Carl Levin

OTS has principal responsibility. FDIC doesn't.

So since there is no regulation on the books for these kinds of risky practices, how are we going to get them on the books?

There has to be a right way to handle them.

Now, as WaMu's condition continued to worsen in the summer of 2008, the FDIC conducted a capital analysis, recommended to OTS that a 4 rating was warranted.

There is no reason why we can't work together.

I hope you are not going to justify that.

When I asked, what was the reason given by OTS, they said, 'We weren't given any reasons.'

Stated income is probably not right.

Asset quality. Weak asset quality. It brought on the liquidity problems.

So that in this exhibit, which is based on the second quarter of 2007, is it accurate to say that FDIC assigned WaMu a C rating?

What, if any, guidance should be given to institutions by regulators relative to that issue as to putting into the stream of commerce the mortgages which are bad mortgages?

Which is kind of, is it fair to say, heading towards a 3? Is that a fair summary?

From your perspectives, it was a turf battle. Protecting turf.

I personally think they didn't want us there.

Is that a fair comparison, given that WaMu's lending practices departed radically from historically safe products and practices?

On Exhibit 51b, if you will take a look at that exhibit, this is a 2005 memo entitled, 'Insured Institutions' Exposure to a Housing Slowdown.'

That interagency position is not binding, is that correct?

We followed our normal protocols under the interagency agreement, and on August 14, we sent the OTS a letter.

Was it important in order for you to have a basis that you have access?

What consequences can you expect when most customers only make minimum payment in terms of the borrower's reaction to a payment shock?

But will you remind all the institutions?

Loans were risky, were they? They had multiple risk factors layered on top of each other.

All right. The IG report... found that Option ARMs were 47 percent of the loans in WaMu's portfolio.

I think the American taxpayers and the American people expect a lot more from their regulators than what we have seen in this situation.

They were ineffective.