WaMu Goes Under: Biggest Bank Failure in US History
By James Buchanan — EURO
A New York Times article reports “Washington Mutual, the giant lender that came to symbolize the excesses of the mortgage boom, was seized by federal regulators on Thursday night, in what is by far the largest bank failure in American history. Regulators simultaneously brokered an emergency sale of virtually all of Washington Mutual, the nation’s largest savings and loan to JPMorgan Chase for $1.9 billion, averting another potentially huge taxpayer bill for the rescue of a failing institution. The move came as lawmakers reached a stalemate over the passage of a $700 billion bailout fund designed to help ailing banks, and removed one of America’s most troubled banks from the financial landscape.”
The ongoing subprime crisis was caused by watering down regulations for subprime loans so that more minorities would qualify. The federal government compelled banks to increase subprime loans to Blacks and Latinos. Any bank that refused would be punished. If a bank didn’t make enough minority loans and they needed federal permission to do anything such as open a new bank, their request was promptly denied by the Feds in retaliation.
A recent article about the subprime crisis reports “Perhaps the greatest scandal of the mortgage crisis is that it is a direct result of an intentional loosening of underwriting standards – done in the name of ending discrimination, despite warnings that it could lead to wide-scale defaults… No sooner had the ink dried on its discrimination study than the Boston Fed, clearly speaking for the entire Fed, produced a manual for mortgage lenders stating that: ‘discrimination may be observed when a lender’s underwriting policies contain arbitrary or outdated criteria that effectively disqualify many urban or lower-income minority applicants.’ Some of these ‘outdated’ criteria included the size of the mortgage payment relative to income, credit history, savings history and income verification…”
There seems to be some karmic justice to the collapse of WaMu. Many people no doubt remember their commercials in which a hip young Black represents WaMu while a bunch of fat, stodgy, old White guys represent the other banks (see Youtube above). Well, it looks like WaMu was a little too hip and much too Black. All those “Affirmative Action” subprime loans to Blacks have helped cause the largest bank failure in US history. Somehow, I don’t think this will be mentioned in the next “Black History Month.”
Read more articles by James Buchanan at WhiteCivilRights.com
[Youtube: An example of one of Washington Mutual’s racist ads lambasting conservative White bankers as old fashioned.]
