Did the FDIC Sabotage WaMu's Management and Erode Investor Confidence? 72 comments
Michael Steinberg
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FDIC Chairwoman Sheila C. Bair, together with JPMorgan Chase (JPM) CEO Jamie Dimon shared the spotlight for saving Washington Mutual (WM) depositors without costing the government a dime. The story is old by now; JPM got the good and the bad of the bank without the holding company’s ugly debt. (Think Clint Eastwood.)
After the glory fades, the reality will come out that the FDIC cannot be trusted. JPM and others were conducting real negotiations with the FDIC at the same time they were conducting fake negotiations with WaMu’s management. During the consummation conference call, Jamie Dimon disclosed that JPM had unprecedented access to WaMu’s mortgage detail. JPM received computer tapes with the most granular mortgage detail (FICO scores, LTVs, and MSAs) to compare with their own data and develop loss projections. JPM had the time to do a true bottom up analysis.
I do not know if it is common FDIC practice to negotiate the sale of a to be closed bank without informing management. But in this case, it sabotaged WaMu’s effort to sell its valuable branch system. I also do not know when the FDIC undercut WaMu’s management. Was it before or after the fall of Lehman? WaMu started to face a bank run on September 15 – the day Lehman filed for Chapter 11.
The FDIC alone could be proud of its accomplishment, but in the overall context they further eroded investor confidence. Now the moral hazard has spread beyond equity holders to bond holders. While WaMu had been slowly losing deposits, the fall of Lehman and subsequent nonstop media coverage accelerated withdraws. The $16.7B (9%) deposit loss since September 15 alarmed regulators.
We are on the cusp “investing” $700B in government money to liquefy toxic bank assets and rebuild investor confidence. We got here through a series of miscalculated idealistic policies based on moral hazard. At this juncture moral hazard has proved extremely expensive with little investor confidence to show for it. Surely backstopping a Barclays (BCS) purchase of all of Lehman and a JPM purchase of all of WaMu would have bought a great deal of investor confidence at a cost far less than $700B.
Where does this leave Wachovia (WB)? The stock market and the media would have us believe that the vultures (the mode of JPM) will wait for the FDIC to serve them the carcass. There are many reasons why it is not in the best interest of the government to let that happen. Beyond the shock to investor confidence, the United States should not be limited to a handful of mega banks. JPM, Bank of America (BAC) and Citigroup (C) need competition.
The Paulson/Bernanke team has not been very pragmatic in creating value in the form of investor confidence for their bailout money. Punishing or killing shareholders and now bond holders have proved very expensive to the government. With each new implementation of moral hazard, the government has to lay out more money to lift investor confidence. The latest trade off – forgoing possibly $60B in Lehman and WaMu backstops created the need for Paulson’s $700B market maker fund.
If the government lets another large financial or insurance institution fail, or severely punishes their shareholders, Paulson's $700B slush fund would be the same as you know what in the wind. Proactively, the most cost effective thing the government can do to prevent bank runs is to raise the FDIC insurance limit from $100K to at least $1M for individuals and $5M for businesses.
Disclosure: Author is long BAC, C, JPM and WB.
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This article has 72 comments:
On 09/17/08, 'U.S. regulators' publicized the need to sell WaMu despite WaMu's executive team claimed their reserve balances were adequate. At this moment, the run on the bank occurred. Either WaMu's executive team mislead shareholders, customers and its own employees about their reserve balance or these 'U.S. regulators' panicked and created an environment that eroded WaMu's deposits.
Do shareholders and employees harmed from this event have the right to file for damages against these 'U.S. regulators'? I hope a thorough investigation is done by an unbiased institution to chronically identify what really caused the largest bank failure. It's in the county's best interest.
What about the $700B bailout, does it protect innocent employees damaged from this event? Rather, it seems to reward and protect home buyers unqualified to buy a home. There seems to be some kind of social injustice if this is the case.
The news media and the govt kept saying how they saved wamu. When in fact it was a bank robbery the kind they put hooded crooks in jail for.
Some palms and pockets were greased on that deal.
jpmorganchase will most likely make billions on the deal.
But the main street small investors the govt has been saying they wanted to protect just got screwed .
The issue of Citi, JPMorgan and US Bank getting too big is real. But right now it is a good thing that these scavengers are around to help clean up the dead animals rather than let them fester and spread disease.
