Thread: "Bank on California" Scheme May Bankrupt Californi

http://newsblaze.com/story/200812261233 ... story.html

By Tony Dolz


The state of California will go bust by March of 2009. Over the cliff we will go and to make sure there is no looking back, Arnold Schwarzenegger gave us an extra shove in the back - the Bank on California scheme.
This week the Governor has startled even his most adoring followers. He launched a program called "Bank on California" for the express purpose of allowing illegal aliens to open bank accounts and get loans using the fraudulent Mexican Matricular Consular and Central American "consular identification cards".

These consular identification cards, which only illegal aliens need, can be purchased for as little as $20 on any big city street corner or for $40 from the official Mexican consulate. In the last few years the Mexican government has put in action a huge fleet of Mexican Consulates on wheels for the purpose of handing out Matricular Consular identification cards in any town and village in America where Mexican illegal aliens can be found. In some instances American public schools and libraries with administrators sympathetic to illegal aliens and open borders are allowing the mobile consular identification operations to issue these questionable identifications from classrooms and meeting rooms, to the outrage of taxpayer groups.

U.S. CONGRESSMAN TED POE CALLS MATRICULAR CONSULAR A HOAX AND A NATIONAL SECURITY RISK

U.S. Congressman Ted Poe at Congressional Hearing on Financial Services.
The Congressman testified that the Matricular Consular poses a security risk for the United States. He pointed out the following facts uncovered by his investigation.
(1) Mexican Banks in Mexico DO NOT accept Matricular Consular as a valid identification
(2) The Matricula Consular can be obtain without authentication of the applicant.
(3) The Matricula Consular can be easily forged with any desired identity and can be purchased either from the Mexican consulate or from false identification producers for under $40.
(4) The U.S. banks that accept the Matricula Consular have no means, nor do they make an effort to verify that the Matricular Consular is valid.
(5) A Congressman Poe staffer was able to get a Matricula Consular issued to his name using the address 1600 Pennsylvania Avenue, for the purposes of demonstrating how unreliable it is.
The above facts may not be known by most California citizens, but all illegal alien advocacy groups, Congressmen, Senators, State Assembly and Senate Members and Governor Schwarzenegger know that the Matricular Consular is a bogus form of identification needed and used exclusively by illegal aliens.

Steve McCraw, Assistant Director, FBI Office of Intelligence Testifies That Matricula Consular is Invalid and a National Security Risk

Quotes from testimony before the House Judiciary Committee on Immigration and Border Security.
"consular ID cards are primarily being utilized by illegal aliens in the United States".
"The U.S. Government has done an extensive amount of research on the Matricula Consular, to assess its viability as a reliable means of identification. The Department of Justice and the FBI have concluded that the Matricula Consular is not a reliable form of identification, due to the non-existence of any means of verifying the true identity of the card holder. The Matricula Consular is the perfect breeder document to secure other legitimate forms of identification and pose a substantial risk of misuse, including misuse by terrorists."

The complete FBI testimony can be read here: FBI

"BANK ACCOUNTS FOR EVERYBODY"

The "Bank on California" program is a sham to provide illegal aliens bank accounts and bank loans they could not get if normal and sound business practices were followed.
Illegal aliens are in the country illegally. The penalty for illegally residing or working in the United States is deportation. If illegal aliens are suddenly deported, will they continue to make payment from Mexico on credit cards, home mortgages or car loans? No! of course not.

The state of California is almost $50 billion in the red and the "Bank on California" program will make matters worse. Vigorous immigration law enforcement could cause a meltdown of major banks in California.

EXODUS OF BUSINESSES AND TAXPAYERS FROM CALIFORNIA

For the past four years, more wealth and employment creating businesses and tax payers have left the state than have settled into it. California now leads the nation with intruding Nanny state policies, energy policies that choke growth and employment and a stubborn refusal to enforce laws that would protect American jobs and reduced the state's social services burden.
The state's net population inflow is swollen by millions of illiterate, poor illegal aliens. Countless studies over the past 40 years document that the same criminal cartels that control drug trafficking also controls human trafficking.

