Mr Cooper Group Inc (COOP)

[JohnnyWinter]

Washington Mutual's reckless former executives


"The Seattle Times editorial board has little sympathy for former Washington Mutual executives Kerry Killinger and Steven Rotella, who are being sued by the FDIC.

WE would be more sympathetic to Kerry Killinger and Stephen Rotella had they owned up to being reckless in the management of Washington Mutual Savings Bank.

But when Rotella, the former president, answers a federal lawsuit by calling himself "an effective, hardworking bank manager," and Killinger, the former CEO, answers the same lawsuit by saying he "responsibly and consistently served the interests of its depositors, customers and shareholders," our sympathy shrivels to the size of a raisin.

They can claim what they want. In the lawsuit filed in U.S. District Court in Seattle, the Federal Deposit Insurance Corp.'s complaint against Killinger, Rotella and the head of WaMu's home loan division, David Schneider, is full of documented detail of how they ran the bank in a manner blind to risk. WaMu's failure was no accident. It was not something that happened to every other bank.

In capitalist America, people who run big companies can make a lot of money. When they do it successfully, creating income and jobs and benefiting the community, we do not look too closely at how much they earn. But when they run a public company off a cliff, leaving busted public shareholders, unemployed workers, empty office buildings and thousands of homes in foreclosure, the people who did it lose the right to retire from the scene with bags of money.

According to the FDIC's complaint, from 2005 until WaMu was seized in September 2008, Schneider was compensated to the tune of $5.9 million; Rotella, $23.4 million; and Killinger, $65.9 million. These numbers are too high for a failed bank.

The lawsuit also says Kerry and Linda Killinger put their houses in Palm Desert, Calif., and in Shoreline into trusts in August 2008 "with actual intent to hinder, delay or defraud" future creditors, and that Stephen and Esther Rotella did "fraudulent transfers" of a house in Orient, N.Y., for the same purpose.

What exactly they did can be established at trial. But these allegations are serious, and we dispute Killinger's description of them as "political theater." "



http://seattletimes.nwsource.com/html/editorials/2014583796_edit24killinger.html?syndication=rss



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