If we end up with an oligopoly in the banking system Congress and the states will have to get busy with some regulations to reduce the danger of that sort of financial structure.
I understand the FDIC reasons but don't you think they could have held out until the bailout? One more day? Don't you think stockholders should have been protected? The CEO was telling the world WM would survive, the FDIC pulled the plug unnecessarily. Never before has a bank of this magnitude been taken out under such terms. Te bank would have survived. The stockholders were raped by hte government.
The events in the financial markets in the past few weeks have however motivated me to stray from my prime area of interest.
Specifically, I was appalled at the seizure of Washington Mutual (WaMu) by the FDIC acting at the behest of the Office of Thrift Supervision (OTS).
I want to say upfront, that I had stock in WaMu, so I do have an axe to grind as I incurred losses after the seizure as the bank’s common stock plunged to 16c after the news. Washington Mutual has since filed for bankruptcy protection.
My interest goes much farther however than the loss of invested funds. My concern revolves around the events leading up to the seizure. Events which were orchestrated in the media, in the trading of the stock on the NYSE, statements by analysts covering the stock, statements by the bank’s management, the oblivious regulatory response by the SEC, demeaning and derogatory comments by the likes of CNBC’s Jim Cramer and the “head in the sand” approach by the touted David Faber, also of CNBC.
I want to try and stay on track with this piece and not wax philosophical, or at least hold those musings to a minimum. Also, I wish to hold the length of this article to a reasonable length while still conveying the salient points as I see them. I will also be asking all concerned citizens, (not just shareholders) to become proactive in voicing their concerns on this matter.
The prime concern
The overriding issue in this rather sorry tale boils down to some very simple questions.
1. Was OTS justified in requesting FDIC seize WaMu?
2. Did FDIC act properly in its seizure of WaMu?
3. Who (if anyone) had advance notice of the FDIC auction of WaMu and exactly when were they notified?
4. Why was this “auction” conducted on a Thursday night, when the “normal” procedure in closures almost universally occurs on a Friday to enable FDIC time to review the books of the seized entity over a weekend?
5. Why was this seizure initiated immediately AFTER media reports of a possible “bailout” deal by the Congress?
6. Who at FDIC determined that the sum of 1.99 billion dollars paid by JP Morgan-Chase was an adequate figure to acquire the assets of WaMu, whose deposit base alone at the time stood at approximate 129 billion dollars?
7. What motivated OTS to determine that the withdrawal of deposited funds (mainly by those with more than $100,000 in their accounts) constituted a true “run on the banks deposits” and not possibly an orchestrated event?
8. What decision making process was employed in considering the possible cascade effect of the premature seizure upon other pending bank acquisitions?
A myriad of other questions
There are of course a myriad of other questions which hang over this deal by FDIC. For the sake of brevity I will omit them at this writing as the above eight should spur the needed concern
Our Politicians are so wrapped up in the election that they are willing to give away the country even if the people do not want the 700M investment or what some say is a bail out. And at a time when all this could have been avoided if the government would have gone away from the market to market accounting rule they recently put in place, along with the removal of the uptick rule in August of 2007 and changing the rule to let banks go to a 30:1 or 40:1 ratio on lending, not to mention their quest to put everyone in a house even if they couldn't afford it. Yes we can thank our government for our problems today. These things are just not Bush, they are heavily the Congress. The Markets can work if government would put the rules back in place that were there before they changed them..., you know the rules that were put in just after the 1929 Depression and only recently changed, and thus the real cause of what is happening today. My only recommendations are not to vote for any of these people up for re-election and vote for a third party in the Presidential election, that is if you really want change. Our Country is heading in the wrong direction and unfortunately neither of the Presidential Canidates has an answer, nor will change anything. You see..., Both Dems and Reps have joinded into one party and that my friends is the only change you will see from them, no matter what they tell you.
Moral hazard happens when the government does not allow investors/risk takers to see their investments fail. With WaMu and Lehman they did. That is what the investor bargained for.
To the contrary, with Fannie/Freddie, the gov't wrongly protected the bondholders who had no explicit govt guaranty. This creates moral hazard.
Who trained or taught these people that the govt should protect investors in America? Where does this nonsense, this expectation come from?Can someone answer this?