A 2006 Heritage Foundation study concluded that illiterates and high school drop-outs (most illegal aliens have no more than a 4th or 5th grade education) whether they are homegrown or imported, cost the taxpayers a net $1 million in social services more than they contribute in taxes over their lifetime. Shutting off the spigot of illiterate illegal aliens and improving education in the state to improve on the current dismal 50% high school graduation figure would save the state billions of dollars and help prevent the bankruptcy of the state.

Multimillion dollar border tunnels the cartels dig to funnel drugs also bring 2 to 3 million illegal aliens that violate the United States borders every year. More ominously, the cartels, which are in it strictly for the money, are also smuggling thousands of foreigners from countries known to harbor terrorists. Congressional investigations have found irrefutable evidence of Middle Eastern human trafficking. These people can take on a "Hispanic" identity. Match those potential terrorists with a Matricula Consular and we have a serious threat to life and security in California.

THERE IS NO FREE HUMAN TRAFFICKING

In many cases, the foreign invaders are forced by the cartels to carry backpacks with drugs as part of their contract. Each backpack can carry as much as $50,000 in narcotics destined for American school children and to be consumed by pilots, bus drivers and others who pose a threat to our lives.
Once in the United States, the illegal aliens are placed in "clown houses", secured locations controlled by the cartels, until the families of the illegals pay the trafficking fee. From that point forward the illegal aliens who are fully paid up are released by the cartels in cities where immigration laws are not enforced or not allowed to be enforced. The relationship between illegal aliens and the cartels continues after the illegals are released into illegal alien enclaves in cities where immigration law is not enforced. The cities that refuse to enforce immigration laws are called Sanctuary Cities. The illegals need false documentation and jobs. The drug cartels run America's identity theft and false document business and rake in many millions of dollars annually from these activities. The cartels have virtually unlimited amounts of money to produce high quality fraudulent documents; and the false documents that they create are indiscernible from the real ones.

Once illegal aliens are integrated into the shadowy illegal alien underground, some discover that by joining established criminal gangs that serve as the distribution network of the criminal drug and human trafficking cartels, they can make more money in one week than other illegal aliens working at minimum wage earn in a year of doing back breaking work.

Just what is the extent of the illegal drug and human trafficking trade? A CBS investigative report quoting government sources concludes that the drug trade earns the cartels annually $140 billion and human trafficking $10 billion. Arms trafficking is also involved and it is estimated to be substantial. The total amount of trade controlled by the cartels is thus estimated to exceed $150 billion. If the crime cartels were a corporation, they would be America's 5th largest corporation ranking after Wal-Mart, Exxon, Chevron and General Motors.

Whether illegal aliens earn a pittance or thousands of dollars per week pushing drugs for the cartels, they need banking services. If banking services were limited to citizens, legal residents and people holding valid foreign passports and visas, illegal aliens would face money laundering difficulties. This is where the Governor comes in. Arnold Schwarzenegger wants to offer illegal aliens a hand in money laundering their illicit earnings with the help of large California banks.

The number of gang members working as part of the Mexican criminal cartels is staggering. There are many gangs competing for the drug distribution business. The most dangerous and bloody of them is MS-13. According to the FBI, as of 2007, there were as many as 100,000 MS-13 active members. In the Los Angeles area the aggregate of competing gangs plying the trade, most of them illegal aliens, are close to 100,000 in this area alone. There were over 6,000 drug smuggling related murders in 2007 along the U.S. Mexican border.

For a jaw dropping exposé ofthe corrupting influence of the Cartels on American elected officials, view the internationally acclaimed documentaries: "Drug Wars", by director Rusty Flemming; and "Border" by director Chris Burgard - both available in a video store near you, but apparently not near Governor Schwarzenegger's home in Santa Monica.

