NEW YORK (TheStreet) -- The Federal Deposit Insurance Corp. will need to prove that
Washington Mutual's executives knew their lending policies would lead to disaster, even though regulators themselves were surprised by the scale of the credit crisis.
Essentially, the question will be "Just what did the president know, and when did he first know it?" as phrased by Senator Howard Baker to H.R. Haldeman during the Watergate Hearings.
This parallel is easy to draw, because the FDIC in its complaint of "gross negligence" against former Washington Mutual CEO Kerry Killinger, former company president and chief operating officer Stephen Rotella and former Washington Mutual president of Home Loans David Schneider, makes many allegations centered on what the executives "knew" about the risks the company was taking and what would result when the housing bubble burst.
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