WASHINGTON (Reuters) – Former Washington Mutual Chief Executive Kerry Killinger charged regulators unfairly seized the thrift in September 2008, even as the head of a congressional panel accused the savings and loan of creating a "mortgage time bomb" in its quest for profits.

In prepared testimony before the Senate Permanent Subcommittee on Investigations, Killinger said that while the company suffered from rising loan losses, it was working its way through the financial crisis.

"It was with great shock and sadness that I read of the seizure and bargain sale of Washington Mutual on September 25, 2008," he said. JPMorgan Chase & Co bought WaMu's banking operations from regulators for $1.9 billion.

Killinger, who was paid more than $100 million between 2003 and 2008, was forced out in 2008, just weeks before the bank was seized.

Senator Carl Levin, the chairman of subcommittee, blasted the bank's management for ignoring warning signs that bank employees often disregarded the bank's credit standards.

Levin told reporters on yeMonday that he would leave it up to the US Department of Justice whether any executives at Washington Mutual should be charged with criminal wrongdoing.

Levin's panel found that the thrift contributed to the financial crisis by making hundreds of billions of dollars in shoddy loans – many lacking documentation or based on fraudulent paperwork – that were packaged and sold to investors as mortgage-backed securities.

"To keep that conveyor belt running and feed the securitisation machine on Wall Street, Washington Mutual engaged in lending practices that created a mortgage time bomb," Levin said yesterday in opening the hearing.