The illegal aliens the Governor is throwing a lifeline to, are valued and protected by a cabal of insidious destructive forces.

Among the profit-sharing beneficiaries of trading in cheap labor are the banks. They handle $23 billion in illegal workers foreign remittances to their home countries. Naturally business big and small benefit immensely from illegal cheap labor.

American workers are pesky. They know their rights, demand medical insurance and Workmen's Compensation for on the job injuries and protection against environmental and job related hazards on top of expecting a living wage. American workers also indirectly force employers to pay payroll taxes because the American workers hold valid Social Security numbers and they declare their income to the Internal Revenue Service and the State Tax Franchise Board.

Given the opportunity, unethical employers will chose cheap illegal workers over American workers. Arnold Schwarzenegger would do well to show compassion for the American worker as millions of unemployed Americans would agree.

Illegal aliens do not have the right to vote and certainly did not vote him into office, so why is the Governor shedding Hollywood tears over them? Who is the Governor really helping by legitimizing illegal aliens?

Illegal aliens are forbidden by law to hold a Social Security number; the tax-payers are the real losers as both the illegal aliens and their employers feverishly fuel identity theft in a massive scale.

11 Million Americans Victimized By Identity Theft Annually

22 million or more illegal aliens in the nation hunger for stolen or falsified Social Security numbers. The Governor wants to provide illegal aliens with a safe place to keep the money they earn illicitly through document and tax fraud, so he launched the Bank on California program, just for them.

A Massive Foreign Invasion of People With Territorial Claims Will Eventually Lead to Social Unrest

The other dark force which will eventually cause social upheaval in California is the duality of Mexican nationalism and Mexican race-based territorial claims over parts of the United States. The aim of Mexican nationalists whether they reside in Mexico or the United States is to retake what they believe are lost Mexican territories. This is called "Reconquista". The Mexican nationalist understand that cheap-labor employers are exploiting them, but they take the long view that illegal employment of a massive illegal population invasion by Mexico will eventually lead to a political takeover of California and other states by Mexican nationalists.
Among the best well known Mexican nationalists are Los Angeles City Mayor Antonio Villaraigosa (birth name Villar) a former leader of the Mexican nationalist MEChA organization; and Fabian Nunez, Speaker of the Assembly another MEChista.

Mayor Villaraigosa, for example, has declared Los Angeles a "Sanctuary City" where federal immigration laws are not enforced and where millions of illegal aliens live without fear of deportation.

The Mexican nationalists serving in the state Assembly and Senate have introduced a wealth of open borders and illegal alien pandering legislation in the last decades. The objective is to create a welcoming environment for illegal aliens and to bring about a sea change in the state demographics. Numerical superiority means Reconquista.

Among the measures advocated by Mexican nationalists serving in Sacramento are driver's licenses of illegal aliens which gives them a recognizable identification card which in turn allows them to vote illegally if they wish to take that chance. Federal and state laws prohibit poll workers from challenging whatever identification would-be voters show up with on election day.

Another notorious Mexican nationalist is Gil Cedillo who serves in the California state Senate. Gil has introduced no less than 23 bills pressing for driver's licenses for illegal aliens. Gil Cedillo who is affectionately known as "one bill Gill", due to his obsession for driver's licenses for illegals, was also the State Director of the Service Employees International Union (SEIU). The SEIU is a union founded by Wade Rathke, a co-founder of the Students for a Democratic Society (SDS); and the Weather Underground, the murderous domestic terrorist group lead by Bill Ayers.

Gil Cedillo carries a lot of clout. The SEIU gave the Democrat Party $26,849,872 or 96% of their contributions in 2007. That makes the SEIU the 8th largest lobbying group in the United States and California. The SEIU openly lobbies for open borders, illegal alien "rights", and illegal alien SEIU union membership. Isn't it ironic that the SEIU recruits illegal aliens into the union, when those illegal aliens do not have the right to work in the United States? Any politician, like Governor Schwarzenegger, must lock step with the SEIU if they want to get on their political contribution gravy train.

