Et Tu, WaMu? Seattle Bank Was Subprime 'Polluter'

Updated

Of all the wing-tipped execs that have been paraded before government officials investigating the roots of the financial crisis, the former Washington Mutual executives are surely among the most shameful.

Tuesday's all-day Senate hearing, conducted by Sen. Carl Levin, aired enough dirty laundry to stink up all of Capital Hill. WaMu, according to the Senate investigation, pursued a deliberate strategy of peddling high-risk, often fraudulent loans, and selling them off to investors. Employees were compensated on quantity, not quality, and even some accused of fraud were lavished with trips to Hawaii. All the while, officials ignored warnings. In fact, when the housing market started to deteriorate, the bank ratcheted up its efforts to push the ill-fated loans in a final push for profits. WaMu was seized by federal regulators in September 2008 and later acquired by JPMorgan Chase in a fire sale, but not before handing its departing CEO a $15 million gift.

"Washington Mutual built a conveyor belt that dumped toxic mortgage assets into the financial system like a polluter dumping poison into a river," said an outraged Levin (pictured). In its wake, WaMu and its peers have left the financial equivalent of a Superfund site that will take years and billions of dollars to clean up.

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