Who's really calling the shots at WaMu?

Washington Mutual made headlines when it announced that the board had finally ousted ex-CEO Kerry Killinger, instead hiring Alan Fishman, currently chairman of New York commercial mortgage broker Meridian Capital Group. The real news was that the company signed a memorandum of understanding with the Office of Thrift Supervision that requires changes in risk management and compliance programs. You can bet the ITS will take an active role in trying to keep WaMu solvent. This is merely the latest indication that federal regulators are putting an increasing number of banks on effective probation, "forcing them to fix their problems and try to avoid potentially costly failures. The secret agreements can force banks to take steps including raising capital, cutting back on risky loans and suspending dividend payments," Dow Jones reports. These memorandums are "often a precursor to more-severe, publicly disclosed enforcement actions if conditions don't improve."

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