FDIC... "The Blame Game" IMO...
WSJ(2/22) FDIC Poised To Sue Wamu Executives
Published Date: February 21, 2011 06:47:00 PM EST
(From THE WALL STREET JOURNAL)
By Dan Fitzpatrick and Jean Eaglesham
The Federal Deposit Insurance Corp. has sent letters to former executives of the failed Washington Mutual Bank warning of possible legal action, according to a person familiar with the situation.
The FDIC has discussed damages of $1 billion in relation to the potential Washington Mutual lawsuit, says a person familiar with the matter. The person said a decision against former executives of WaMu, the largest institution to be seized by regulators during the financial crisis, could be made within the next 30 days. It is unclear which former WaMu executives would be charged.
Such letters, designed in part to encourage executives to reach a settlement under their directors' and officers' liability insurance, can be a precursor to a lawsuit.
The potential action against executives of WaMu would be the most prominent attempt to date by the FDIC to bring cases against bank executives for alleged wrongdoing during the crisis. The FDIC has authorized the filing of lawsuits seeking to recover $2.6 billion from 130 officers and directors, as pressure mounts to identify bankers responsible for the largest number of failures in nearly 20 years.
So far, the FDIC has filed civil lawsuits against former officers and directors of just four of the more than 300 banks that have failed since 2008. The actions include a suit seeking $300 million from four former executives at IndyMac Bancorp, the Pasadena, Calif., lender that was shut in July 2008.
Washington Mutual's collapse in September 2008 was the largest-ever U.S. banking failure. The FDIC, as receiver, sold the bank's assets to J.P. Morgan Chase & Co. for $1.8 billion. For more than two years, WaMu's bankrupt parent, Washington Mutual Inc.; the FDIC; J.P. Morgan Chase, and bondholders have been fighting over billions of dollars in assets left behind.
The executives in charge when WaMu went down, including former Chief Executive Kerry Killinger, defended their actions before a U.S. Senate subcommittee in 2010. Lawmakers said Mr. Killinger and other executives tolerated fraudulent lending, knowingly dumped problem loans on investors and did too little, too late to stem problems once they threatened to sink the thrift.
Mr. Killinger, who told the panel he reduced risky lending as the housing market worsened, on Monday declined to comment on the potential FDIC action.
