Carl Levin

Fraud problems resurfacing with a gusto in early 2008.

The major drop which you and others from WaMu refer to came in the fixed, 30-year loans, and that drop took place when you decided to engage in a higher-risk strategy.

So basically, those----

So that was a higher interest rate there, as well?

Was there a high risk in doing that?

During these years, WaMu cut back on its loan originations overall, but while cutting back, it also changed the mix from lower- to higher-risk loans.

The overall system of credit risk management activities and processes exhibits weakness and/or has deficiencies related to multiple business activities.

Basically they did not want to slow down loan production.

We have to do some financial reform in the Senate.

And would you say that the criteria were looser as a result of that demand?

That is what I hoped you would have said.

Do you remember a discussion about delinquencies and that being a reason why you had better get rid of Option ARMs quickly?

Some of the other products being high-risk products.

Would you have made that inquiry or thought it ought to be made?

I am talking about those emails. Would you have been concerned then if you had read those emails?

It is very clear, you should have been disturbed by that.

Do you remember those problems at Long Beach in 2003, Mr. Killinger?

Those Option ARMs... now have a delinquency rate of more than 50 percent, which means more than half of the underlying loans are now delinquent.

I think, Mr. Killinger, in your opening statement, you made reference to Wall Street's growing appetite for these products.

But yet you hired Goldman Sachs in the end to help you out, is that correct?

You should have been disturbed by what you heard here today, OK?

Those are higher-risk products. That is November 2007.

You say you adopted this shift to high-risk strategy in 2004 and 2005. Is that correct?

I am sure it is, but were you aware of it? That is my question.

Are my numbers accurate?