The Schwarzenegger "Bank on California" program panders to illegal aliens and is part of an array of measures to make the life of illegal aliens in California more comfortable, for example: driver's licenses, free education, no out of state/out of country tuition and free medical care.

The cost to California taxpayers for the folly of pandering to illegal aliens is up to $12 billion per year or about $1,400 per California family. Do you have $1,400 to spare this year? Let the Governor know.

California Was Ruled By Spain, Not Mexico

For over 130 years, every Mexican child has been raised on school books spouting the belief that California was stolen from Mexico. No matter what polite citizens of Mexico may tell you, in their hearts many believe in one or more versions of a Mexican race-based and or political territorial claim against the United States, California included.
Naturally, this belief is pure fiction. California was Spanish not Mexican. Following the Mexican war of independence, the Mexican revolutionaries in Mexico City, who had taken the territory from Spain through war, tried for 23 years to take possession of California but they were repelled by the Californianos who had lived there for more than 200 years. Rather than be ruled by Mexico, Californians chose to ally themselves with the United States. Read the writings of General Mariano Guadalupe Vallejo and the Californio Governor Juan Alvarado, for clarity on this issue.

The Mexican "Reconquista" movement might be driven by mythology, but the number of foreign nationals within our state and their allies who believe in it are powerful and dangerous due to their vast numbers and the ignorance and or lack of patriotism to their American allies.

The entire premise behind "Bank on California" is based on falsehoods and sleight of hand. The first false premise is that people need "help" in opening a bank account. Who is the Governor trying to fool? To what degree are we going to tolerate a Nanny Government that intrudes into petty discretionary personal matters, like opening a no-brainer bank account?

Any person reading this article can take no more than $5 to any bank in California and open a bank account in 20 minutes or less and get a donut and a cup of coffee while waiting. The Governor on his "Bank on California" website gives us a sob story about percentages of "victims" that do not have a bank account. Help me with this, but don't people have to have money and the desire to have a bank account first and foremost? What the Governor is really trying to say is that millions of illegal aliens are afraid to put their illicit money in the bank for fear of blowing their cover. There is no justification for the Governor to put the seal of the state of California or spend tax-payers money to promote bank accounts and loans for illegal aliens or for anyone for that matter.

"LOANS FOR EVERYBODY"

Visit the official state of California "Bank on California" website, bankoncalifornia.ca.gov. Many of the banks listed as partners are embroiled in the risky lending practices that are bankrupting the nation. These banks have gotten $1 trillion in taxpayer bailout money so far. Why would the Governor encourage a new wave of risky bank services for illegal aliens now?
We are heading into a financial crisis worse than the Great Depression in large part because banks made loans, under government pressure, to people who they knew could not pay for them. Illegal aliens, due to their illegal presence are subject to deportation at any time. If deported, they will default on loans they take out under the Governor's plan.

Deported illegal aliens would have no incentive to continue to pay off loans in the United States for homes, cars and businesses that they can no longer posses or return to. The Governor may well be putting the last nail in the coffin of the California economy and the state budget.

The governor wants to be "liked" by what he sees as the people who will soon be the majority in this state, especially if cheap labor lobbyists succeed in buying enough influence to get a general illegal alien amnesty bill passed.

Governor Schwarzenegger is showing great insensitivity to the citizens and tax payers of this state; evident of someone who is a short-sighted political opportunist.

On a CBS interview yesterday Schwarzenegger said that he would like to run for President of the United States if being a "natural born citizen" were not a Constitutional requirement. Whatever his political ambitions, getting political contributions from cheap labor corporate interests, cannot hurt. What price will we pay to stoke his political career?

