By Jim Puzzanghera and Clement Tan
John Reich, who was director of the Office of Thrift Supervision, tells a Senate panel that Washington Mutual’s 2008 collapse resulted from a drop in public confidence, not a failure by his agency.
Reporting from Washington — The former head of the chief banking regulatory agency that oversaw failed Washington Mutual told lawmakers Friday that the giant savings and loan collapsed because of a run on the bank, not failures by him or other regulators.
The testimony of John Reich, who served as head of the Office of Thrift Supervision from 2005 to 2009, came as a Senate subcommittee released the results of an 18-month investigation that blasted regulatory supervisors for doing little to halt risky practices at WaMu that bank examiners had identified as early as 2003.
The criticism was echoed by a report this week on WaMu’s collapse, the largest bank failure in U.S. history, by the inspectors general of the thrift agency and the Federal Deposit Insurance Corp.
Reich said WaMu was seized by regulators on Sept. 25, 2008, because of a $16.4-billion run on deposits after the sharp decline in the economy throughout the year and the failure of Lehman Bros. and the bailout of American International Group Inc. just days earlier.