‘If your mother says she loves you,…’
Drew DeSilver and David Heath of the Seattle Times track the collapse of Washington Mutual by looking at the bank’s move into option ARMs (adjustable-rate mortgages) in 2003. The first of the two-part series uses previous presentations, internal and government documents and employee interviews to produce a nut graf that reads:
“After its collapse, [CEO Kerry] Killinger and other leading WaMu executives repeatedly deflected responsibility, saying the company fell victim to a housing slump turned global credit crisis that they foresaw but couldn’t outrun.
But interviews with former WaMu executives and employees, along with government and internal company documents, reveal a far different picture, one of executives charting a reckless course that doomed the bank.”
Today’s Tip: Before attributing a financial failure to the economic collapse, research to be sure. Or, as you’ve been told, “If your mother says she loves you, check it out.”
The series also has compelling stories about real people, including a sidebar about a 90-year-old stroke survivor who was forced to sell her nearly million-dollar home after six WaMu loans in six years stripped much of the equity from it.
The article even includes an anecdote about O.J. Simpson:
“‘Someone in Florida had made a second-mortgage loan to O.J. Simpson, and I just about blew my top, because there was this huge judgment against him from his wife’s parents,’ [former WaMu chief legal officer Fay Chapman] recalled. Simpson had been acquitted of killing his wife Nicole and her friend but was later found liable for their deaths in a civil lawsuit; that judgment took precedence over other debts, such as if Simpson defaulted on his WaMu loan.
“‘When I asked how we could possibly foreclose on it, they said there was a letter in the file from O.J. Simpson saying ‘the judgment is no good, because I didn’t do it.’ ‘”
