While Occupy was trying to shut down the Port of Seattle and damage it’s thousands of well-paying blue-collar jobs, the FDIC was reaching a settlement with three former Wasshington Mutual executives, including former CEO Kerry Killinger. The $75 million deal will apparently be paid mostly from the bank’s estate and insurer. Once again, the Obama administration has shown itself unwilling or unable to bring to justice the kingpins that brought on Depression 2.0.
If you just rolled into town, Washington Mutual was once one of Seattle’s most important corporate headquarters. It was for nearly a century a thrift engaged in the boring but safe business of taking deposits and making loans. Under Killinger, it became a powerhouse, a major financial institution. Unfortunately, most of that growth came from the dodgy subprime mortgages that were then sold to Wall Street and turned into swindles called derivatives. when the reckoning finally came, Washington Mutual became the biggest banking failure in American history. More than 4,000 jobs were lost and shareholders were wiped out.
The pattern in the aftermath is familiar: A strange lack of curiosity on the part of the Justice Department, a barely pursued and quickly stifled criminal probe, the too-big-to-exist banks got bigger and none of the bigwigs who cooked up the calamity were required to return their outlandish compensation. A taxpayer bailout sent the message that such behavior will be backed by Uncle Sam if the risky business goes sideways. Nobody went to jail.
In addition to making a travesty of justice and what was once the American sense of fair play, this merely sets us up for more and worse financial disasters to come. It would be nice to hope that even if the Masters of the Universe avoided hard time with a cell mate named Big Nate, regulators and policy makers would have learned something. Apparently they did: The corporate evildoers can get away with it.
Today’s Econ Haiku:
Good morning oil scare
Markets on a hair trigger
Cocked, locked rumor mill