Washington Mutual Investigation by U.S. Concludes Without Criminal Charges
Stock Chart for Washington Mutual Inc (WAMUQ)
Washington Mutual Bank’s failure, the biggest in U.S. history, won’t result in criminal charges against its former executives, U.S. Attorney Jenny A. Durkan in Seattle said.
A federal investigation of the bank’s collapse included hundreds of interviews and a review of millions of documents concerning its operations, Durkan and the Justice Department said yesterday in an e-mailed statement.
“The evidence does not meet the exacting standards for criminal charges in connection with the bank’s failure,” according to the statement.
The bank, the operating unit of Washington Mutual Inc., was seized by regulators on Sept. 25, 2008, and sold to JPMorgan Chase & Co. (JPM) for $1.9 billion. The bank had more than 2,200 branches and $188 billion in deposits. The following day, the parent company filed for bankruptcy.
Former U.S. Attorney Jeffrey Sullivan in Seattle, citing “intense public interest” in the bank’s failure, said in October 2008 that his office had created a task force working with investigators from the Federal Bureau of Investigation, the Federal Deposit Insurance Corp., the Securities and Exchange Commission and the Internal Revenue Service to investigate its collapse.
Andrew C. Irgens, a lawyer representing Washington Mutual Inc. in its bankruptcy case, didn’t immediately return a call and e-mail seeking comment after regular business hours yesterday.
Federal prosecutors continue to cooperate with the FDIC in a lawsuit against three former Washington Mutual executives, according to yesterday’s statement.
In that case, the FDIC accuses former Washington Mutual Inc. (WAMUQ) Chief Executive Officer Kerry Killinger, former Chief Operating Officer Stephen Rotella and David Schneider, the bank’s former home-loans president, of taking extreme risks with the bank unit’s home-loans portfolio, causing billions of dollars in losses.
The FDIC accuses the executives of disregarding the bank’s long-term safety and fixating on rewarding themselves. The men received more than $95 million in compensation from January 2005 to September 2008, according to the suit.
In its bankruptcy case in Wilmington, Delaware, WaMu is seeking approval for a reorganization plan that would pay creditors more than $7 billion. Shareholders have asked U.S. Bankruptcy Judge Mary Walrath to reject the reorganization plan for a second time because they would get nothing.
The FDIC case is FDIC v. Killinger, 11-00459, U.S. District Court, Western District of Washington (Seattle). The bankruptcy case is In re Washington Mutual Inc., 08-12229, U.S. Bankruptcy Court, District of Delaware (Wilmington).
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