Washington Mutual (WaMu) Fired Subprime Mortgage Loving CEO
Author: Rob K. Blake | Date: September 8, 2008 | Filed In: Mortgage News
Washington Mutual, Inc. (NYSE:WM) today canned their CEO, Kerry Kilinger who drove the company head-long into the profits of the subprime mortgage market only to see it all unravel in recent months. WaMu stock is off over 20 percent today on the news
WaMu CEO Loved Subprime Mortgages
The unraveling the $50 Billion investment WaMu in subprime mortgages has piled upt $6.3 Billion in losses over the last three quarters and is expect to exceed $19 Billion over the next year or so. Even before today, WM stock had lost over 80 percent of it’s value.
I remember back in 1999 when Washington Mutual bought subprime giant, Long Beach Mortgage, it was the beginning of the end for WaMu.
Long Beach Mortgage had the reputation on the street for approving virtually any loan scenario. WaMu aggressively press for more and more subprime originations and, if I remember right, their subprime outreached their prime lending for many quarters.
They also got embroiled in an appraisal scandal and eventually cut off their wholesale lending division.
When a bank regulator asks you to sign a memorandum of understanding requiring an improvement in risk management and compliance, you know something is wrong. And that’s exactly what the Office of Thrift Supervision did to Washington Mutual.
It’s pretty clear that with all banks holding subprime mortgage exposure, WaMu has to be one of the largest which, that plus regulator issues, puts it on my list of “Most Likely To Fail”.
Subprime mortgage mess strikes again…
Good Luck!
PS: Here’s a quick video on the shakeup at WaMu…
Author: Rob K. Blake
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