Former WaMu CEO Blames Wall Street 'Club'

APRIL 14, 2010
Wall Street Journal
Former WaMu CEO Blames Wall Street 'Club'
Senators Begin Hearings as Regulators Remain Reluctant to Detail Their Handling of Collapse
By JOHN D. MCKINNON And DAN FITZPATRICK

WASHINGTON—Former Washington Mutual Inc. Chief Executive Kerry Killinger scoffed at lawmakers who blamed him for the largest bank failure in U.S. history, accusing regulators of helping only financial institutions deemed "too clubby to fail."

The 60-year-old Mr. Killinger's defiant, two-hour testimony at Tuesday's hearing by the Senate Permanent Subcommittee on Investigations was marked by confrontations with lawmakers who claimed he repeatedly ignored warnings that the overinflated real-estate bubble was about to burst. But the former CEO held his ground, insisting the Seattle thrift's seizure in September 2008 could have been avoided if regulators had offered the same help given to other battered banks, including capital infusions.

"For those that were part of the inner circle and were 'too clubby to fail,' the benefits were obvious," Mr. Killinger said. "For those outside the club, the penalty was severe." A spokesman at the Office of Thrift Supervision, the federal agency that seized Washington Mutual, declined to comment on Mr. Killinger's testimony.

Mr. Killinger's comments were a contrast to the low profile he has kept since the collapse. He shuttles between homes in Palm Desert, Calif., and a gated community in Seattle, and has avoided public events and new business ventures, according to people familiar with the situation.

He was forced to break his silence by the Democratic-led Senate subcommittee, which is trying to build momentum for pending financial-overhaul legislation...