Mr Cooper Group Inc fka COOP

[califax]

Cantwell reveals another WaMu inquiry

Friday, February 5, 2010, 2:50pm PST
http://www.bizjournals.com/seattle/stories/2010/02/01/daily48.html?surround=lfn

In her first extensive interview about Washington Mutual since right after its closure, Sen. Maria Cantwell revealed there is an additional investigation ongoing into the bank’s seizure by the government in September 2008.

Cantwell, D-Wash., declined to release details of the investigation, or even say whether a government agency is involved. In an interview with the Puget Sound Business Journal this week, she said only that “we’ve pushed the people who are looking into it and they are working with us.”

More than a year after government regulators seized Seattle-based WaMu and sold it to JPMorgan Chase & Co., the number of parties investigating the seizure is growing. Among the agencies involved in WaMu investigations:

- The Inspector General offices of the Federal Deposit Insurance Corp. (FDIC) and the Office of Thrift Supervision (OTS), WaMu’s chief federal regulators

- The Senate Permanent Subcommittee on Investigations

- The Federal Bureau of Investigation (FBI) ,which is heading up a larger task force.

Cantwell said she is aware of all the ongoing investigations and decided not to launch her own in the wake of the WaMu fallout because of the other parties involved. Still, she said that an additional investigation is taking place, but she declined to elaborate.

WaMu, in light of more than 170 other banking failures across the country, remains a “critically important” issue, Cantwell said.

“WaMu represents the challenges and the moral hazards that exist when you’re trying to pick winners and losers,” Cantwell said. “That’s not what’s going to give people faith in our system.”

Cantwell’s comments about WaMu come as the senator has increasingly positioned herself as critical of the federal government’s actions during the financial crisis. She voted against the Troubled Asset Relief Program (TARP) in 2008, the government’s billion-dollar plan to help banks, and recently voted against a second term for Federal Reserve Chairman Ben Bernanke.

She also recently lobbied Treasury Secretary Timothy Geithner for billions of dollars in additional capital for community banks nationwide in a push to unplug the flow of credit to small businesses.

“It’s a battle against this large institution conglomerate taking over and then being set up so they can be bailed out by taxpayers again,” Cantwell said.

In WaMu’s case, Cantwell said she tried on several occasions to get answers from former Treasury Secretary Hank Paulson and FDIC Chairman Sheila Bair about how the government was handling WaMu in the frantic days before the bank was closed in September 2008. At one point, she said, after Paulson didn't return her phone calls, she cornered him before a congressional hearing to ask about the bank. After she told him that WaMu had adequate capital and liquitity, he hurriedly answered, “I know all this.”

Cantwell said she told Bair before the bank’s closure that she didn’t understand why regulators would take action against WaMu when the government was anticipating passing legislation that would help all banks.

Cantwell said she told Bair that “whatever she did better be clear and transparent.”

After WaMu was shut down on Sept. 25, 2008, Cantwell said federal regulators explained to her that a $16.7 billion bank run was the reason for its closure. That information was also released to the general public.