This article was on the front page of New York Times on 12/28/08. If you want to know how we got into the mess we are in now with mortgages this article gives you a good insight. It is just amazing what went on with these financial companies. The New York Times article explains how officers of WaMu made more money with riskier loans. WAMU is now part of Chase. It’s worth the read.
During Mr. Killingers tenure, WaMu pressed sales agents to pump out loans while disregarding borrowers incomes and assets, according to former employees. The bank set up what insiders described as a system of dubious legality that enabled real estate agents to collect fees of more than $10,000 for bringing in borrowers, sometimes making the agents more beholden to WaMu than they were to their clients.
WaMu gave mortgage brokers handsome commissions for selling the riskiest loans, which carried higher fees, bolstering profits and ultimately the compensation of the banks executives. WaMu pressured appraisers to provide inflated property values that made loans appear less risky, enabling Wall Street to bundle them more easily for sale to investors.
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