U. S. Senate investigators has said that Washington Mutual executives made sub-prime home loans they knew were likely to fail and then bundled them into risky instruments.

The Los Angeles Times has reported that documentation released Monday by the Senate Permanent Committee on Investigations indicate WaMu executives knew in 2006 of trouble within the company's sub-prime unit, based in Southern California.

The documents included internal e-mails and reports quoting WaMu executives as saying the sub-prime subsidiary firm Long Beach Mortgage Corp. was "a real problem" for the bank.

David Schneider, WaMu's former president of home loans, wrote in an e-mail sent in December 2006, the newspaper said, "Short story is this is not good. We are all rapidly losing credibility as a management team."

Subcommittee Chairman Sen. Carl Levin, D-Mich., said the bank's home mortgage operation was "a conveyor belt that dumped toxic mortgage assets into the financial system like a polluter dumping poison into a river."

Levin said, "Using a toxic mix of high-risk lending, lax controls, and destructive compensation policies, Washington Mutual flooded the market with shoddy loans and securities that went bad. As the debate on financial reform begins, it is critical to acknowledge that the financial crisis was not a natural disaster, it was a man-made economic assault."

Washington Mutual collapsed in 2008 in the largest bank failure in American history.

The Times further said that former WaMu executives are scheduled to testify Tuesday on Capitol Hill, followed by regulators later in the week. The Office of Thrift Supervision and the Federal Deposit The newspaper also said that Insurance Corp. is expected to issue a report Friday blaming regulators for the failure. (With Inputs from Agencies)