There are Different Rules for Bankers
One of the early casualties of the Financial Crisis was the failure of Washington Mutual. Unlike Mitt Romney, the FDIC recognizes that corporations are not people, and that people had to have been responsible for this massive bank failure.
The FDIC, in a lawsuit filed in federal court in Seattle in March, accused former Chief Executive Kerry Killinger, ex-President Stephen Rotella, and David Schneider, the bank's former home-loans president, of taking gambles that sparked the thrift's collapse in 2008. The agency also accused the three, along with the wives of Messrs. Killinger and Rotella, of seeking to shield cash and their houses from legal claims.
Now the FDIC had sued for $900 million, but it just announced that it will settle for less than $90 million, and that very little of that will come from the executives.
There are three components to the new Washington Mutual settlement: the cash from the insurance proceeds, a minimal amount of cash from the three individuals and a potential release of other claims from Washington Mutual's bankruptcy case, such as executive severance payments that would be turned over to the FDIC, said people familiar with the matter.
How well did the executives do while they were mismanaging a large and formerly profitable institution?
The three former executives received a total of $95 million in compensation between 2005 and 2008, the FDIC said in its lawsuit.
The defense of the executives is that they were good managers, really, that they did a great job and besides the regulators didn’t catch them.
Mr. Killinger said in a statement in March that "the management of
Mutual was sound and prudent." He said banking regulators had reviewed the bank's position and had "unfettered access" to its books in the months leading up to its collapse. Washington
So business texts are now going to have to re-write their meaning of “sound and prudent” management to mean driving a company into total and complete failure. But that’s not all, the regulators were being mean and “unfair” to these hard working executives, men who worked long hours to achieve total destruction of the company.
Mr. Rotella said last March in a statement that it was "patently unfair for the FDIC to expect an individual to have perfect foresight into a crisis that the FDIC itself did not see coming
Yep, it is just wrong to expect that experienced financial executives who were paid $95 million would know that loaning money to people who could not pay it back for houses that were overvalued would cause any problems. They are only human, unlike a corporation.