Monday, August 08, 2011

Joel Connelly: "With WaMu, white-collar crime goes unpunished - again!"

Joel Connelly (
The Senate report details how two WaMu risk managers were marginalized by company brass. One of them told Senate investigators that executives began providing the Office of Thrift Supervision with outdated loss estimates. A risk manager tipped off regulators, and was fired.

The Office of Thrift Supervision did get mad - at the Federal Deposit Insurance Corporation, which downgraded WauMu's safety-soundness rating shortly before its collapse.

The office's top guy, John M. Reich, wrote a snarling e-mail in which he said of F.D.I.C. Chair Sheila Bair: "I cannot believe the continuing audacity of this woman." The words were written in September of 2008, just two weeks before WaMu failed. (F.D.I.C. sseized the company and sold it to J.P. Morgan Chase.

Don't any of these activities, the fraudument documents and false information given federal regulators, and the winking and profiting by higher-ups, qualify for prosecution? Shouldn't the federal government be shamed by its record?

As columnist Zach Carter wrote after a Senate hearing on WaMu last year: "Everything WaMu did could have been stopped not only by an engaged regulator who worried about the company's bottom line, but by a regulator who cared about consumer protection in any degree whatsoever."

The bottom line: Large-scale white collar crime goes unpunished in America, except for out-and-out Ponzi schemes.

Who, I ask, has gone to jail among those who issued reckless and fraudulent loans that triggered the housing crisis? The practice went on, to use the name of another big player, Countrywide.

Yet, efforts are underway in the U.S. House of Representatives and among Senate Republicans to eviscerate a financial reform bill that Congress enacted just last year. Critics say it places too many burdens on the financial services industry. MORE...

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