Pity poor Kerry Killinger. The onetime Washington Mutual CEO made $25 million in 2008, the year he was ousted and the thrift imploded, but he still wasn't part of the Wall Street club.
Kerry Killinger blames "clubby" Wall Street leaders for WaMu's demise.
That, at least, is his view, one he is presenting today at a U.S. Senate subcommittee hearing investigating WaMu's collapse. His 28-page testimony--notably obtained in advance by the Puget Sound Business Journal, revealed yesterday to be a Pulitzer finalist for its WaMu coverage--is striking for its utter lack of remorse.
WaMu was the victim, Killinger repeatedly tells us, and a few of his remarks are bound to become infamous.Take this passage, where Killinger outlines his argument that WaMu received "unfair treatment" from banking industry leaders. WaMu, he says, was
excluded from hundreds of meetings and telephone calls between Wall Street executives and policy leaders that ultimately determined the winners and losers in this financial crisis. For those that were part of the inner circle and were "too clubby to fail," the benefits were obvious. For those outside of the club, the penalty was severe.
That penalty for WaMu, he says, was the thrift's "unnecessary seizure and bargain sale" of WaMu.
Undoubtedly, there was backroom dealing. But the Wall Street Journal points out today that at least one insider, Lehman Brothers, wasn't saved, while at least one self-perceived outsider, Bank of America, was. And what exactly it means to be an outsider isn't obvious, at least in WaMu's case, which long benefited from glowing reports by Wall Street analysts puffing up its stock.
But in any case, Killinger minimizes WaMu's own role in its collapse as it turned out high-risk mortgage after high-risk mortgage. Instead, he says it was fault of the housing downturn, the severity of which no one could have predicted.
Will Senators buy this? You can watch the ongoing hearings here.