"Bank on California" Enables Money Laundering of Illicit Earnings

Governor Schwarzenegger, show us that you are not aiding and abetting illegal activities on the part of illegal aliens and the cheap labor profiteers. Stand tall, makes us proud of you and prevent money laundering of illicit earnings. Make it mandatory that the banks submit to the Department of Homeland Security detailed contact information on every foreigner that applies for a bank account or bank loan on the basis of a Mexican Matricula Consular or other Consular identity card. Impose a fine of no less than $10,000 for every bank infraction on this regulation.
California will run out of money by March of this year. Bank on California is a program that we cannot afford, that we should not be supporting; and that will make solving California's economic problems much harder.

Governor, leave a legacy that we can respect. Put an end to the Banks Financial Services Act for illegal aliens, the Bank on California program.

Call and write Governor Schwarzenegger and demand that "Bank on California" be dismantled immediately.

Governor's Office Telephone 916-445-4571 Fax: 916-558-3160

CNN Lou Dobbs report can be found here: http://www.youtube.com/watch?v=NcTMu3LL6rY

Media Contact: Article Author, Tony Dolz dolz.com 310-371 7500 bankoncalifornia@dolz.info

See Also:
Gov.Schwarzenegger Launches `Bank on California` to Help Californians

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Good grief this man gets stupider every day, someone take his American citizenship away and send him back to his home country!

Forwarding this to everyone I know

Important article. Forwarded to my Rep. Heath Shuler, one of the few Democrats fighting against illegal immigration and who opposed the bailout both times.

As I stated all along this is where our bailout money is going which is to help illegal aliens with their mortgages, other loans and to hell with struggling Americans.

I just called his office on this. I told them he's further threatening our banking system with this scheme and he'd be better off starting a program to seize the assets they obtained here under illegal and fraudulent circumstances.

More of the same; the Governator hasn't learned. Some of the results of giving loans to those who shouldn't get them:

Last updated December 28, 2008 8:50 p.m. PT

Saying yes to anyone, WaMu built empire on shaky loans
By PETER S. GOODMAN AND GRETCHEN MORGENSON
THE NEW YORK TIMES

"We hope to do to this industry what Wal-Mart did to theirs, Starbucks did to theirs, Costco did to theirs and Lowe's-Home Depot did to their industry. And I think if we've done our job, five years from now you're not going to call us a bank."

-- Kerry K. Killinger, chief executive of Washington Mutual, 2003

SAN DIEGO -- As a supervisor at a Washington Mutual mortgage processing center, John D. Parsons was accustomed to seeing baby sitters claiming salaries worthy of college presidents, and schoolteachers with incomes rivaling stockbrokers'. He rarely questioned them. A real estate frenzy was under way and WaMu, as his bank was known, was all about saying yes.

Yet even by WaMu's relaxed standards, one mortgage four years ago raised eyebrows. The borrower was claiming a six-figure income and an unusual profession: mariachi singer.

Parsons could not verify the singer's income, so he had him photographed in front of his home dressed in his mariachi outfit. The photo went into a WaMu file. Approved.

"I'd lie if I said every piece of documentation was properly signed and dated," said 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 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 Parsons and recalls seeing drug paraphernalia on his desk. "Everybody said, 'He gets the job done."'

At WaMu, getting the job done meant lending money to nearly anyone who asked for it -- the force behind the bank's meteoric rise and its precipitous collapse this year in the biggest bank failure in American history.

On a financial landscape littered with wreckage, WaMu, a Seattle-based bank that opened branches at a clip worthy of a fast-food chain, stands out as a singularly brazen case of lax lending. By the first half of this year, the value of its bad loans had reached $11.5 billion, nearly tripling from $4.2 billion a year earlier.

Interviews with two dozen former employees, mortgage brokers, real estate agents and appraisers reveal the relentless pressure to churn out loans that produced such results. While that sample may not fully represent a bank with tens of thousands of people, it does reflect the views of employees in WaMu mortgage operations in California, Florida, Illinois and Calif., .

