Sense on Cents

You get the reputation you deserve.

Whether on Wall Street or Main Street, individuals, firms, or entire industries are known by the manner in which they carry themselves. While I am all for having a good time, that little virtue called class should never be compromised. To that end, the mortgage banking industry has always had a reputation for being less than classy and professional.

I see rampant evidence of this in a story which the industry certainly would have preferred to keep buried but was released yesterday. What story is this? A corporate shindig thrown by Washington Mutual in Maui in 2006. The Wall Street Journal highlights this boondoggle in reporting, At Mock Countrywide Funeral, the Last Laugh Was on WaMu:

In most instances in life, it is never a good idea to wish that someone was dead. It seems doubly bad Karma to stage a mock funeral for that person.

The same would seem true in the mortgage business.

And yet buried in the trove of documents Washington Mutual submitted to the Senate subcommittee is the curious transcript of a corporate-party script in which the Seattle thrift did just that.

It was in 2006, as the housing market showed signs of strain but before the credit markets had crumbled, that Washington Mutual held an annual party for employees in Maui. One evening, the company put on a sort of talent show that featured an appearance by Magic Johnson and a song called “Baby Got Bucks” – referring to all the money WaMu’s mortgage brokers were raking in at time time (“You just spends…Like it never ends…Cuz you gotta have that big new Benz).

WaMu also thought it would be funny to stage a fake funeral for Countrywide Financial Corp., which at the time was a high-flying subprime mortgage lender. A transcript of the skit is contained in the file of exhibits released by the Senate subcommittee investigating WaMu’s collapse.

The skit opens with a coffin imprinted with the Countrywide logo being slowly carried on stage by four pallbearers wearing dark sunglasses.

Brothers and sisters of the Home Loans fraternity … it is my sad responsibility today on this otherwise joyous occasion to be the bearer of tragic news. For this day, we have lost one of the true legends in our industry,’’ the MC says.

So many of us warned the dearly departed about the risky – some may say reckless – behavior they engaged in. Throwing money around like Paris Hilton and selling products they don’t really know or understand.

The MC then takes a swipe at Countrywide’s perpetually sun-tanned former CEO, Angelo Mozilo:

“And while it is true that when you dance with the devil you have to expect to get burned, we are indeed sorry that it will be flames for eternity for them. A nice tan is one thing, but too much heat isn’t good for anyone’s complexion.”

The actors then break out into song: “Na, Na, Na, Na, Na, Hey, Hey, Hey Goodbye.”

“Now borrowers across the nation will all be better served with Simpler Banking and More Smiles! And some really scary and dangerous people won’t be on the street anymore. To tell you the truth, I never really liked them anyway.”

The irony, of course, is that WaMu underwrote the same kinds of risky mortgages as Countrywide did, using questionable underwriting. And just as Countrywide was sold off in a government brokered deal to Bank of America in 2007, WaMu was sold to J.P. Morgan Chase in 2008.

It is no wonder J.P. Morgan, which still is recording losses on WaMu’s mortgage portfolio, asked that the transcript of the Maui bash be kept confidential, according to a notation at the bottom of exhibit. Who could blame it?

Having a good time is one thing. These types of outings, however, shed a view inside the crass, classless, and yes fraudulent culture of a firm which was heavily involved in originating mortgage products which crippled our nation. Where were the WaMu execs? Where were the regulators? Arrogant a$$holes? You tell me.

LD

UPDATE: Hat tip to Dealbreaker for posting a copy of the text/script of this skit. Check it out by clicking on the image below:

This entry was posted on Thursday, April 15th, 2010 at 10:36 AM and is filed under General, Washington Mutual. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.