WAMU Sues FDIC for $6.5 Billion
Now ain’t this a bitch?
Washington Mutual’s holding company is suing federal regulators for billions of dollars, saying the firesale of the bank’s assets to JPMorgan Chase violated its rights. The lawsuit was filed Friday in federal court against the Federal Deposit Insurance Corp., which seized the Seattle-based savings and loan in September. It was the largest bank failure in U.S. history.
Lawyers for the holding company, Washington Mutual Inc., argue that the bank was worth more than the $1.9 billion JPMorgan paid for it in a deal arranged by the FDIC. The lawsuit argues that if WaMu’s assets had been liquidated prudently, they would have been worth more than that.
An FDIC spokesman did not immediately return a call seeking comment Saturday.
At what point do you just liquidate every last one of these sons of bitches — and throw their management in jail?
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Sources:
Washington Mutual sues FDIC for over $13 billion
Reuters, Sat Mar 21, 2009 1:49pm EDT
http://www.reuters.com/article/newsOne/idUSTRE52K1K620090321
WaMu holding company sues FDIC over bank seizure
AP, Sat Mar 21, 7:05 pm ET
http://news.yahoo.com/s/ap/20090321/ap_on_bi_ge/wamu_lawsuit
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March 21st, 2009 at 11:39 pm
At what point do you just liquidate every last one of these sons of bitches — and throw their management in jail?
And why hasn’t it happened already?
March 21st, 2009 at 11:51 pm
hmmm – if the “assets were liquidated properly”……
Hopefully WAMU will win this suit (against the American Taxpayer). If they do it will simply add fuel to the seething fire that is burning within the country.
You see, NOTHING – NOTHING is going to happen – there will be no consequences for any of the fraudulent preference bailouts that have occurred or the raping of our grandchildren’s heritage by Wallstreet.
Our lawmakers (generally) are going to do nothing – President Obama (has already proven by his appointments so far) that he is going to do nothing (and that is NOT a political statement). Mainstream media is going to do nothing – SO who is going to do anything. Normal Americans won’t – unless we are so outraged at what is happening that we snap…..SO WAMU – please win your lawsuit. It will get us one step closer to where we need to be….
March 21st, 2009 at 11:58 pm
Add WaMu’s management to the tar and feather list.
March 22nd, 2009 at 12:11 am
You would think bankers more than anybody would realize how quickly one’s world can fall apart. Lesson: when in hole, stop digging.
March 22nd, 2009 at 12:21 am
The thing is WAMU is probably right. This was another one of the government’s backdoor bailouts. They took advantage of the situation to help JPM
March 22nd, 2009 at 12:33 am
Sounds like WAMU is jealous of CITI/BoA and all the other banks getting bail out money? Why weren’t we big enough to fail??
Another argument for letting banks file for chapter 11. You won’t have a discussion over the price of the company.
March 22nd, 2009 at 12:54 am
And to think Congress is focusing on CEO salaries. I think Congress has much bigger issues that need to be dealt with at the moment.
March 22nd, 2009 at 1:15 am
And where is the blogosphere’s rage at AIG for suing the US government (their majority shareholder) for back taxes?
A.I.G. Sues U.S. for Return of $306 Million in Tax Payments
http://dealbook.blogs.nytimes.com/2009/03/20/aig-sues-us-for-return-of-306-million-in-tax-payments/
No one is covering this and it’s 1000x times more outrageous than the bonus headfake. Why can’t Tiny Tim just call up Liddy and say “No, you’re not suing us, I own you, STFU.”? Would that be so hard?
March 22nd, 2009 at 1:20 am
OT:
the QOTD:
“Do you know the only thing that gives me pleasure? It is to see my dividends coming in.” —John D. Rockefeller
more peeps should, while they still have access, take a 1/2-1 hour with their fave web-searcher, and find out how true that quote really is..
March 22nd, 2009 at 1:53 am
C’mon, Mark! If you have the fish handy, must we each pick up our rods for that one?? Do tell. Do tell. :-)
March 22nd, 2009 at 1:57 am
wunsa-
“Teach a Man to Fish, He eats for a Lifetime.”…
http://www.topfishingsecrets.com/
March 22nd, 2009 at 2:02 am
>> And to think Congress is focusing on CEO salaries.
For years, finance professors pointed to corporate managers running companies for themselves instead of for shareholders. “Executive pay out of proportion to contribution” is what enticed corporate execs to create the present problem. The rest of society is too important for that issue to go unexamined.
