by Calculated Risk on 4/12/2010 05:50:00 PM

Jim Puzzanghera at the LA Times has a preview: Washington Mutual created 'mortgage time bomb,' Senate panel finds

Before Washington Mutual collapsed ... its executives knowingly created "a mortgage time bomb" by steering borrowers to subprime mortgages and turning the loans into securities the company knew were likely to go bad, one of the most extensive investigations into the causes of the financial crisis has found.
...
"At times, WaMu selected and securitized loans that it had identified as likely to go delinquent" or securitized loans in which the company had discovered fraudulent activity, such as misstated income, without disclosing the information to investors, the committee found. The company's pay practices exacerbated the problem by rewarding loan officers and processors based on how many mortgages they could churn out.

More from the WSJ: Senate Probe Finds Washington Mutual Ignored Warnings

The documents to be disclosed on Tuesday also reflect that employees routinely fabricated lending documents. "One Sales Associate admitted that during that crunch time some of the Associates would 'manufacture' asset statements …and submit them to the" loan processing center, according to one document. "She said the pressure was tremendous ... since the loan had already [been] funded."

The Inspectors General's report on WaMu will be issued on Friday - Sewell Chan at the NY Times reported Saturday: U.S. Faults Regulators Over a Bank

Regulators failed for years to properly supervise the giant savings and loan Washington Mutual, even as the company wobbled ... a federal investigation has concluded.
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The report, prepared by the inspectors general for the Treasury Department and the Federal Deposit Insurance Corporation, is expected to be released Friday. A draft was obtained by The New York Times.

A huge bank out of control and regulators ignoring the problem ... this is quite a story. And no surprise at all.