FDIC may sue former Washington Mutual executives for wrongdoing: Report
The Federal Deposit Insurance Corp. has mailed letters to former Washington Mutual bank executives warning them of a possible legal action, The Wall Street Journal reported Tuesday. The action would address the executives' role in the 2008 collapse of WaMu, which was a substantial player in the mortgage lending industry. The FDIC was not immediately available for comment Tuesday morning. Sources cited by the Journal stopped short of naming names, but said the damages ceiling could run as high as $1 billion, according to news reports. At the time of its collapse, Washington Mutual was led by CEO and Chairman Kerry Killinger. Last year, while testifying to a Senate committee, Killinger said, "As CEO, I accept responsibility for our performance and am deeply saddened by what happened." He said despite the bank's reduction in lending and new capital requirements, there was nothing WaMu could have done to prepare for the recession. During the 2008 financial crisis, Washington Mutual was seized by the FDIC and later sold to JPMorgan Chase (JPM). WaMu has been a thorn in the side of JPMorgan since the 2008 acquisition. Jaime Dimon, CEO of JPMorgan Chase, said earlier this year he would have only paid $1 for the failing Seattle-based bank if he knew then what he knows now. At the time, JPMorgan paid $2 billion to acquire the failing bank. The sale included WaMu's home lending platform, which was later blasted by Treasury Department officials for holding mortgages written with loose lending standards and questionable appraisal practices. WaMu had $307 billion in assets before its 2008 troubles, making it the largest bank failure in U.S. history. WaMu's demise followed on the heels of IndyMac's failure and Wells Fargo's buyout of Wachovia. Write to Kerri Panchuk.