NPR logo Wall Street Banks Were 'Too Clubby To Fail'


Wall Street Banks Were 'Too Clubby To Fail'

It's come to this: Even a former bank president is complaining about close ties between bankers and government officials. The problem for ousted Washington Mutual CEO Kerry K. Killinger is that only some banks were in the club.

In testimony prepared for a Senate hearing today, Killinger says WaMu had would have been able to ride out the crisis if it hadn't been seized by regulators. What's more, he says, WaMu was at an unfair disadvantage because it was ...

excluded from hundreds of meetings and telephone calls between Wall Street executives and policy leaders that ultimately determined the winners and losers in this financial crisis. For those that were part of the inter circle and were "too clubby to fail," the benefits were obvious. For those outside of the club, the penalty was severe.

Killinger argues that the government response to the crisis reflects "a vision of a banking industry dominated by large Wall Street banks." He suggests that this will mean less competition among retail banks, which could in turn lead to higher fees and lower interest rates on consumers' deposits.

For another side of the WaMu story, read this morning's post on the Senate investigation that found WaMu often made loans based on fraudulent information, and passed those loans to investors.