The Government SUES Some BANKERS, FINALLY!!

[Segami]

:wtf: Took so long?



" As a former customer of Washington Mutual (though not willingly -- my much smaller bank was swallowed up by WaMu during their great 1990s expansion drive) I have followed the twists and turns of the saga of the financial crisis's poster-boy for reckless lending with great interest over the years. Way back in August 2006, I was jolted to learn that WaMu had been booking negative amortization -- roughly speaking, the amount of money owed that its mortgage borrowers were falling behind on paying -- as earnings. I called it "Enron Economics" then and I think that subsequent events have borne me out.



So now, in what is being billed as the biggest legal action taken by a regulator against executives of a financial institution involved in the great crash, the FDIC is suing WaMu's three top corporate officers for, among other things "gross negligence, breach of fiduciary duty, and fraudulent conveyance." The gist of the case: CEO Kerry Killinger and his two right-hand men knew that they were taking big risks by putting people in homes they couldn't afford. They were warned countless times of the danger they were exposing the bank to. But they went ahead and did it any way, continuing their reckless gambling even as the housing boom collapsed around them.



The complaint makes for interesting reading, even if the broader narrative has been clear for some time. But one juicy little passage resonates with particular harshness.



"....Both Killinger and (Chief Operating Officer Steven) Rotella were heard to deride risk managers as "checkers checking checkers."


Checkers checking checkers. So much scorn! So much condescension! So utterly self-destructive! On the basis of that quote alone, I say: Lock 'em up and throw away the keys.



cont'

http://www.salon.com/news/mortgage_crisis/index.html?story=/tech/htww/2011/03/18/fdic_sues_washington_mutual



.

[tallahasseedem]

1. Some?

I'd like most, but I guess I'll take this.

[Scuba]

2. Sued? Why not indicted? n/t

[dixiegrrrrl]

5. "Sue" is civil court =fine. NO crimimal charges,ever.

Holder has already refused to prosecute Angelo Mozilla ( Countrywide) criminally.
SEC has sued several banks and gotten a "fine" which equates to about 1% of the stolen profits.
the usual nondisclosure agreement, etc. NO changes, no criminal charges, no heads rolling.
Message received, loud and clear.

[Thunderstruck]

6. They're all in the same club and you ain't in it. Also, those "fines" are priced into the fraud.

[Segami]

7. Has a pattern with Holder materialized? It would seem so.

[dixiegrrrrl]

8. Long time ago, yes, definitely.

[bluesbassman]

3. A little salt on the wound - Killinger received $25M in '08, the year he was fired.

$15M of that was severence pay!

Sude note, although Killinger worked his way up with WaMu, the rest of the executive staff came over from JP Morgan and Citibank starting around '06. WaMu was an outstanding company up to that point - very customer and employee focused.

[chill_wind]

4. Mirabile Dictu! (Naked Capitalism)

I always learn a lot from the extended comments section there.

Interesting that the fdic is going after executives of WAMU, which did not cost the FDIC a single penny when it failed. if the FDIC had any courage, it would go after CitiBank and Bank of America, which each received open-bank assistance from the FDIC. Moreover, what about going after the prinicpals of the failed Franklin Bank, SSB, which cost the FDIC $1.5 billion. but that would mean the FDIC would have to sue Lewis Ranieri. ironic how Ranieri can lecture about the immorality of home debtors walking away when underwater, but he did the same thing by exercising the put to the FDIC.

(more)

http://www.nakedcapitalism.com/2011/03/mirabile-dictu-fdic-suing-former-wamu-ceo-two-execs-for-900-million.html

[alfredo]

9. It is treason

Oran's Dictionary of the Law (1983) defines treason as "...a...citizen's actions to help a foreign government overthrow, make war against, or seriously injure the parent nation." In many nations, it is also often considered treason to attempt or conspire to overthrow the government, even if no foreign country is aided or involved by such an endeavour.