WaMu bondholders were shafted. They will get zero for their once-legal primary claim to company assets as collateral for the money they loaned the business. If the FDIC had waited until a bailout bondholders would be fully protected. Hard-earned money, invested and lost for political expediency. (Unlike AIG bondholders who will be fully repaid. Go figure.)
We are witnessing the essence of government laid bare. Property rights ignored and trashed for purposes the government thinks best. I have read that regulators are now saying that AIG shareholders won't even be allowed to vote on the takeover by the FED. It's a fait accompli, whether they like it or not.
Welcome to the new world of investing. If you put your money in the shares or bonds of a company and you read about it in the headlines, you better think hard about selling out before the government decides you don't deserve to get anything back.
I'm sure that will help boost the dwindling TRUST in the market.
If you don't already have a couple month's worth of living expenses squirreled away in cash you might want to think about doing so before your bank is 'assimilated' for government purposes. Who knows, you may be forced to stand in a very long line at an ATM every day just to get by.
Caveat Emptor
We do not invest on the premise that the FDIC would do what it did - pillage and rape the investors
This is the largest open effort to move America toward Socalists Democracy in the history of the planet. So few reall see the true picture. It shows in their writings. It is telling in their statements.
There is so much at stake here for the sole of "LIBERTY" . It could very well be said Liberty lost. Because that is just what has happened. A capitolists system will not work unless there is allowable failure. When the Banking system poured 100s of millions into changing Bankrupcy laws, this is what started the ball rolling in their direction. Looks as though they have won. American citizens defeated again. Send Liberty to the scrap yard.
JPM knew what WM was worth and took advantage of the situation to take anything of value for free. They knew there was a plan in the works that would give them the opportunity to offload the mortgages they told the FDIC they would have to write down. As soon as congress signs, JPM can move a big chunk of the 30 Billion from the loss column to the profit.
Shareholders in the mean time get wiped out and debt holders get nothing. The 30 Billion would have allowed most that lost to walk away with their dignity. This is criminal and even the most casual observer knows it.
Then regulators finish the job at shareholder expense. I am long AIG and watched in wonder as the facts about the deal made by the board flopped around to where the shareholders had no vote.
I bought some WM as a speculative gamble but bailed out when it became apparent the FDIC was closing in - once you get burned for 80% that is an education in how the current regulatory regime operates.
The FDIC did what they should have done. In the face of existing facts and reality, they brought in a strong substitute quickly, and avoided further runs and losses. However we got to this point might be inappropriate, but they needed to deal with today, not yesterday.
So, welcome WAWHO and farewell WAMU - RIP.
"Analysts said the settlement was an embarrassment for the F.D.I.C., which was criticized by First City officials when it closed the bank as they were putting the final touches on a $400 million recapitalization plan."
"In hindsight, it looks like the F.D.I.C. acted too hastily," said Frank W. Anderson, an analyst with Stephens Inc. "It's unusual for them to settle so quickly."
PRECIDENT SETTING CASE >>>
query.nytimes.com/gst/...
Originally published by Nutzworld.com:
While the markets were closed, and the Chairman of Washington Mutual was on a flight from New York to Seattle, the largest theft in US history took place. Although there has been negative news about the financial stocks for the past few months, including Washington Mutual,the FDIC and Washington Mutual repeated assurances that the bank was in good shape through 2010 over and over and the fact that WaMu met it's daily requirements. If that is the case, the seizure and immediate for profit sale of WAMU to JP Morgan Chase raises many questions.
This isn't so much about the failure of WAMU, as that may have happened eventually anyway, but suddenly the FDIC has become a for profit institution taking over and selling off a company for 1.9 Billion dollars. This is unprecedented in many ways, and in many ways probably illegal. The shareholders own WAMU, not the FDIC. Yes, the FDIC regulates banking, however shareholders own the company. WAMU could have literally gone bankrupt and sold off chairs, computers, land etc and shareholders would have received some portion of compensation. In this seizure, Chase gets the assets and deposits at a bargain, the FDIC gets 1.9 Billion dollars and shareholders get nothing. It is literally something you might think would happen in Nazi Germany, not the United States.
