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U.S. is probing WaMu failure

The FBI and other agencies join in examining the thrift.

October 16, 2008|From the Associated Press

SEATTLE — Federal authorities said Wednesday that they had opened an investigation into the failure of Washington Mutual Inc., the nation's largest bank failure.

U.S. Atty. Jeff Sullivan said the FBI, the Federal Deposit Insurance Corp., the IRS and the Securities and Exchange Commission had created a task force to look into the thrift's failure.

He asked anyone with information to contact authorities through a tip line, or to e-mail the FBI's Seattle office.

Sullivan said that "given the significant losses to investors, employees and our community, it is fully appropriate that we scrutinize the activities of the bank, its leaders and others to determine if any federal laws were violated."

Seattle-based WaMu ran into trouble giving loans to people with poor credit repayment histories during the housing boom.

As talk of the 119-year-old thrift's instability spread and its credit was downgraded, people began pulling their money out -- leaving WaMu without enough cash to meet its obligations.

WaMu filed for federal Chapter 11 bankruptcy protection and was sold last month in a $1.9-billion fire sale to JPMorgan Chase & Co., one of the nation's biggest banking companies.

Sullivan did not say what laws investigators believe may have been broken.

His spokeswoman, Emily Langlie, said the U.S. attorney's office had no further comment.

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