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Back in the Day: Who Said What about Subprime Lending

Adam Rust's picture

Posted May 23, 2013

"The Power of Yes"

Answer: Kerry Killinger, CEO of Washington Mutual and Long Beach Mortgage. Word is that WaMu's Chief Credit Officer countered that he believed in "The Wisdom of No," but he got shouted down. Kerry Killinger was named "Banker of the Year" by American Banker in

2001. When things went bad, the Chief Credit Officer and Killinger both got the sack. But Killinger still did pretty well. He earned a combined total of $39.4 million in 2007 and 2008 and was given a $15.3 million severance payment when he was relieved of his position in the days immediately after the financial crisis in September 2008. Killinger believed that Washington Mutual could become "the Wal-Mart of banking."

"It's a Question of Dominance"

Answer: Angelo Mozilo, CEO of Countrywide. Mozilo didn't want to lose market share to Ameriquest. After Ameriquest's market share became twice that of Countrywide in 2003, Mozilo turned on the gas. Then he caught on fire.

"We feel like we are merging with a crown jewel....this is a great day for us."

Answer: G. Kennedy Thompson, CEO of Wachovia, in explaining his excitement about his bank's purchase of Golden West in 2006.

"Don't Judge Too Quickly. We Won't."

Answer: This quote was from the advertisement made by Ameriquest Mortgage.

 

It first appeared on the 2005 Super Bowl. Maybe a regulator should have been worried when getting a mortgage became a national joke.

"This bond blows."

Answer: Greg Lippman, who worked in the securitization department at Deustche Bank. Lippman was specifically referring to a mortgage-backed security assembled by his bank out of loans originated by Long Beach Mortgage in 2006. This was an internal email - Lippman was much more positive about his securities when he was trying to sell them to his customers. It is also unlikely that he told his customers ("the CDO fools") that his bank was going to short those securities as soon as they could unload them from their own books.

"This report focuses ... “high-risk” subprime lenders.... Many of their loans were clearly unaffordable to the borrowers from the very beginning."

Answer: This was a conclusion made in early 2008 by a coalition of consumer advocates. The group examined loans made in 2006.  The group had been issuing similar studies since 2007.