Credit Herald

A draft of a long-awaited investigation faults federal regulators for failing to properly supervise Washington Mutual in the years leading up to its failure in September 2008, according to a report Sunday by The New York Times.

The report by the inspectors general for the Federal Deposit Insurance Corporation (FDIC) and the Treasury Department is expected to be released April 16, according to the Times. The federal report was initially expected to be released in the fall of 2009.

The Times said it obtained a draft of the document. According to the newspaper, the report says WaMu failed “because of management’s pursuit of a high-risk lending strategy that included liberal underwriting standards and inadequate risk controls.”

If federal investigators release their report April 16, its disclosure would coincide with a hearing by the Senate Permanent Subcommittee on Investigations into the regulatory oversight of WaMu, which was the largest bank failure in U.S. history.

The committee will question regulators from the FDIC and the Office of Thrift Supervision in a hearing that is scheduled for 9:30 a.m. Eastern (6:30 a.m.Pacific) on April 16. Puget Sound Business Journal staff writer Kirsten Grind will provide online coverage of the hearing from Washington, D.C.

The committee on Tuesday is expected to question former WaMu executives, including former chief executive Kerry Killinger and former president and chief operating officer Steve Rotella. Both men will tell the committee that WaMu was close to stabilizing its finances when federal regulators seized the bank on Sept. 25, 2008, according to testimony obtained in advance by the Puget Sound Business Journal. That story was available only to subscribers over the weekend, but is now accessible to anyone.

Staff writer Grind and editorial intern Kelly Gilblom will provide live online coverage of the Tuesday hearing, which is expected to begin at 9:30 a.m. Eastern (6:30 a.m.Pacific).

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