The Federal Deposit Insurance Corp. (FDIC)  has sent letters to former executives of the failed Washington Mutual Bank, Seattle, warning of possible legal action, according to a report by Dow Jones, quoting a source familiar with the situation.

The newspaper reported that the FDIC has discussed civil damages of $1 billion in relation to a potential Washington Mutual lawsuit against former senior management.

The agency is expected to make a decision on filing a claim within 30 days.

In the wake of the nation's housing bubble, the FDIC has filed civil lawsuits against former officers and directors of just four institutions out of more than 300 banks that have failed since 2008.

During the S&L and banking crisis of the 1980s and early 1990s the FDIC filed well over 100 such lawsuits in an attempt to recover money from director and officer liability insurance policies.
WaMu's collapse in the fall of 2008 was the largest thrift failure in U.S. history. Its CEO at the time was Kerry Killinger.

The Seattle-based depository was a major player in subprime, alt-A and payment option lending. It also bought close to a dozen depository and nonbank mortgage lenders during its last 10 years of existence.

WaMu's assets were sold to JPMorgan Chase for $1.8 billion.

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