WASHINGTON — Facing withering attacks for failing to prevent the largest U.S. bank failure ever, a former regulator is defending his actions and pushing back against charges that he was too cozy with bank management.
Questioned about an apologetic and familiar e-mail to Washington Mutual Inc. CEO Kerry Killenger, former Office of Thrift Supervision director John Reich told a Senate panel, “I make no apology for that e-mail whatsoever.”
“I am by nature a humble person, I am a casual person and an informal person,” Reich said. “It is not at all unusual that I address people . . . by their first name, particularly if I am 10 years older than they are.”
Reich headed OTS, WaMu’s main regulator, in the years before the bank failed. He is testifying before the Permanent Subcommittee on Investigations as it probes the lax oversight that allowed WaMu to flood the financial system with billions of dollars of toxic mortgage investments.
The subcommittee is charging that regulators failed to act for years despite knowing the bank had problems, then argued among themselves as it collapsed.
Panel chairman Sen. Carl Levin, D-Mich., shot back, “It is not only feeble enforcement, it is pitiful enforcement.” He said earlier that OTS “was more of a spectator on the sidelines, a watchdog with no bite, noting problems and making recommendations, but not trying to correct the flaws and failures it saw.”
Reich said he regretted some decisions, but would not apologize despite lawmakers’ invitations.
A Treasury Department watchdog earlier told the panel that regulators trusted the executives of Washington Mutual to correct risks at the bank but did little to force a change — leading to the bank’s failure.