Their accounts are consistent with those of 89 other former employees who are confidential witnesses in a class-action filed against WaMu in federal court in Seattle by former shareholders.

According to these accounts, pressure to keep lending emanated from the top, where executives profited from the swift expansion -- not least, Kerry K. Killinger, who was WaMu's chief executive from 1990 until he was forced out in September.

Between 2001 and 2007, Killinger received compensation of $88 million, according to the Corporate Library, a research firm. He declined to respond to a list of questions, and his spokesman said he was unavailable for an interview.

During Killinger's tenure, WaMu pressed sales agents to pump out loans while disregarding borrowers' incomes and assets, according to former employees. The bank set up what insiders described as a system of dubious legality that enabled real estate agents to collect fees of more than $10,000 for bringing in borrowers, sometimes making the agents more beholden to WaMu than they were to their clients.

WaMu gave mortgage brokers handsome commissions for selling the riskiest loans, which carried higher fees, bolstering profits and ultimately the compensation of the bank's executives. WaMu pressured appraisers to provide inflated property values that made loans appear less risky, enabling Wall Street to bundle them more easily for sale to investors.

"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."

JPMorgan Chase, which bought WaMu for $1.9 billion in September and received $25 billion a few weeks later as part of the taxpayer bailout of the financial services industry, declined to make former WaMu executives available for interviews.

JPMorgan also declined to comment on WaMu's operations before it bought the company. "It is a different era for our customers and for the company," a spokesman said.

For those who placed their faith and money in WaMu, the bank's implosion came as a shock.

"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."

'Like a sweatshop'
Some WaMu employees who worked for the bank during the boom now have regrets.

"It was a disgrace," said Dana Zweibel, a former financial representative at a WaMu branch in Tampa, Fla. "We were giving loans to people that never should have had loans."

If Zweibel doubted whether customers could pay, supervisors directed her to keep selling, she said.

"We were told from up above that that's not our concern," she said. "Our concern is just to write the loan."

The ultimate supervisor at WaMu was Killinger, who joined the company in 1983 and became chief executive in 1990. He inherited a bank that was founded in 1889 and had survived the Depression and the savings and loan scandal of the 1980s.

An investment analyst by training, he was attuned to Wall Street's hunger for growth. Between late 1996 and early 2002, he transformed WaMu into the nation's sixth-largest bank through a series of acquisitions.

A key deal came in 1999, with the purchase of Long Beach Financial, a California lender specializing in subprime mortgages, loans extended to borrowers with troubled credit.

WaMu underscored its eagerness to lend with an advertising campaign introduced during the 2003 Academy Awards: "The Power of Yes." No mere advertising pitch, this was also the mantra inside the bank, underwriters said.

"WaMu came out with that slogan, and that was what we had to live by," Zaback said. "We joked about it a lot." A file would get marked problematic and then somehow get approved. "We'd say: 'OK! The power of yes."'

Revenue at WaMu's home-lending unit swelled from $707 million in 2002 to almost $2 billion the following year, when the "The Power of Yes" campaign started.

Between 2000 and 2003, WaMu's retail branches grew 70 percent, reaching 2,200 across 38 states, as the bank used an image of cheeky irreverence to attract new customers. In offbeat television ads, casually dressed WaMu employees ridiculed staid bankers in suits.

Branches were pushed to increase lending. "It was just disgusting," said Zweibel, the Tampa representative. "They wanted you to spend time, while you're running teller transactions and opening checking accounts, selling people loans."

Employees in Tampa who fell short were ordered to drive to a WaMu office in Sarasota, an hour away. There, they sat in a phone bank with 20 other people, calling customers to push home equity loans.

"The regional manager would be over your shoulder, listening to every word," Zweibel recalled. "They treated us like we were in a sweatshop."

