Senate Panel Rebukes Regulators For WaMu Failure

Senator Carl Levin, the chairman of the Senate Panel investigating the causes of the financial crisis, has lambasted federal bank regulators for ignoring risky transactions at Washington Mutual. He said that regulators “saw the shoddy lending practices, saw the high-risk lending, saw the shoddy securitizations, understood the risk, but let the bank do it anyway." Levin also criticized the Office of Thrift Supervision. He said that the office did not perform its duties diligently.

According to the Associated Press, A Treasury Department official told the panel that regulators trusted the bank to correct risks. Treasury Inspector General Eric Thorson said that OTS officials “accepted assurances from WaMu management and its board of directors that problems would be resolved." Washington Mutual had indulged in risky lending from 2002 and ultimately collapsed in 2008.