October 16, 2008 in Business

WaMu failure investigated

Associated Press
 

SEATTLE – Federal authorities said Wednesday they have opened an investigation into the demise of Washington Mutual Inc., the nation’s largest bank failure.

U.S. Attorney Jeff Sullivan said the FBI, Federal Deposit Insurance Corp., Internal Revenue Service and Securities and Exchange Commission have created a task force to look into the thrift’s failure. He asked anyone with information to contact authorities through a tip line, or to e-mail the FBI’s Seattle office.

Sullivan said in his statement that “given the significant losses to investors, employees and our community, it is fully appropriate that we scrutinize the activities of the bank, its leaders and others to determine if any federal laws were violated.”

Seattle-based WaMu ran into trouble giving loans to people with poor credit repayment histories during the housing boom. As talk of the 119-year-old thrift’s instability spread and its credit downgraded, people began pulling their money out – leaving WaMu without enough cash to meet its obligations.

It filed for Chapter 11 bankruptcy protection and was sold last month in a $1.9 billion fire sale to JPMorgan Chase & Co., one of the nation’s biggest banking companies.

Sullivan’s statement did not say what laws investigators believe may have been broken. His spokeswoman, Emily Langlie, said the U.S. attorney’s office would have no further comment.

© Copyright 2008 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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