NY Times published an interesting story about the criminal lending practices of WaMu that resulted in billions of dollars worth of bad loans, you can read it over here. Shaky loans were big business for banks like WaMu; lending to people who weren’t credit-worthy resulted in big bonuses but had very nasty consequences for the rest of the economy.
Here’s a snip:
As a supervisor at a Washington Mutual mortgage processing center, John D. Parsons was accustomed to seeing baby sitters claiming salaries worthy of college presidents, and schoolteachers with incomes rivaling stockbrokers’. He rarely questioned them. A real estate frenzy was under way and WaMu, as his bank was known, was all about saying yes.
Yet even by WaMu’s relaxed standards, one mortgage four years ago raised eyebrows. The borrower was claiming a six-figure income and an unusual profession: mariachi singer.
Mr. Parsons could not verify the singer’s income, so he had him photographed in front of his home dressed in his mariachi outfit. The photo went into a WaMu file. Approved.