It seems as if these failures are following a pattern that we are seeing over and over. First, short sellers work to smear the bank's reputation. Major media outlets join the fray. Analysts downgrade. Ratings agencies follow with downgrades. Cost of insurance skyrockets creating self-fulfilling prophecy. The Bank forced to come up with reserve capital to please ratings agencies. Dilution of shareholder equity at sale prices. Share price falls further triggering more downgrades from above-mentioned entities. The Media really starts to salivate now and creates all kinds of instability with doom and gloom, and seem outright gleeful about it. Then institutions and high net worth individuals begin pulling deposits out of the targeted bank. Further ratings agencies downgrades. The media then creates a self fulfilling prophesy with constant reporting of doom and gloom and individuals also pull their money out of the targeted bank. Then the FDIC having all the ammunition it needs steps in and seizes the bank assets and sells them to whoever they are in bed with that week.
Basically the government decided that they liked JP Morgan Chase so much as an institution that they would gift them this company.
It's worse than that though, last week Goldman Sachs upgraded WM to hold knowing all of this was going on. Serious misrepresentation of the facts. The story told to the public was that Goldman was supposed to be brokering a sale. This at the expense of average Americans. Sure there are a lot of institutions that owned shares in WAMU, but there are an incredible amount of average Americans who had large portions of their retirements tied up in WAMU stock. Without that upgrade, many may not have kept the stock through this trouble. Some are now threatening suicide. Families are breaking up. People have lost everything. How can the American public not be safe investing in an American Bank. A bank that owns assets, that had a large deposit base and that stated it could sustain life until 2010.
That doesn't even begin to mention that by next week the whole dynamics of WM could change for the better with the government bailout coming. Stock could have increased in value once the toxic paper was taken from WM. More liquidity would have been available. The 2010 deadline would be extended to many more years once the toxic paper was removed. This was not a bank in trouble in any of the standards that have been repeated over the last eighty years.
You really want to get upset about it, take a look at the aftermarket trading volume. Before any of this was announced, there were three very large trades in the early aftermarket, in a three minute period totaling almost 13 million shares. The FDIC and the markets allowed someone to get inside and make away with some 12 million dollars. There is no way that trading should not have been suspended before this was allowed to happen, just another case of corruption and manipulation by the government and large institutions.
Possibly the most damaging could be what this could do to the American psyche as a whole. The corruption in the system has just killed the morale and spirit of many people. They have no trust in Wall Street, the financial system, politics and the future of America! Corruption, short selling, manipulation of stock, and abusive ratings downgrades are all responsible for bringing this company down to the point that this could happen, and then a corrupt government agency cherry picked a bargain for their buddies at JPMorgan who get a huge upside. The FDIC facilitated a transaction that was so corrupt and damaging words cannot properly describe it.
In the end, it is the system as a whole that will lose, as the average American can no longer trust not only it's banking industry, or Wall Street, but apparently it's government anymore.
Disclosure: I am a (former) WaMu employee, but one who had nothing to do with the mortgage business.
Point one: Yes - management was not the best I've seen. But the reality is, WaMu was a thrift, which meant it was REQUIRED to hold mortgages on its balance sheet... as at least 80% of assets.
Yes, there was some toxic stuff, but not severely disproportionate to the industry overall. The bottom line - - this was caused by a housing bubble. No management, smart, dumb, greedy, or honest with a $300B mortgage book that could not be offset by other types of assets was going to survive a housing price crash of this magnitude. Period.
Point Two: Yes, The FDIC's actions have been unconcionable. In fact, the rumor was out in the street that regulators lost confidence in WaMu a couple weeks ago, and were pushing for a sale (a rumour that happened to be true) which led to the final crash in the stock price and accelerated deposit withdrawls. It was this... an old fashioned run on the bank... that caused the collapse.
In theory, the FDIC is supposed to support public confidence in the safety of their deposits, not to undercut it. And again, no bank regardless of the management or size, can survive losing over a billions in deposits a day for long. None. Not BAC, not C, and no, not JPM.
Point three:
If you are an investor if any kind, secured, unsecured, equity or debt in any depository institution in the US, the only lesson to draw is that your capital is not welcome.
I am extremely angry about the FDIC seizing Washington Mutual just before the bailout plan was to be passed.
