Washington Mutual, the largest “savings and loan” in the United States, was seized by federal regulators in September of 2008. The FDIC is finally getting around to doing something. Too little, too late of course: they’re asking for permission to seize assets but the former CEO – the CEO! – has apparently long since disappeared. Most everybody who can be reached isn’t commenting. From Bloomberg:
FDIC Sues Ex-Washington Mutual CEO Killinger for Bank Losses
Former Washington Mutual Inc. Chief Executive Officer Kerry Killinger and Chief Operating Officer Stephen Rotella took extreme risks with the bank’s home-loans portfolio, causing billions of dollars in losses, the Federal Deposit Insurance Corp. said in a complaint.
Rotella, Killinger and David Schneider, Washington Mutual’s home loans president, showed reckless disregard for the bank’s long-term safety and instead focused on short-term gains to increase their compensation and “should be held accountable,” the FDIC said in the complaint filed March 16 in federal court in Seattle. The agency seeks unspecified damages and an order freezing the assets of Killinger and Rotella and their wives.
Federal regulators seized Washington Mutual, once the nation’s biggest savings and loan, in September 2008 and sold it to New York-based JPMorgan Chase & Co. for $1.9 billion.
Bank executives blamed Killinger, who was CEO for 18 years, during hearings before the U.S. Senate last year for ineffective management controls and lax lending standards.
“This action runs counter to the facts about my relatively short time at the company,” Rotella wrote in a letter e-mailed to Bloomberg by his spokesman, Daniel Hilley. “As you might imagine, I am angered by this abuse of power by the FDIC.”
JPMorgan spokesman Joseph Evangelisti declined to comment. No phone number is listed for Kerry Killinger in Washington State and Schneider couldn’t immediately be reached for comment.
The case is FDIC v. Killinger, 11-00459, U.S. District Court, Western District of Washington (Seattle).
You might ask how it is that the largest bank in the country can go on operating for years without anyone in authority noticing that it’s a scam, then when the inevitable billions or trillions are gone the solution is to let the taxpayers take the hit while the CEO of the bank absconds with his booty to some remote island or other. Then after it’s all over and the money is gone and no one’s listed in the phone book anymore, the feds finally bring suit. You’d think they’d be embarrassed; but then this whole thing is a study in astonishing shamelessness.
On second thought, don’t ask. There’s no good answer, or maybe the question just answers itself.