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FDIC Said to be Considering $1B Lawsuit Against Former WaMu Execs

Another lawsuit may join the ranks of lawsuits against banking executives for their part in the housing collapse.

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Earlier in February the ""Securities and Exchange Commission"":http://www.sec.gov/ (SEC) charged three former executives at IndyMac Bancorp with securities fraud for misleading investors about the lender's failing financial condition.

Just a few days ago the Department of Justices cleared former Countrywide CEO of charges it brought against him in a lawsuit that lasted more than two years.

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Now there are reports that the ""Federal Deposit Insurance Corporation"":http://www.fdic.gov/ (FDIC) is said to be considering a lawsuit against former executives of the now defunct bank Washington Mutual, for alleged fraudulent lending practices.

The government agency is reportedly weighing a lawsuit seeking up to $1 billion in damages from the executives for their role in the collapse of the company, which the FDIC took over and sold to JPMorgan Chase for $1.8 billion in 2008.

According to the ""Wall Street Journal"":http://www.wsj.com/, ""Lawmakers claimed [former CEO Kerry Killinger] and other executives tolerated fraudulent lending, knowingly dumped problem loans on investors and did too little, too late to stem problems once they threatened to sink the thrift.""

In 2008 Washington Mutual became the largest bank failure in U.S. history.

""The bank originated and sold hundreds of billions of dollars in high risk loans to Wall Street in return for big fees, polluting the financial system with toxic, and sometimes fraudulent, mortgages,"" said Sen. Carl Levin (D-Michigan) in April, during an investigation of the bank.

About Author: Joy Leopold

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