Federal bank regulators have sued three former top executives of Washington Mutual (WaMu), the biggest U.S. bank ever to fail, accusing them of negligence in allowing risky mortgage lending and seeking $900 million in damages.
The Federal Deposit Insurance Corp. (FDIC)filed the civil lawsuitWednesday against former WaMu Chief Executive Kerry Killinger, ex-Chief Operating Officer Stephen Rotella and David Schneider, who headed the bank's home loans division. The FDIC also named Killinger and Rotella's wives in the suit filed in federal court in Seattle.
The FDIC said the three executives pushed for expansion of WaMu's risky lending even though they knew or should have known that its loan standards and controls were inadequate. The bank collapsed in September 2008 and was sold for $1.9 billion to JPMorgan Chase & Co.