The CEO, Alan Fishman, stated as of Monday, Sept 22nd, in a letter to shareholders that the company's liquidity was above the minimum for well capitalized banks. This company had $380 B in assets, $143 B in deposits and earned $2 B per quarter on interest income. Fishman said the company had access to $50 B in cash if necessary. Fishman said the company was in better shape than being reported numerous times, and also said Wamu could sustain operations thru 2010.
Here is an email received from the Investor Relations Dept. just 30 mins before the FDIC/JPM announcement came out on Thursday!
Concerned Shareholder:
Thank you for your interest and genuine concern. We know that WaMu has been in the press lately and we appreciate your questions, but we have a long-standing policy of not commenting on media stories.
WaMu has strong fundamentals with an ample supply of funds on hand to meet the needs of our customers and our day-to-day operations. WaMu's business is funded largely through its deposits, and we also have access to billions of dollars from the Federal Home Loan Bank system. Our capital ratios continue to be well in excess of the levels that government regulators require of "well capitalized" institutions.
As the stock price continues to see pressure, management is working hard to restore investor and customer confidence. For your reassurance, attached is our CEO Alan Fishman's personal letter in which he reiterates his belief in the strength of our company.
We're enouraged by the direction of the plan proposed by the President, Treasury and the Federal Reserve to support the troubled financial markets. We look forward to seeing the details as the plan is further developed by Congress. This plan should assist in providing stability to our financial markets and should provide a mechanism for an orderly transition of troubled illiquid assets.
Sincerely,
The Washington Mutual Investor Relations Team
Why would the FDIC management decide they are going to wipe out shareholders without any prior notice? ... Because "The FED" is actually a private company controlled by the "Power Elite" bankers, of which JPMorgan is one of the original members! Can you say "COLLUSION and CORRUPTION"!
WaMu was given away for $1.9 B not including the $31 B in debt JP Morgan will assume. The bailout bill will cover that debt making this purchase a sweetheart deal for $1.9 B.
Something here doesn't sit right with me or other shareholders. This was an orchestrated plan between the FDIC and JPMorgan to steal from the shareholders! A conspiricy to commit bank fraud, if you will!
In reality, it is the FDIC that is INSOLVENT! They are overleveraged!
The FDIC has already admitted that they kept these backdoor negotiations a secret! Imo, The FED, The FDIC, and JPMorgan are GUILTY of "Conspiracy to Commit Bank Fraud"!
**********************...
The great, late George Carlin sums it all up in 3 minutes.
www.youtube.com/watch?...
Paulson's motivation was clear: the "Bailout Bill" was in jeopardy and he wanted to creat another sensation to get the Congress to pass the bill. Shame on you Hank Paulson! Millions of investors and employees lost their life savings/retirements because of you. In two days from the seizure the bailout would have been complete and the outlook for Wamu would have been radically different; and you know it! You also did this as a way of paying back JPM for buying Bear Stearns; shame on you Hank! You can bet your butt that there will be millions of law suits over this one.
I'm with those who find the timing of the deed a little suspicious. The bailout deal falls apart in congress and suddenly there is a bank failure to spur things along. Not done Monday? Another bank failure on Tuesday.
For those of you who think things will be better after the bailout and the election, remember, the people who will be running things in congress will be the same losers who allowed this mess to develop (those campaign contributions were worth it!) and will allow it to develop again. It doesn't really matter who wins, they are all in the pockets of the corporate lobbyists. One of the fixes for this debacle is meaningful campaign finance reform, a ban on corporate political activity, especially campaign contributions.
I believe WB was (is) in a worse position, so why wasn't WB taken out?
The reason that the banks all pay an insurance fee is to that the FDIC will be thee to STOP a run. The way to do that is to advance the funds to the bank to pay the depositors as they make the withdrawals.
In this case the FDIC and the OTS were both derelict in performing thier obligations. They just confiscated the bank, wiping out all shareholders and all bondholders. What they really did was destroy any idea that anyone should ever invest in a bank. After months of claiming that WM was sound they confiscated it. The loans that WM had on the books were not the best. However, the cash flow from payments was much larger than the payments for deposits. That is why it was a sound bank, if weak.
American's MUST make a stand NOW against
THE NEW WORLD ORDER AGENDA!
If you don't believe that our Government is planning on rounding up and killing 90% of our population - here's the PROOF!
1) Halliburton Confirms Concentration Camps Already Constructed
www.libertyforlife.com...
