This is from a series from the New York Times called “The Reckoning” exploring the causes of the financial crisis. Gretchen Morgenson continues to be impressive in her coverage of the crisis.
The opening anecdote of the article and the idea that WaMu was “all about saying yes” is interesting: in the new Jim Carrey vehicle, The Yes Man (the reviews have been tepid), Carrey plays a loan officer. My understanding is that some kind of spell is placed on him that forces him to say “yes” to any request. He essentially became a pre-meltdown mortgage broker.
Saying Yes, WaMu Built Empire on Shaky Loans
By PETER S. GOODMAN and GRETCHEN MORGENSON | December 27, 2008
“We hope to do to this industry what Wal-Mart did to theirs, Starbucks did to theirs, Costco did to theirs and Lowe’s-Home Depot did to their industry. And I think if we’ve done our job, five years from now you’re not going to call us a bank.”
“It was just disheartening,” said Sherri Zaback, a mortgage screener for Washington Mutual. “Just spit it out and get it done. That’s they wanted us to do. Garbage in, garbage out.”
— Kerry K. Killinger, chief executive of Washington Mutual, 2003
SAN DIEGO — As a supervisor at a Washington Mutual mortgage processing center, John D. Parsons was accustomed to seeing baby sitters claiming salaries worthy of college presidents, and schoolteachers with incomes rivaling stockbrokers’. He rarely questioned them. A real estate frenzy was under way and WaMu, as his bank was known, was all about saying yes.
Yet even by WaMu’s relaxed standards, one mortgage four years ago raised eyebrows. The borrower was claiming a six-figure income and an unusual profession: mariachi singer.
Mr. Parsons could not verify the singer’s income, so he had him photographed in front of his home dressed in his mariachi outfit. The photo went into a WaMu file. Approved.
Read the rest of the article.