Kerry Killinger, former Chairman and CEO of Washington Mutual, threw a nice little pity party for himself in his prepared testimony for the Senate yesterday. It’s even got a populist, anti-Wall Street flavor to it. His basic point of view is that WaMu was unfairly excluded from clubby Treasury chats with Wall Street banks and never should have been put into receivership. Annie Lowrey is not impressed:
Kerry Killinger was the chairman and chief executive officer of Washington Mutual, the $300 billion savings-and-loan organization, from 1990 until 2008. During his tenure, he made more than $100 million in compensation, including more than $14 million in 2007 and $21 million in 2008 — granted for his oversight of WaMu’s tremendous expansion and rise in profitability, fueled by making loans to less-than-creditworthy borrowers. […]
And my sense is that in the coming week Killinger’s testimony will seem even more ridiculous. Levin’s committee’s report, due to be released in full on Friday, reportedly shows gross negligence and fraud at WaMu, which made hundreds of millions off of mortgage-backed deals before collapsing and spurring the “man-made economic assault” of the Great Recession, as Levin describes it in his blistering opening remarks.
All that said, Killinger does have a point that WaMu was treated more roughly than some other key institutions like Citigroup and Bank of American in a way that doesn’t have a clear moral or policy justification. The issue, however, is that in the future we should have more institutions treated the way WaMu was treated, with equity holders wiped out, rather than more bailouts. The point of the “resolution authority” provisions in the different financial regulation bills is to try to make sure that managed liquidation is feasible in a way it hasn’t been in the past.