A federal investigation into Wall Street and the economic crisis has honed in on Washington Mutual, making the bank that was absorbed by New York’s JPMorgan Chase in 2008 the poster child for what went wrong with the nation’s financial system.

via www.dsnews.com

The bank securitized over $77 billion in subprime mortgages and billions more in other high-risk home loans. At times, WaMu selected and securitized loans that it had identified as likely to go delinquent, without disclosing its analysis to investors, the panel said. 

The bank also securitized loans tainted by fraudulent information, without notifying purchasers of the fraud that was discovered, according to the panel’s report. The senators determined that WaMu’s compensation system rewarded loan officers for originating large volumes of high risk loans, and paid bonuses to loan officers who overcharged borrowers or added stiff prepayment penalties.

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