Ex-FDIC chief Sheila Bair: ‘I had little sympathy for Killinger’
In her new book, “Bull by the Horns,” former FDIC chief Sheila Bair takes some familiar-sounding swipes at former Washington Mutual CEO Kerry Killinger and his managers, calling them “unsophisticated and not up to the task of managing an institution of that size.”
In the summer of 2008, as the housing market continued to crumble and depositors continued to drain billions from WaMu accounts, Bair said she received daily reports about WaMu’s deposit outflows, which “made me physically ill.” Bair was worried about the damage WaMu would do to the Federal Deposit Insurance Corp.’s (FDIC) fund if the bank failed and her agency had to step in to protect depositors.
After Killinger called Bair “pleading for help,” according to her book, Blair said she did what she could, including stepping up a West Coast public information campaign touting the FDIC’s “perfect track record" of protecting insured deposits.
Bair also complained to the Securities and Exchange Commission about the SEC’s restriction on short selling of stock of the nation’s largest banks, a restriction that was driving short-selling activities to WaMu and other smaller banks. The consequence was causing WaMu’s weak stock to plummet even more.
“Frankly , I had little sympathy for Killinger,” Bair writes, saying he had a chance to sell the bank earlier to Jamie Dimon’s JP Morgan Chase instead of raising capital from a private equity fund.
According to Bair’s account, WaMu and Killinger had a “too-close” relationship with its primary federal regulator, the Office of Thrift Supervision (OTS).
Much of the regulatory infighting also has been explored by journalist Kirsten Grind in her reporting for the Puget Sound Business Journal as well as in the pages of her book, "The Lost Bank," which focuses on the WaMu failure.
Bair devotes a big chunk of Chapter 7 to the WaMu saga. The chapter’s title is “The Audacity of That Woman,” a reference to an email that former OTS Director John Reich sent to a staffer after Bair called WaMu’s last CEO, Alan Fishman, and informed him that the FDIC was downgrading WaMu in the days before the bank collapsed and was sold to JP Morgan Chase.
Bair says that the OTS resisted pressure to clamp down on WaMu, a stance Bair says was driven by OTS’s desire to protect its regulatory turf against a perceived threat from Bair’s FDIC.
“If only OTS had spent as much energy regulating WaMu as it had fighting us, we might have been able to avert a failure,” Bair wrote.
www.bizjournals.com/seattle/blog/2012/10/...for-killinger.html
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