A number of former WaMu employees told ABC News that WaMu’s execs were eager to profit from the housing boom and lending frenzy and ignored risk managers’ warnings. They allege that this behaviour is responsible for the bank’s failure.
ABC News: These former WaMu employees, 89 of them who worked throughout the company and around the country, described a bank eager to profit from a housing boom and lending frenzy that seemed to have contributed to the credit crunch and housing bust now plaguing the economy…
In court documents, the insiders said the company’s risk managers, the “gatekeepers” who were supposed to protect the bank from taking undue risks, were ignored, marginalized and in some cases, fired. At the same time, some of the bank’s lenders and underwriters who sold mortgages directly to home owners said they felt pressure to sell as many loans as possible and push risky but lucrative loans onto all borrowers, according to insiders who spoke to ABC News…
Dale George, a former WaMu senior risk manager who spoke exclusively to ABC News, explained that risk managers are like the brakes on a car. WaMu executives “took the brakes off and drove over a cliff,” he said.
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