April 16th, 2010
05:12 PM ET

WaMu's risky lending led to failure, regulators say

The demise of Washington Mutual, the biggest bank failure in U.S. history, was due largely to a high-risk lending strategy pursued by the company's management, according to a government report released Friday.

The Treasury Department and the Federal Deposit Insurance Corporation also faulted the Office of Trust Supervision (OTS) for failing to adequately curb WaMu's risky activities.

"WaMu failed primarily because of management's pursuit of a high-risk lending strategy that included liberal underwriting standards and inadequate risk controls," according to the report.

Regulators said that strategy, combined with the housing and mortgage market collapse in 2007, resulted in huge losses for WaMu, drove its stock price down and prompted a rush of withdrawals by jittery depositors.

Read the full CNNMoney.com story

soundoff (One Response)
  1. P

    How can regulators seize a solvent bank and then toss all Wamu stakeholders under the bus with a fire sale without proper evaluation?

    April 16, 2010 at 5:51 pm | Report abuse |