Slapped Wrists at WaMu
By GRETCHEN MORGENSON
WHEN Washington Mutual collapsed in 2008, it was the largest bank failure in American history. So the $64.7 million settlement struck last week by federal banking regulators and three former WaMu executives seems like small potatoes indeed.WAMU - Washington Mutual - was one of the biggest players in the mortgage crisis which led to the almost total failure of our financial system and has certainly caused the destruction of our economy, our middle class and our housing market.
Worse, most of the money didn’t even come from the former executives’ pockets. Instead, it came from directors’ and officers’ liability insurance policies paid for by the bank.
“Pretty soft,” is how Senator Carl Levin, the Michigan Democrat who heads the Senate’s permanent subcommittee on investigations, characterized the settlement in an interview on Friday.Yes, "pretty soft" indeed! Considering the fact that the three former executives made millions for themselves while running their company into the ground. "Pretty soft" considering the fact that WAMU under their leadership and direction probably - or allegedly (more politically correct) participated in many of the illegal activities the entire banking system participated in to create the housing boom to bust cycle.
“Washington Mutual Bank epitomizes everything that went wrong with the banking industry and contributed to the financial crisis, so the F.D.I.C. was right to go after the bank’s leadership,” Mr. Levin said in a statement issued on Tuesday. “Former WaMu executives Killinger, Rotella and Schneider are truly the 1 percent: they got bonus upon bonus when the bank did well, but when they led the bank to collapse, insurance and indemnity clauses shielded them from paying any penalty for their wrongdoing.”
On the heels of SEC charges against the former heads of Fannie Mae and Freddie Mac (see related story...click here) one would think - as I did - that more charges with real teeth would be forthcoming. I for one was hopeful that these pending charges from SEC would open the door to prosecution of CEO's responsible the many (criminal) activities in what I consider to have been an organized "criminal" activity that should have been and still should be prosecuted under RICO.
I was wrong.
While our politicians play games for their own job creation and preservation by not extending the tax cuts and other important legislation that would truly help the people - our regulators are still protecting the "guilty" allowing them to continue to live in the lap of luxury while millions in THIS country will go hungry and homeless this holiday season.
Although the settlement probably disappoints anyone hoping executives might be held personally accountable, it does illustrate what regulators are up against when litigating these matters.I am really not sure what "regulators are up against when litigating these matters" other then self preservation and continuing to feed the general public a lot of BS in an attempt to show us that they care and are doing something.
Mr. Levin’s dismay over the settlement probably arises from his deep knowledge of WaMu and its practices. After all, he led the Senate’s 2010 investigation into the origins of the financial crisis, producing a 650-page report on actions taken by WaMu, Goldman Sachs and the credit ratings agencies, among others."Dismay" seems to produce paralysis when not even a Senator seems to be powerless against those his colleagues deemed to be Too Big To Fail.
Mr. Levin’s office referred the findings to prosecutors for possible follow-up. Not much has happened since.(emphasis added)
The damning report detailed WaMu’s questionable operations as well as those of its regulator, the Office of Thrift Supervision. That feckless agency was responsible for overseeing three of the biggest disasters in mortgage lending history: Countrywide Bank, IndyMac Bancorp and WaMu. Mercifully, the Dodd-Frank law put an end to the O.T.S., folding it into the Office of the Comptroller of the Currency.(emphasis added)A "damning report" detailing "questionable operations" is for some reason not enough to take legal criminal action. My brief moment of hope for justice I spoke of just hours ago has quickly turned into despair. It once again raises the question in my mind as to who really is running our country with powers stronger then most of the dictators we have had a hand in eliminating.
ARE the WaMu executives out of the woods? They’re getting close. Last summer, the Justice Department shut down its criminal investigation into WaMu and its officials, concluding that the evidence it had amassed “did not meet the exacting standards for criminal charges in connection with the bank’s failure.” (emphasis added)Those of us who are victims (I am one) of the actions of the true 1%'ers, will once again suffer the hardships and indignity during what once was a joyous holiday season for the masses.
The Scrooges of our country have been relentless in their pursuit of their own happiness at our expense and immune to any type of justice.
I apologize for my brief encounter with optimism and hope.
I was wrong.
Read Gretchen's article...click here