Tuesday, February 22, 2011

FDIC Mulls Suing Former WAMU Execs

Posted By on Tue, Feb 22, 2011 at 9:23 AM

When the former Washington Mutual bank collapsed in September 2008, it was the largest failure of its kind in American financial history.

Massive sub-prime losses resulted in WAMU being seized by the U.S. Office of Thrift Supervision. The bank was placed in receivership by the Federal Deposit Insurance Corporation and the FDIC, in turn, sold the assets to JP Morgan Chase for $1.8 billion. Overnight, hundreds of WAMU banks, including 22 in Idaho, turned into Chase branches. And the Washington Mutual Building on Capitol Boulevard in Boise, stood as a reminder of the colossal collapse.

Today, the online edition of The Wall Street Journal reported that the FDIC is weighing a $1 billion suit against several former WAMU executives, tying their role to the collapse. The pending legal action has spilled over to Capitol Hill, where lawmakers are holding hearings over whether WAMU was prematurely shut. Kerry Killinger, WAMU's former chief executive, testified that his company had been treated unfairly and "should have been given a chance to survive."

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