Settlement talks wrap up over WaMu allegations

Talks have ended between three former Washington Mutual executives and the federal government over possible settlement of a lawsuit alleging that their “gross mismanagement” led to the giant thrift’s demise.

The Federal Deposit Insurance Corp. in March sued former WaMu CEO Kerry Killinger; former WaMu Chief Operating Officer Stephen Rotella; and David Schneider, former head of WaMu’s home-loans division.

A motion to dismiss the suit is pending.

The agency accused them of recklessly pushing WaMu into making billions in high-risk home loans, despite knowing the nation was in an unprecedented housing bubble.

WaMu collapsed in September 2008, largely because of losses in the mortgage business.

McClatchy