2) Civilian Inmate Labor Program - Army Regulation 210—35
Confirming the government and the Army's plans for U.S. based Concentration Camps.
www.libertyforlife.com...
3) "ALL OF US in the CIA know ALL ABOUT the concentration camps in America and their purpose! We ALL KNOW that their purpose is to TERMINATE 'RESISTERS OF THE NEW WORLD ORDER' UNDER MARTIAL LAW!" - Michael Maholy, 20 years Naval Intelligence/CIA under BUSH SR)
www.youtube.com/watch?...
4) Former Inspector for Joint Chiefs of Staff explains how U.S. Citizens will be rounded up and sent to death camps. The plans and camps mirror Hitler's SS plans and implementations, correlating with the strong ties between the Bush's and Hitler.
www.libertyforlife.com...
5) More information, proof, maps, and state-by-state locations:
www.squidoo.com/usacon...
THIS IS NO JOKE!!!
Why do you think they don't care about bankrupting the social security fund and running up debt into the Trillions. They are currently extracting Billions for the taxpayers to support this corruption and evil!
I also found it interesting that the bailout bill has language saying that banks cannot sell their troubled assets to the taxpayers at a profit, but makes an exception for assets received through a merger or buyout (meaning that JPM will be allowed to sell WAMU's assets to the Treasury for a nice profit, AFTER the FDIC basically gave the assets to JPM for nothing). It simply boggles the mind. The government seizes private property, gives it to a corporate friend, and then buys it back from said friend at a higher price. Wow!
The run on the bank was caused by the media and not one agency thought of regulating them or to set the record straight... they let the run on the bank happen right in front of their eyes.
Former CEO Kerry Killinger was so selfish and dumb enough not to sell at $8 per share before turning to TPG and investors for money. He was too concerned about his own legacy and income that he forgot what his job functions were and who he wrote his paychecks. Oh and he was paid over $22 million in separation package.
And now Alan Fishman will get paid over $18 million dollars for three weeks of work? humm… since he failed to do his job as a CEO to secure the company... should he be compensated $18 millions?
Oh and Stephen Rotella (President and COO) is getting his $12 million plus package for doing what? Running WaMu into the grounds? This is on top of his millions in bonuses.
Are they serious? We need to stand up... Open up your eyes people... this just doesn’t happen over night.
Everyone in the executive team of WaMu should be held accountable along with the feds who led this take over without any recourse or consideration for the employees' retirements, public pensions and share holders.
But also look at the WaMu’s asset quality. JPMorgan is expecting to have write-downs of $30 billion out of the almost $180 billion Wamu mortgage portfolio.
investor.shareholder.c...
Investors shouldn’t complain when they knew the risk they were getting into when they bought the stock.
It is a ridiculous to blame the regulators for causing WaMu’s failure. I understand the lack of oversight and lax regulation argument, but I don’t understand how you can look at the WaMu recent poor underwriting and think that regulators caused it to fail.
WaMu’s last earning statement in second quarter 2008 was a net loss of $3.33 billion. WaMu a first quarter 2008 net loss was $1.14 billion. Its nonperforming assets to total asset ratio was at 3.6 percent in the second quarter 2008, up from 2.9 percent in the previous quarter and 2.2 in the further quarter 2007.
investors.wamu.com/Cac...
WaMu was a seriously struggling institution and needed to be saved. The FDIC is expected to have an $8.9 billion cost for the closing of IndyMac. So the fact that WaMu was 10 times larger, I think it is good that it was bought up by JPMorgan. The FDIC has only $45 billion in its deposit insurance fund. After that, it has a $30 billion line of credit from the Treasury. The last time the FDIC borrowed from the Treasury, it took two years to pay it back with interest.
Finally, the FDIC’s mission is to protect depositors, not shareholders/debt holders. Legally, they have to act in a manner that is least costly to the insurance fund. Maybe it might make investors responsible for caring more about the companies they buy stock in. I find a little funny that investors are crying for the government to have bailed them out for their bad investments. If you didn’t know the risk WaMu was, then you might be just as misinformed those individuals who cause bank runs because they think their insured deposits aren’t safe.
What do you think about the shareholders? Are they not tax payers?
A week later… FDIC takes over the bank.
I seriously think FDIC had this planned… Tricked everyone…
This seazure of WaMu by FDIC and selling for peanuts to JPMorgan was an overhasted and not well thought operation.
