Subscribe to Dollars & Sense magazine. Recent articles related to the financial crisis. WaMu ReckoningThis is from a series from the New York Times called "The Reckoning" exploring the causes of the financial crisis. Gretchen Morgenson continues to be impressive in her coverage of the crisis.The opening anecdote of the article and the idea that WaMu was "all about saying yes" is interesting: in the new Jim Carrey vehicle, The Yes Man (the reviews have been tepid), Carrey plays a loan officer. My understanding is that some kind of spell is placed on him that forces him to say "yes" to any request. He essentially became a pre-meltdown mortgage broker. Saying Yes, WaMu Built Empire on Shaky Loans By PETER S. GOODMAN and GRETCHEN MORGENSON | December 27, 2008 "We hope to do to this industry what Wal-Mart did to theirs, Starbucks did to theirs, Costco did to theirs and Lowe's-Home Depot did to their industry. And I think if we've done our job, five years from now you're not going to call us a bank."SAN DIEGO — As a supervisor at a Washington Mutual mortgage processing center, John D. Parsons was accustomed to seeing baby sitters claiming salaries worthy of college presidents, and schoolteachers with incomes rivaling stockbrokers'. He rarely questioned them. A real estate frenzy was under way and WaMu, as his bank was known, was all about saying yes. Yet even by WaMu's relaxed standards, one mortgage four years ago raised eyebrows. The borrower was claiming a six-figure income and an unusual profession: mariachi singer. Mr. Parsons could not verify the singer's income, so he had him photographed in front of his home dressed in his mariachi outfit. The photo went into a WaMu file. Approved. Read the rest of the article. Labels: financial crisis, housing bubble, mortgage meltdown, Washington Mutual Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). In Other News: Three More Banks Go DownAnother one of those stories that would normally be front page news for a week but barely registers these days:Two California thrifts (Downey Savings & Loan and PFF Bank & Trust) and one Georgia thrift (Community Bank of Loganville) were closed by regulators on Friday, the highest number of bank closures in a single day since the S&L crisis of the late 1980s. All the banks were put into receivership by the FDIC which then sold all the deposits. Bo depositors lost money, however the FDIC deposit insurance fund is on the hook for an estimated $2.3 billion total for all three banks. So far this year, 22 U.S. banks have failed, the largest being the $307 billion Washington Mutual. All the banks failed due to massive lending in the sub-prime mortgage sector that have since gone sour. [As we mentioned in a post a few days ago, you can follow the bank closings yourself by visiting this page at the FDIC's website regularly.] Labels: bank consolidation, bank failures, FDIC, WAMU, Washington Mutual Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). |
