Banking Law
WaMu is Being Investigated by FBI
Posted Oct 16, 2008, 03:12 pm CST
By Martha Neil
Add Washington Mutual Bank to a list of major corporate failures that are being investigated by the FBI.
The FBI had been secretly looking into the bank's operations for months. However, it went public yesterday with the investigation because WaMu depositors, having already seen the institution become the biggest bank failure in U.S. history last month, cannot now be hurt much by further adverse publicity, according to the Seattle Times.
Multiple class action claims filed against the lender in lawsuits throughout the country have been consolidated before a federal judge in Seattle, and may be providing a road map for the FBI investigation, the newspaper writes.
"The question is going to be, 'Did Washington Mutual hide what they knew about these loan portfolios?' It isn't whether WaMu was just buying these junk loans. They were the ones creating the junk," says attorney Lynn Sarko of Keller Rohrback in Seattle, who is representing former WaMu employees in retirement-related claims. "When do you go from negligence to recklessness to intentionally holding your nose while you do this?"
Earlier coverage:
ABAJournal.com: "Feds Seize & Sell WaMu; Biggest Bank Failure in US History"
ABAJournal.com: "1 Family + 43 WaMu Mortgages = $2.7M in Likely Lender Losses Since 2007"
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