The executives of Washington Mutual Bank reached a deal with the Federal Deposit Insurance Commission (FDIC) today and it is only costing them pennies on the dollar.
The FDIC had brought a civil action against former Washington Mutual executives Kerry Killinger, Stephen Rotella and David Schneider for $900 million dollars back in March, accusing them with “gross negligence” and “breach of fiduciary duty,” in taking “extreme and historically unprecedented risks with WaMu’s held-for-investment home loans portfolio,” and saying the executives “focused on short term gains to increase their own compensation, with reckless disregard for WaMu’s longer term safety and soundness.”
The settlement was reached for $75 Million dollars with the large bulk of the money coming from the company’s insurers and from their bankruptcy estate. The executives seem to have avoided jail in the settlement as prosecutors will forgo pressing criminal charges.
CitiBank executives were not as lucky. They had offered to pay the FDIC $284 Million to settle similar charges with the Security Exchange Commission, but the settlement was rejected by U.S. District Judge Jed S. Rakoff. He refused to allow CitiBank executives off the hook without them offering some level of admission of wrongdoing. Judge Rakoff had said that the settlement was “neither reasonable, nor fair, nor adequate, nor in the public interest,” .
Do you think that executives should be let off the hook with only fines for causing the financial meltdown of 2008?