FDIC sues former WaMu execs
This makes perfect sense. The FDIC has to prove that it was justified in siezing WaMu and finding former executives guilty of mismanaging the bank is a good way to swing the public perception.
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).
WaMu failure | admin March 18, 2011
