Washington Mutual: Scam of the Decade
It seems that Washington Mutual knew about the impending mortgage crisis long before any of us had a chance to plan or prepare. The bank is accused of being a major contributor to the mortgage crisis because of attempts in 2003 to increase profits by investing heavily in subprime and risky loans. Through company e-mails and government investigations we are learning that Washington Mutual went so far as to steer borrowers who qualified for prime loans into subprime loans. Internal attempts to stop lending practices described as “shoddy” fell on deaf ears. The rest, unfortunately, is history.
While any financial institution accepts a level of risk when doing business, the amount of risk taken by Washington Mutual has been described as excessive, unnecessary, and careless.
Timothy McFarlin, an Irvine based attorney with law firm McFarlin LLP, feels that these claims, if true, should not go unpunished. Lending institutions should not be allowed to take advantage of their borrowers and should never be allowed to advise borrowers against their best chance of success. This would be like a doctor convincing a patient with a broken arm to undergo experimental brain surgery. The risk is so excessive that any normal person would find it hard to justify. Perhaps if Washington Mutual had seen what their actions were going to do to our country, they might have acted differently, but the thing about hindsight is that it only works after the fact. What we have here is a case of corporate executives gambling with the future of their borrowers. Some might go as far to say that Washington Mutual scammed their borrowers because the tactics that they used allowed loan officers to push a product that they knew had a very good chance of failing.
Senate hearings are planned for the very near future after which committee members will decide whether or not to forward the case to the Department of Justice to pursue criminal charges.Post Tags: