Obama can resist all this, if he chooses, but he seems conflicted. Obama’s approach so far is devoted to restoring Wall Street’s famous names, and his economic advisers tell him this is the “responsible” imperative, no matter that it might offend the unwashed public. Obama evidently agrees. He does not seem to grasp that the tone-deaf technocrats are leading him into a dead-end.” William Greider, The Nation
“Barack Obama’s Special Olympics line on Leno got all the headlines, but the night’s real money quote was his saying that his administration plans to ’set up a securitized market for student loans and auto loans outside of the banking system’ in order to ‘get credit flowing again.’ Excuse me, but isn’t that what the $700 billion bank bailout was supposed to do?” Arianna Huffington, HuffingtonPost
“Within 24 hours, Summers’s stand was discarded by Obama, who tardily (and impotently) vowed to “pursue every single legal avenue” to block the bonuses. The question is not just why the White House was the last to learn about bonuses that Democratic congressmen had sought hearings about back in December, but why it was so slow to realize that the public’s anger couldn’t be sated by Summers’s legalese or by constant reiteration of the word outrage.” Frank Rich, The New York Times
“Right now we have an absence of inspirational leadership. From business we hear about institutions too big to fail — no matter how reckless.” Tom Friedman, The New York Times
@24: Bill O’ is forgetting one thing – the incompetent Cheney could have had the same assisination team that went after bin Laden going after Hersh.
@26: And your point is what? Krugman thinks that we need more stimulus. Dowd is barely worthy of comment and is not a liberal. Greider is probably right that the banking industry that Bush tried to shore up (reward for screwing up) may not be the place to fix things. Huffington is also right that the banking mess is even biger than previously thought and bush underestimated it compeletely.
And Friedman is right that business is failing to provide any leadership except to scream that certain insitutions are too big to fail.
I liked Friedman’s article. And even Dowd’s. Us, the American Tax Payer’s have been raped by Wall Street, and no one is being prosecuted.
Much of what they did was “legal” but most of it was blatant fraud. Ask anyone.
Barack. Where are the prosecutions of the Wall Street Gang?
RICO
(crickets chirping)
And your point is what? Krugman thinks that we need more stimulus. Dowd is barely worthy of comment and is not a liberal. Greider is probably right that the banking industry that Bush tried to shore up (reward for screwing up) may not be the place to fix things. Huffington is also right that the banking mess is even biger than previously thought and bush underestimated it compeletely.
And Friedman is right that business is failing to provide any leadership except to scream that certain insitutions are too big to fail.
——-
The point is . . . this is the liberal press taking direct aim at Obama. And Friedman is referring to Obama when he says there’s a lack of leadership – that’s what the article is about. And Dowd not a liberal? That’s a first. Here:
“It may seem surprising that Dowd, a liberal female columnist known for her vicious attacks on men in power, could put forth an argument so complicit in gender stereotyping.”
[http://www.campusprogress.org/features/726/disappointing-dowd]
Or:
“It’s not unusual for Barack Obama to take a little friendly fire from the Times. But it’s perhaps unprecedented for him to get hit on the same day by columnists Frank Rich, Thomas Friedman and Maureen Dowd—and in the paper’s lead editorial. Their critique punctuated a weekend that started with a widely circulated blog post by Paul Krugman that said the president’s yet to be announced bank rescue plan would almost certainly fail.”
[http://www.politico.com/news/stories/0309/20325.html]
“Friendly” fire refers to the liberal press.
Or:
“Just this morning, he sat down for an off-the-record lovefest with leftie scribes Frank Rich, Maureen Dowd, Gerald F. Seib from The Wall Street Journal, Ronald Brownstein from the National Journal, Andrew Sullivan from the Atlantic, and E.J. Dionne and Eugene Robinson from the Washington Post. ”
[http://nymag.com/daily/intel/2009/01/obama_also_met_with_liberal_co.html]
Too, too much.
@27
Krugman ,Dowd and Huffington ,Friedman where is barney this where your scrap up your thought for the day. Pea Brain
This is LOL time. “And Friedman is right that business is failing to provide any leadership except to scream that certain insitutions are too big to fail.’
A few weeks ago they said.
Republicans are failing to provide any leadership.
Lonely when your on the wrong side. Even Europe hates the losers now.
Your better off going fishing then payiny any attention to the losers friends. .
Oh looky here…a fresh set of trolls.
Hey guys…welcome to HA, now go home.
The blame needs to be laid at the feet of our godernment.
Thousands of God Fearing people lost money (read retirement) at the hands of the OTS/FDIC seizure, wherein JPMorgan was the puppet master, as they have been all through banking history (Google THAT).
Perhaps management should have restrained itself from becoming involved in these risky mortgages….HOWEVER, it’s hard to stop the run-away stagecoach with Uncle Sam whipping the horses no end.
Perhaps some of the posters here could do a bit of research: http://www.WaMuStory.com before they post their uninformed rants.
Of course most of these posters are shills for JPMorgan/FDIC, who will not be confused by the FACTS…….
PS. Why do you think this epic lawsuit is not being reported in the mainstream media? Could somebody be controlling the news? They must have missed Tel Aviv though…z
jpmorgan tried to buy wamu. the offer was rejekted. then they bribed the bush-administration with ots and fdic to force wamu into receivership. then jpmmorgan had stolen in an act of crime at a “firesale” the best parts of wamu. (they paid 1,9 bio at 9/25/08 and stated on 9/26/08 the value with 40 bio.
how much from the loot got you for your article?
The former execs are being investigated, and rightfully so. I’ve been following the Washington Mutual story for a few months now, and it gets very interesting.
The FDIC actually did violate their legal authority on multiple accounts in the seizure of WaMu. It isn’t discussed much, but the bank was actually well-capitalized through the date of receivership, and JP Morgan Chase bank immediately made a huge profit from obtaining it. The FDIC violated their own policies and procedures by seizing a bank that was still fully operational and met all regulatory standards to conduct business. From a legal standpoint, seizing a bank because they ‘think it might fail in the future’ is much different from seizing a bank because it did fail to meet regulatory guidelines. The FDIC also illegally seized property that was not owned by the bank.
There are other legal violations on the FDIC’s behalf, but in their defense they probably panicked because their insurance fund (yes, the FDIC is an insurance company) was underfunded. Why was it underfunded? Because congress forced the FDIC to stop collecting premiums.
It’s easy to play the blame game when you have banks being given billions of dollars of taxpayer money to prop up their business and meanwhile AIG gives billions to foreign banks then has the nerve to reward people with millions of TARP dollars of performance bonuses for shamelessly running their company into the ground… The level of incompetence in our government is incredible.
@35 Hey, come up with a different screen name before somebody attacks you thinking that you’re me!
@36
You have no worry. It’s like day and nigh his thoughtful insight on banking and your, If I can’t say anything nice I will shut up.