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News Wrap: Bank Regulators Defend Oversight of Failed WaMu

April 16, 2010 at 12:00 AM EST
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In other news Friday, federal bank regulators came under fire in the Senate for their role in the Washington Mutual bank failure, and President Obama renewed his calls to rein in the derivatives market in the financial system.
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HARI SREENIVASAN: The Goldman Sachs news rattled Wall Street. After two months of steady gains, the Dow Jones industrial average lost nearly 126 points to close at 11018. The Nasdaq fell 34 points to close at 2481. For the week, the Dow gained a fraction-of-a-percent; the Nasdaq rose a little over 1 percent.

Federal bank regulators came under fire today over the largest bank failure in U.S. history. It happened at a Senate hearing on the 2008 collapse of Washington Mutual, commonly known as WaMu.

Democratic Chairman Carl Levin of Michigan lashed out at the Office of Thrift Supervision.

SEN. CARL LEVIN, D-Mich.: OTS was a feeble regulator. Instead of policing the economic assault, OTS was more of a spectator on the sidelines, a watchdog with no bite, noting problems and making recommendations, but not acting to correct the flaws and the failures that it saw. At times, it even acted like a WaMu guard dog.

HARI SREENIVASAN: The head of the office, John Reich, denied he had been too cozy with WaMu managers. And Sheila Bair, chair of the Federal Deposit Insurance Corporation, said her agency did all it could.

Battle lines have hardened on a bill to reform financial regulation. President Obama called again today for reining in derivatives. They include the mortgage-backed securities that triggered the housing market collapse. The president said — quote — “I will veto legislation that doesn’t bring the derivatives market under control.”

The Senate could consider the bill next week, but all 41 Senate Republicans announced today they will oppose it.

Nearly all U.S. hospitals will have to give same-sex couples greater rights on visitation and medical decisions. The president issued the order last night. It will end policies that sometimes bar gays and lesbians from visiting their ailing partners or consulting on treatment. All hospitals accepting Medicare and Medicaid patients are affected.

Senate Republicans and Democrats went at it today over a federal court nominee who’s become a lightning rod.

“NewsHour” congressional correspondent Kwame Holman has the story.

KWAME HOLMAN: The focus at the Senate Judiciary Committee hearing was Goodwin Liu, law professor at the University of California, Berkeley. He’s been nominated for the 9th Circuit Court of Appeals in San Francisco.

Republican Orrin Hatch of Utah charged, Liu’s writings show he would reinterpret the Constitution to suit his liberal views.

SEN. ORRIN HATCH, R-Utah: It’s one thing to be a law professor and to make a lot of hypotheticals and other things. Do you still stand by these approaches, as though you can just about make of the law anything you want to?

GOODWIN LIU, 9th Circuit Court of Appeals nominee: Whatever I may have written in the books and in the articles would have no bearing on my role as a judge.

KWAME HOLMAN: As the hearing went on, Liu was pressed repeatedly to say he would be impartial if confirmed.

GOODWIN LIU: As much as I like my own views, I confess to you that I would actually be a little afraid if I was the only voice speaking and that everything went my way. That is not — that is not the kind of certainty that I have about my own views.

KWAME HOLMAN: Liu has sharply criticized conservative U.S. Supreme Court Justices John Roberts and Samuel Alito.

But Republican Jeff Sessions contrasted their experience, when nominated, with Liu’s.

SEN. JEFF SESSIONS, R-Ala.: Have you argued any cases before the Supreme Court or any cases before the federal courts of appeals?

GOODWIN LIU: Senator, I have not argued any cases before the United States Supreme Court. I have argued one case before the United States Court of Appeals for the D.C. Circuit.

KWAME HOLMAN: Liu won support from Committee Chairman Patrick Leahy and other Democrats. They accused Republicans of being unfair.

SEN. PATRICK LEAHY, D-Vt., Judiciary Committee chairman: Let’s leave these — these straw men kind of complaints out of it. You are — we have so many people sitting on our courts of appeals nominated by Republican presidents, supported by both Republicans and Democrats, who do not begin to have the kind of background that you do.

KWAME HOLMAN: The hearing was considered a test for the larger fight to come, when the president nominates someone for the new vacancy on the Supreme Court.

HARI SREENIVASAN: Toyota announced a new recall today. The automaker said it will check 600,000 Sienna minivans for corrosion in a cable holding the spare tire carrier. The spare could come lose and fall onto the road. The affected minivans were sold in the U.S. from the 1998 through 2010 model years.

For the record, Toyota is an underwriter of the “NewsHour.”

New information has surfaced on the destruction of CIA videotapes that showed water-boarding. The 92 tapes involved terror suspect Abu Zubaydah. Internal e-mails released last night said former CIA Director Porter Goss agreed with the 2005 decision to get rid of the tapes. They said the videos showed interrogators didn’t follow procedures authorized by the Bush administration.

The death toll from this week’s earthquakes in Western China climbed above 1,100 today. Officials also said more than 400 villagers are still missing in the mountainous area near Tibet.

Meanwhile, Buddhist monks created a makeshift morgue next to a monastery in the shattered region. They chanted and prayed over the bodies of hundreds of victims.

GEGA, Tibetan Buddhist monk (through translator): For us, the Tibetan people, this is critically important. Every Tibetan here believes in Buddhism. Religious rituals, like chanting scriptures and a belief in salvation for the dead, are very important. If there is no ritual like praying and helping the dead into the afterlife, Tibetans would feel very guilty.

HARI SREENIVASAN: The monks planned a mass cremation of unclaimed bodies tomorrow.

In Afghanistan, the U.N. confirmed five of its Afghan workers are missing in the north. Police in the Baghlan province said they were kidnapped by Taliban insurgents. Four German soldiers were killed in that same area yesterday.

In neighboring Pakistan, a suicide bomber killed eight people at a hospital emergency room in the city of Quetta. They were Shia Muslims mourning a man killed earlier in the day.