Eyes Open, WaMu Still Failed
By FLOYD NORRIS
NYT
In the crazy days of 2005 and 2006, when home prices were soaring and mortgage underwriting standards were crumbling, it took foresight and judgment to see that it was all a bubble.
As it happens, there was a bank chief executive whose internal forecasts now seem prescient. “I have never seen such a high-risk housing market,” he wrote to the bank’s chief risk officer in 2005. A year later he forecast the housing market would be “weak for quite some time as we unwind the speculative bubble.”
At that same bank, executives checking for fraudulent mortgage applications found that at one bank office 42 percent of loans reviewed showed signs of fraud, “virtually all of it attributable to some sort of employee malfeasance or failure to execute company policy.” A report recommended “firm action” against the employees involved.
In addition to such internal foresight and vigilance, that bank had regulators who spotted problems with procedures and policies. “The regulators on the ground understood the issues and raised them repeatedly,” recalled a retired bank official this week.
(More here.)
NYT
In the crazy days of 2005 and 2006, when home prices were soaring and mortgage underwriting standards were crumbling, it took foresight and judgment to see that it was all a bubble.
As it happens, there was a bank chief executive whose internal forecasts now seem prescient. “I have never seen such a high-risk housing market,” he wrote to the bank’s chief risk officer in 2005. A year later he forecast the housing market would be “weak for quite some time as we unwind the speculative bubble.”
At that same bank, executives checking for fraudulent mortgage applications found that at one bank office 42 percent of loans reviewed showed signs of fraud, “virtually all of it attributable to some sort of employee malfeasance or failure to execute company policy.” A report recommended “firm action” against the employees involved.
In addition to such internal foresight and vigilance, that bank had regulators who spotted problems with procedures and policies. “The regulators on the ground understood the issues and raised them repeatedly,” recalled a retired bank official this week.
(More here.)
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1 Comments:
Taking Killinger to task is the right thing to do, I hope they save space in his prison cell for Barney Frank, Christopher Dodd and any other politicial who protected Freddie and Fannie.
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