Digital News Report – The 2008 financial crisis of the banks is being investigated by the Senate Permanent Subcommittee on Investigations with Washington Mutual given testimony today. Former CEO, Kerry Killinger testified that the TARP program was unfairly designed to favor an inner circle of banks, in essence to buy out other banks at deeply discounted prices.
Kerry Killinger who was the former chief executive officer of Washington Mutual Inc. for the past 18 years claimed in a written testimony that he doesn’t believe that the bank should have been seized and sold at a bargain price because they were working on reducing operating costs and had raised over $10 billion in additional capital. The bank was seized by the Federal officials on September 25, 2008 and sold to JPMorgan Chase & Co. at a liquidated price of $1.9 billion. Killinger said that when he left the bank in September 2008 the bank’s “capital greatly exceeded regulatory requirements for a well-capitalized bank.”
Killinger criticized that they were not given the benefits that other financial institutions had which he lists as:
Killinger also said that they were excluded from the Wall Street Banks “do not short” list and were also excluded from important meetings and phone calls with the government policy makers and Wall Street executives that determined the fate of those who won or lost at the financial crisis.
Killinger said that those Wall Street banks were “too clubby to fail” and those banks that were left out of the circle the “penalty was severe.” In Washington Mutual’s case, it and so many other financial institutions it means being sold out a liquidated prices to those certain few banks. Killinger believes it will be bad in the long term with less banks to compete, fees will very likely go up and interest payments to consumers will remain low.
ref: http://hsgac.senate.gov/public/index.cfm?FuseAction=Files.View&FileStore_id=8ce3f81e-17e1-43b9-9bbc-c6203e1f3ac9