Wednesday, April 14, 2010

Ex WaMu CEO whines that they got a raw deal

Nothing like trying to shoot the messenger when you get caught in a fraud scandal. Killinger the WaMu exec looked like a deer in the headlights when testifying before a congressional comittee yesterday. His contention was that WaMu was well on it's way to becoming solvent when the Feds pulled the plug. I got news for him a snowball would have had a better chance in hell than WaMu coming back. Why? It was so obvious that when the banks' financial position came to the attention of its' customers, money was flying out the doors faster than pizzas on a free pizza Monday. It didn't take a genious to figure out that the bank was drowning in debt once the truth came out. You can't make loans at 125% of value and interest only loans and expect to stay in business very long. It must have been quit an uneasy feeling for a branch manager to sit and watch customers close accounts on a daily basis. Then to see a branch go from four or five tellers down to two or three. But what did the higher ups care when they were making millions in bonuses even after the train wreck.
So now it is up to congress to try and pick apart the wreckage and preform the autopsy. Maybe they can come up with some sane rules to prevent this from happening for at least another thirty or forty years but I wouldn't hold my breath. The money behind the scenes is still being shoveled at congress so that the game can continue. Rules? Rules? We don't need no stinking rules. And there in lies the problem. We had rules that worked for 60 years. They were put in place for a purpose to prevent from what happened from happening. We never seem to learn from history even though it repeats itself.
As for Mr. Killinger it's not over for him and he knows it. He could be charged with fraud and yes even serve time in jail. I can only wish but we know how these guys tend to get off on such charges. Try stealing something from a local store and see what happens. But you can defraud an entire nation and not only get away with it but get a bonus for doing it. So let this be a lesson to you boys and girls. Stay in school and you too can do the crime and get off scott free and not even get your hands dirty.


MadMike said...

I love the blue eyed Siberian husky and despise WaMu. They held a mortgage for me..A big one. What disaster!

Tim said...

Wasn't it the Glass Seagall act of 1932 that was torn up when Clinton was Pres.1999. Introduced by Phil Gramm. Your right when you say the repukes way to "HELP"is less regulations.
Elizabeth Warren I see as good guy.

BBC said...

The village idiots financed with WaMu. Hehehehe

BBC said...

Of all the properties I've bought and sold over the years I never once went with a large outfit. Those that do are usually wanting into a bigger and fancier place than they can actually afford, it serves them right if they've been bitten.

Anonymous said...

I think people need to take a look at Wamu's seizure carefully.
Since when could regulators in America seize a well-capitalized and solvent bank because they thought it might be in trouble?
Wamu did not fail that Thursday, and it certainly did not fail due to the subprime mess it and many other banks were involved in that Thursday.

"Who is behind the financial meltdown? The top 25 subprime lenders and their wall street backers"

Wamu was solvent, and there was no reason to believe otherwise unless we saw an insolvency analysis.
How could a solvent institution be considered a failure?
OTS probably believed Wamu could have lasted at least until TARP passed.
Why should we believe FDIC’s assessment of the situation when this same agency picked Citigroup to “rescue” Wachovia?
If Congress wanted to go after only OTS, it should take a look at all the OIG reports criticizing poor supervision across the board. Go to the FDIC website and see how many Class NM and SB banks, with the FDIC being the primary federal regulator, also failed.
In this case, the FDIC seized a solvent bank and sold it for $1.9 billion without conducting any proper evaluation of its worth.
It wiped out Wamu bondholders, which essentially destroyed the bond market.
It refused to help Wachovia stay independent.
But, it then decided to help, instead of seize, Goldman Sachs, GMAC, GE, etc raise over $300 billion to fight liquidity pressure by backing their bonds.
This was a travesty of justice.
Thousands of people lost their jobs and billions of investments were wiped out.

“Up to 19,000 employees of Washington Mutual face being laid off this weekend as JPMorgan Chase turns up the synergy on its recent acquisition.”

“The Washington State Investment Board’s funds will lose about $47 million because of the failure of Washington Mutual, state officials tell KIRO 7 Eyewitness News… Florida’s Pension, Hurricane Funds Have Millions In WaMu Holdings… Pension fund (Florida Retirement System): $42.18 million in WaMu holdings… Florida Hurricane Catastrophe Fund: $41.28 million… At least seven pension funds lost their private equity investments in Washington Mutual, following its failure and subsequent purchase by JPMorgan Chase… Investors in the $19.8 billion TPG VI include CalPERS, New York State Common Retirement Fund, Illinois Teachers’ Retirement System, Washington State Investment Board, Los Angeles City Employees Retirement System and the San Francisco City & County Retirement System.”…


Anonymous said...

Do you think only bank investors and creditors were affected?

"When banks fail, so do those promised cd rates...

An astonished Scott received a letter from the FDIC, similar to thousands that quietly have been sent to customers of failed banks around the nation in recent months: 'Your deposit agreement with the Failed Institution is no longer in force.'"

These were Wamu's numbers. Since its seizure, how many banks were taken over by our regulators that really didn't have to fail, or that were declared failures earlier than those with worse numbers?

“Washington Mutual had a Tier 1 capital ratio of 8.4 percent on Sept. 30, well above the 6 percent threshold that regulators use to classify a bank as well capitalized. JPMorgan Chase (NYSE: JPM), which purchased WaMu had a similar ratio of 8.9 percent. Wachovia… had a capital ratio of 7.5 percent as of Sept. 30, compared to Wells Fargo’s 8.6 percent. And National City had an 11 percent capitalratio, and yet had to sell out to PNC Financial Services (NYSE: PNC). By comparison, Bank of America (NYSE: BAC), considered one of the bedrock financial institutions, had a capital ratio at the end of the third quarter of 7.6 percent.”

“Washington Mutual, which already essentially ‘went under’ by nature of forced acquisition, has a tangible book/asset ratio of 3.66. And that number is on the higher end of the scale/list. So, the thinking would be that many of the institutions with ratios lower than that could potentially be in trouble as well.
The US banks & their tangible book/asset ratios:
BB&T (BBT) 6.86
PNC (PNC) 5.87
Northern Trust (NTRS) 5.51
Goldman Sachs (GS) 4.86
Morgan Stanley (MS) 4.35
JPMorgan (JPM) 3.83
Washington Mutual (WM) 3.66

Wells Fargo (WFC) 3.50
Merrill Lynch (MER) 2.84
Bank of America (BAC) 2.83
US Bancorp (USB) 2.74
Lehman Brothers (LEHMQ.PK) 2.39
Citigroup (C) 1.52″…

“Right before Washington Mutual failed, its TCE ratio was 7.8%.”


Theresacprs said...

- Go the extra mile and learn a little bit about the Army's history if you get time. When the panel asks you 'What can you tell us about the Army?' you will be able to demonstrate that you have made an effort to look into their history as well as their modern day activities; * What salary and timescale requirements that help you? Salary; do not mention salary until the end of interview, or if it is fist discussed by the interviewer, asking about the salary too early or at the wrong time in the interview can give the impression you are only interested in how much they will pay you.