For instance, use of controlled substances was acceptable as long as they were the productivity-enhancing sort:
“I’d lie if I said every piece of documentation was properly signed and dated,” said Mr. Parsons, speaking through wire-reinforced glass at a California prison near here, where he is serving 16 months for theft after his fourth arrest — all involving drugs.
While Mr. Parsons, whose incarceration is not related to his work for WaMu, oversaw a team screening mortgage applications, he was snorting methamphetamine daily, he said.
“In our world, it was tolerated,” said Sherri Zaback, who worked for Mr. Parsons and recalls seeing drug paraphernalia on his desk. “Everybody said, ‘He gets the job done.’ ”
As I am sure readers know all too well, that sort of thing is quietly prevalent in investment banks (well, except for being so indiscreet as to have your implements on view), as coke-snorting traders and institutional salesmen were sufficiently common in the 1980s so as to become a staple of fiction and magazine articles. Even in the seemingly innocent early 1980s, a member of Goldman’s corporate finance department was known to use uppers and downers on what was presumed to be a daily basis. He made partner. A attorney buddy realized how naive he was when on a deal, with all too great frequency, the room where negotiations were being held would empty itself. It took him a couple of days to figure out everyone else wasn’t making urgent phone calls, but repairing to bathrooms, and not to have sex with each other, either. I’ve also been told of very high level IT guys (the kind who built and ran mission critical systems, and made seven figures in the peak years) having meth habits. (Based on my very very limited anecdotal sample, meth does appear to live up to its billing and leads to much more rapid personal train wrecks than other stimulants).
But banking, at least until financial institutions started moving in a serious way onto each other’s territory, was a sober, repetitive, low discretion, high reliability business. The comparatively modest stress and pay levels weren’t terribly conducive to costly drug habits (not that it prevented them, mind you, but they were decidedly acultural, except for the trading operations).
Nevertheless, WaMu appears to have brought an exceptionally freewheeling approach to retail banking on many fronts:
“It was the Wild West,” said Steven M. Knobel, a founder of an appraisal company, Mitchell, Maxwell & Jackson, that did business with WaMu until 2007. “If you were alive, they would give you a loan. Actually, I think if you were dead, they would still give you a loan.”…
“I never had a clue about the amount of off-the-cliff activity that was going on at Washington Mutual, and I was in constant contact with the company,” said Vincent Au, president of Avalon Partners, an investment firm. “There were people at WaMu that orchestrated nothing more than a sham or charade. These people broke every fundamental rule of running a company.”
The article also confirms a practice that some borrower advocates have claimed is not unheard-of, namely, that brokers had mortgage applicants sign forms with key sections (like income) blank, to be filled in by someone other than the borrower to make the loan “work”:
Martine Lado, an agent in the Irvine, Calif., office, said she coached brokers to leave parts of applications blank to avoid prompting verification if the borrower’s job or income was sketchy.
“We were looking for people who understood how to do loans at WaMu,” Ms. Lado said.
Of course, under the law, that makes the
chump borrower the perpetrator of the fraud, not the person who inked in the blank section.
Go read the piece. Lots of juicy stuff.