Carl Levin

And that was your responsibility to make sure that the securities which went out to the investors were following notice to the investors of everything that they needed to know in order that the information be complete and truthful.

Look, Mr. Beck, those emails talk about delinquencies, delinquencies, delinquencies.

Were they notified that there was a billion-and-a-half dollars in loans that were selected because they were Option ARMs and that it was your expectation that Option ARMs were going to go delinquent in greater numbers?

Would selling those mortgages for that reason trouble you without disclosing that to investors?

Do you remember saying that we should think seriously about getting rid of these Option ARMs?

A lack of controls for fraud, according to this report--this is your own internal report--has existed for some time.

You did execute on it for about a year, a year and a half.

You executed on a bunch of high-risk products.

Thank you very much, Senator Coburn.

Were you aware, first, Mr. Rotella, that WaMu employees were cutting corners and even engaging in fraud to meet volume demands?

Did they know, were they informed that loans with those or some of those characteristics had a greater propensity towards delinquency in WaMu's analysis? Were they told that?

You have an obligation to tell your purchasers as an underwriter complete and truthful information.

The reason that Option ARM loans were selected is because they were most likely to go delinquent.

You don't get involved in $3 billion authorizations?

Did that surprise you? Did that trouble you, that suddenly delinquencies hit very hard?

But you said you first became aware of fraud in 2008 and this shows significant fraud in 2007.

These are very serious allegations. These are high fraud rates.

But by 2005, the problems started erupting again with a surge of early payment defaults.

Excuse me for interrupting because we do not have that much time, but I just wanted to go into the numbers.

He is laying out the risks as he sees them in the pool.

You are working for a bank which according to a 25-loans test had almost half reflecting a sale after an investigation has confirmed fraud.

You thought they were going to be removed?

Thank you. Senator Kaufman.

I think you would agree, contributed to the reduction in the criteria--the loosening of the criteria for these products.

Now, in your statement, Mr. Killinger, you described how the Office of Thrift Supervision was on site at WaMu and approved of WaMu's actions.