On the other end of the country, at WaMu's San Diego processing office, Zaback's job was to take loan applications from branches in Southern California and make sure they passed muster. Most of the loans she said she handled merely required borrowers to provide an address and Social Security number, and to state their income and assets.

She ran applications through WaMu's computer system for approval. If she needed more information, she had to consult with a loan officer -- which she described as an unpleasant experience. "They would be furious," Zaback said. "They would put it on you, that they weren't going to get paid if you stood in the way."

On one loan application in 2005, a borrower identified himself as a gardener and listed his monthly income at $12,000, Zaback recalled. She could not verify his business license, so she took the file to her boss, Parsons.

He used the mariachi singer as inspiration: a photo of the borrower's truck emblazoned with the name of his landscaping business went into the file. Approved.

Parsons, who worked for WaMu in San Diego from about 2002 through 2005, said his supervisors constantly praised his performance. "My numbers were through the roof," he said.

On another occasion, Zaback asked a loan officer for verification of an applicant's assets. The officer sent a letter from a bank showing a balance of about $150,000 in the borrower's account, she recalled. But when Zaback called the bank to confirm, she was told the balance was only $5,000.

The loan officer yelled at her, Zaback recalled. "She said, 'We don't call the bank to verify.'" Zaback said she told Parsons that she no longer wanted to work with that loan officer, but he replied: "Too bad."

Shortly thereafter, Parsons disappeared from the office. Zaback later learned of his arrest for burglary and drug possession.

The sheer workload at WaMu ensured that loan reviews were limited. Zaback's office had 108 people, and several hundred new files a day. She was required to process at least 10 files daily.

"I'd typically spend a maximum of 35 minutes per file," she said. "It was just disheartening. Just spit it out and get it done. That's what they wanted us to do. Garbage in, and garbage out."

Referral fees for loans
WaMu's boiler room culture flourished in Southern California, where housing prices rose so rapidly during the bubble that creative financing was needed to attract buyers.

To that end, WaMu embraced so-called option ARMs, adjustable rate mortgages that enticed borrowers with a selection of low initial rates and allowed them to decide how much to pay each month. But people who opted for minimum payments were underpaying the interest due and adding to their principal, eventually causing loan payments to balloon.

Customers were often left with the impression that low payments would continue long-term, according to former WaMu sales agents.

For WaMu, variable-rate loans -- option ARMs, in particular -- were especially attractive because they carried higher fees than other loans, and allowed WaMu to book profits on interest payments that borrowers deferred. Because WaMu was selling many of its loans to investors, it did not worry about defaults: By the time loans went bad, they were often in other hands.

WaMu's adjustable-rate mortgages expanded from about one-fourth of new home loans in 2003 to 70 percent by 2006. In 2005 and 2006 -- when WaMu pushed option ARMs most aggressively -- Killinger received pay of $19 million and $24 million respectively.

The ARM loan niche
WaMu's retail mortgage office in Downey, Calif., specialized in selling option ARMs to Hispanic customers who spoke little English and depended on advice from real estate brokers, according to a former sales agent who requested anonymity because he was still in the mortgage business.

According to that agent, WaMu turned real estate agents into a pipeline for loan applications by enabling them to collect "referral fees" for clients who became WaMu borrowers.

Buyers were typically oblivious to agents' fees, the agent said, and agents rarely explained the loan terms.

"Their Realtor was their trusted friend," the agent said. "The Realtors would sell them on a minimum payment, and that was an outright lie."

According to the agent, the strategy was the brainchild of Thomas Ramirez, who oversaw a sales team of about 20 agents at the Downey branch during the first half of this decade, and now works for Wells Fargo.

Ramirez confirmed that he and his team enabled real estate agents to collect commissions, but he maintained that the fees were fully disclosed.

"I don't think the bank would have let us do the program if it was bad," Ramirez said.

