FDIC Files $900M Suit Against WaMu Executives and Wives
The Federal Deposit Insurance Corp. has filed a $900 million reckless-lending suit against three Washington Mutual executives stemming from the biggest bank failure in history.
But they aren’t the only defendants; the suit also names the wives of two of the executives for helping set up trusts, allegedly to shield their homes from creditors, according to the New York Times and the Wall Street Journal.
The suit is the FDIC’s first case against the chief executive of a major bank. Previously it brought claims against about 158 people from about 20 small banks that did not survive the financial downturn, the Times says. The suit, filed in Seattle federal court, claims the bank’s former chief executive, Kerry Killinger, led WaMu on an irresponsible “lending spree.”
The executives “focused on short-term gains to increase their own compensation, with reckless disregard for WaMu’s long-term safety and soundness,” says the suit (PDF posted by the New York Times). Also named as defendants were Killinger’s wife, Linda; home lending president David Schneider; chief operation officer Stephen Rotella; and Rotella’s wife, Esther.
Killinger called the accusations “baseless” and “political theater,” while Rotella said the suit was “an abuse of power.”
Previous coverage:
ABAJournal.com: “Report: FDIC and OTS Sat Back as WaMu ‘Mortgage Time Bomb’ Ticked”
ABAJournal.com: “Option ARM Killed Bank & Homeowners; Why Didn’t Feds Shut It Down Sooner?”
