ONCE AGAIN, THE CRA WASN'T TO BLAME

The wingnuts LOVE to claim that the housing bubble was caused by the CRA forcing banks to make loans to poor people (for Baggers, this often means "Black" or "Hispanic") who couldn't possibly make the mortgage payments.   This lawsuit by the FDIC shows that it was the top executives at the banks and other lending institutions who made those poor decisions.

FDIC sues ex-WaMu execs, wives over bank's failure
By Tom Hals

WILMINGTON, Delaware | Thu Mar 17, 2011 5:39pm EDT

WILMINGTON, Delaware (Reuters) - A U.S. government regulator sued Kerry Killinger and two other Washington Mutual Bank executives accused of pioneering reckless home loans that led to biggest bank failure in U.S. history.

The three "gambled billions of dollars of WaMu's money" by rewarding employees and themselves for pushing risky, low-teaser rates loans while ignoring warnings about the housing bubble, the Federal Deposit Insurance Corp said in its lawsuit.

When the bubble began to burst, Killinger and former Chief Operating Officer Stephen Rotella were alleged to have quietly transferred their wealth to their wives, in an attempt to put it beyond the reach of creditors.

The third former executive was David Schneider, the former president of the company's home loans division.

The regulator said the executives had a "fixation on short-term profits" and a desire to gobble up market share in risky loans, such as mortgages with an option to make minimal initial payments, despite loud warnings from risk managers.

The lawsuit accused the three, who collected $95 million in compensation between 2005 and 2008, of gross negligence and breach of fiduciary duty.

U.S. banking regulators have authorized lawsuits against 158 bank officials so far as they seek to recover at least $3.6 billion in losses from bank failures related to the 2007-2009 financial crisis.