Ramirez's team sold nearly $1 billion worth of loans in 2004, he said. His performance made him a perennial member of WaMu's President's Club, which brought big bonuses and recognition at an awards ceremony typically hosted by Killinger in tropical venues like Hawaii.

Ramirez's success prompted WaMu to populate a neighboring building in Downey with loan processors, underwriters and appraisers who worked for him. The fees proved so enticing that real estate agents arrived in Downey from all over Southern California, bearing six and seven loan applications at a time, the former agent said.

WaMu banned referral fees in 2006, fearing they could be construed as illegal payments from the bank to agents. But the bank allowed Ramirez's team to continue using the referral fees, the agent said.

Forced out with millions
By 2005, the word was out that WaMu would accept applications with a mere statement of the borrower's income and assets -- often with no documentation required -- so long as credit scores were adequate, according to Zaback and other underwriters.

"We had a flier that said, 'A thin file is a good file,"' recalled Michele Culbertson, a wholesale sales agent with WaMu.

Martine Lado, another agent in the Irvine 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," Lado said.

Top producers became heroes. Craig Clark, called the "king of the option ARM" by colleagues, closed loans totaling about $1 billion in 2005, according to four of his former coworkers, a tally he amassed in part by challenging anyone who doubted him.

"He was a bulldozer when it came to getting his stuff done," said Lisa Alvarez, who worked in the Irvine office from 2003 to 2006.

Christine Crocker, who managed WaMu's wholesale underwriting division in Irvine, recalled one mortgage to an elderly couple from a broker on Clark's team.

With a fixed income of about $3,200 a month, the couple needed a fixed-rate loan. But their broker earned a commission of three percentage points by arranging an option ARM for them, and did so by listing their income as $7,000 a month. Soon, their payment jumped from roughly $1,000 a month to about $3,000, causing them to fall behind.

Clark, who now works for JPMorgan, referred calls to a company spokesman, who provided no further details.

In 2006, WaMu slowed option ARM lending. But earlier, ill-considered loans had already begun hurting its results. In 2007, it recorded a $67 million loss and shut down its subprime lending unit.

By the time shareholders joined WaMu for its annual meeting in Seattle last April, WaMu had posted a first-quarter loss of $1.14 billion and increased its loan loss reserve to $3.5 billion. Its stock had lost more than half its value in the previous two months. Anger was in the air.

Some shareholders were irate that Killinger and other executives were excluding mortgage losses from the computation of their bonuses. Others were enraged that WaMu turned down an $8-a-share takeover bid from JPMorgan.

"Calm down and have a little faith," Killinger told the crowd. "We will get through this."

WaMu asked shareholders to approve a $7 billion investment by Texas Pacific Group, a private equity firm, and other unnamed investors. David Bonderman, a founder of Texas Pacific and a former WaMu director, declined to comment.

Hostile shareholders argued that the deal would dilute their holdings, but Killinger forced it through, saying WaMu desperately needed new capital.

Weeks later, with WaMu in tatters, directors stripped Killinger of his board chairmanship. And the bank began including mortgage losses when calculating executive bonuses.

In September, Killinger was forced to retire. Later that month, with WaMu buckling under roughly $180 billion in mortgage-related loans, regulators seized the bank and sold it to JPMorgan for $1.9 billion, a fraction of the $40 billion valuation the stock market gave WaMu at its peak.

Billions of dollars that investors had plowed into WaMu were wiped out, as were prospects for many of the bank's 50,000 employees. But Killinger still had his millions, rankling laid-off workers and shareholders alike.

"Kerry has made over $100 million over his tenure based on the aggressiveness that sunk the company," said Au, the money manager. "How does he justify taking that money?"

In June, Au sent an e-mail message to the company asking executives to return some of their pay. He says he has not heard back.

http://seattlepi.nwsource.com/business/ ... amu28.html

I emailed this to everyone in my contact list and asked them to email it to their senators and congresspeople...then I did the same.