Why did FDIC have only some $42 billion resources, if they have some 170 banks on their warning list? They should have raised their customer bank fees long time ago, when this crisis became imminent, to add their resources to face the savings bailouts from banks, which go bankrupt. WaMu was NOT near a bankrupt, and OTS (supervising WaMu) was not alarmed to warn FDIC. The initiative came from FDIC and JPM - and the speed of the action and the result of it seem extremely suspicious. This seizure process must be examined thoroughly before people can be convinced it was fairly done, both technically and morally.
Otherwise this single operation will further weaken American people's trust STRONGLY in their authorities. It can be felt everywhere.
If you don't smell any wishy-washy in this WaMu seizure operation, wellcome to the WallStreet. You will soon learn.
"Maintaining Capital - In late 2006 and 2007, WMB began to build its capital level
through asset shrinkage and the sale of lower-yielding assets. In April 2008, WMI
received $7.0 billion of new capital from the issuance of common stock. Since
December 2007, WMI infused $6.5 billion into WMB. WMB met the wellcapitalized
standards through the date of receivership."
If wellcapitalized why did they need to be sold.
That effectively means that no company outside the group can raise capital. Only the big five will be able to raise capital to fund their purchases (at bargain basement prices).
If these are the smartest guys in the room, I'm in the wrong room.
There is a campaing underway to unite the wamu shareholders called savewamu.com
Please join and organize. We need more media coverage on the truth behind this centuries greatest bank robbery. And they weren't even wearing a mask.
1. Is WaMu going to sue the FDIC or are we (shareholders) going to sue
the FDIC?
2. Which Law Firm will represent WaMu or us (shareholders)?
Three weeks before J.P. Morgan bought WaMu's deposits for $1.9 billion, officials at the Federal Deposit Insurance Corp. called J.P. Morgan to say the FDIC was carefully monitoring WaMu and that a seizure of its assets was likely. The FDIC said it would want to immediately auction off WaMu's assets if a seizure was necessary, people familiar with the situation told Deal Journal.
J.P. Morgan was well-prepared, then, when the FDIC asked for bids Tuesday, Sept. ..."
online.wsj.com/article...
(1) Was WaMu insolvent at the time it was seized by FDIC?
(2) Was FDIC fund dangered by WaMu if the seizure did not happen for another week or two?
(3) Who is the biggest beneficiary: tax payer, WaMu customers, or FDIC?
Does anyone know where to get the facts about this seizure?
RememberWaMu
(1) Was WaMu insolvent at the time it was seized by FDIC?
(2) Was FDIC fund dangered by WaMu if the seizure did not happen for another week or two?
(3) Who is the biggest beneficiary: tax payer, WaMu customers, or JPM?
Does anyone know where to get the facts about this seizure?
RememberWaMu
Seems the only reason to shut down WaMu was to protect the FDIC from going under and reveal the fact that it can not make good on its, FDIC insured protection theme. For years the FDIC has wasted and under insured its assets. WaMu was indeed in no real risk
except for the risk created by the media, the FDIC, JPM and naked short selling.
This was in fact a bank robbery negotiated via the auspice of your government and its cronies.
I don't want to be called speculators and robbed by GOV institution. For many years there will be no confidence in investing. No rules, no trust , fear come back and 700bln couldn't save system. If nationalization happened it will feed fear of all system and this will lead to nationalization of all system. I think that happened in 30's.
> (1) Was WaMu insolvent at the time it was seized by FDIC?
Great question, insolvent no, liquidity problems yes.
> (2) Was FDIC fund dangered by WaMu if the seizure did not happen
> for another week or two?
I personsally do not think so, files.ots.treas.gov/48...
> (3) Who is the biggest beneficiary: tax payer, WaMu customers, or
> JPM? JPM of course, they get about $222B of assets for $1.9B which will come out of the $700B government package. What do you think? Tax payers are screwed regardless, look at the citibank bail out? Come on we the tax payers are on the hook for generations to come.
dailybriefing.blogs.fo.../
>
> Does anyone know where to get the facts about this seizure?
Try CNNmoney, Sept. issues and the FDIC web site and compare notes. Some one is not telling the truth, but government is allowed to do that. Good luck.
>
> RememberWaMu