E.g., Japanese automakers have no problems hiring good managers for less. As an investor and laborer, I look forward to some kind of change in American corporate management.
March 22nd, 2009 at 2:04 am
C’mon, Mark. We know that… I guess my banter didn’t persuade you to cough up the goods. Oh well… ;-)
Signing off to study. ‘nite.
March 22nd, 2009 at 3:06 am
Hoooyaaaah. WAMU! Go for it.
It’s about OPM. DUH.
RTC II. Assets being sold to insiders for pennies on the dollar.
Ask Hillary. Her little stint at the little law firm served a few people quite nicely.
Anyone that thinks this is a straight game needs to crawl back into the time capsule and set the dial back about one million years.
March 22nd, 2009 at 3:07 am
BO is quickly turning out to be Clinton II.
March 22nd, 2009 at 3:29 am
USP@BO is quickly turning out to be Clinton II.
But with his di*k in his pocket. At least so far!!
March 22nd, 2009 at 3:58 am
re “At what point do you just liquidate every last one of these sons of bitches — and throw their management in jail?”
Amen.
March 22nd, 2009 at 6:01 am
All I know is right after the takeover a source at WAMU internal audit dept told me that WAMU was still making money but, because of a “mild” run on the bank they were about to tap FDIC and FDIC was running out of funds so they took them over and sold them to JPM rather than FDIC asking for more funding to bail them out.
March 22nd, 2009 at 6:47 am
“At what point do you just liquidate every last one of these sons of bitches — and throw their management in jail?”
Now that the attorneys have arrived the fun really starts. Every morsel will be picked clean.
March 22nd, 2009 at 7:21 am
Financial terrorism is what this is. Too bad we can’t declare the SOB’s enemy combatants.
I hope any prudent judge throws the case out.
These people are all parasites at this point.
Free Market Capitalism is displaying more contradictions with each passing day.
March 22nd, 2009 at 7:45 am
Whose cooked books are they using to come up with this figure? If we had an SEC or Justice Department with fortitude to take on the bankers, they could find something in the law to file a countersuit against the management of WAMU.
March 22nd, 2009 at 8:12 am
Not surprising..
These entities are insolvent. Two administrations have told them we will keep you alive.
Frankenstein’s monster behaved the same way….
If your child sees you are a p###y, they will misbehave too, until you earn their respect.
Expect more of this…why not, when you are misbehaving, and every day is STILL Christmas?
March 22nd, 2009 at 8:42 am
http://video.aol.com/video-detail/from-ceo-to-delivering-pizza/2269814123
These CEO’s need to realize things could get a lot worse….
March 22nd, 2009 at 8:50 am
More proof that the US is not going to bounce back for a while.
March 22nd, 2009 at 8:57 am
And another thing…if your mutual fund has lost half your net worth, then by definition, they have less money under management. What to do? Well, why not increase management fees?
http://www.marketwatch.com/news/story/Mutual-funds-hike-fees-adding/story.aspx?guid=%7B1687B296%2DDEB3%2D4F08%2DBF0C%2DAD5D0BBB14D8%7D
After stocks’ plunge, fund investors hit with double whammy as charges rise
…Bizarro world….
March 22nd, 2009 at 9:34 am
Somehow I don’t think this lawsuit is going anywhere since WAMU was clearly insolvent and the FDIC has a statutory right to seize insolvent banking institutions and dispose of them as it thinks fit.
March 22nd, 2009 at 10:07 am
Jail… exactly… and there’s plenty of space available in the three office buildings WAMU left empty in Seattle.
March 22nd, 2009 at 10:40 am
USPhoenix:
I never had to worry about whether I would have a roof over my head or enough money this week for beans and rice during the “bad old days” of the Clinton years. So if your comment is meant to be an insult…it’s not.
And as to this lawsuit…The chances of it succeeding are exactly zero. BR is correct that management should be drawn and quartered for filing this frivolous lawsuit. The court system is NOT going to get involved in the minutiae of deciding which rescued banks needed to be saved and which didn’t. Courts will recognize that these decisions are made in a pressure-cooker where a 4 hour delay could actually cause the collapse of the world banking system.
March 22nd, 2009 at 10:45 am
“Teach a Man to Fish, He eats for a Lifetime
Not if Dow Chemical poisoned the river, which they did.
March 22nd, 2009 at 11:12 am
There will be waves of lawsuits about these backdoor, minimally documented, weekend shotgun marriages and I expect Treasury and the Fed will also be sued and I hope Paulson, Bernanke and Geithner are also personally named. Hopefully we’ll eventually find out at least some of the truth.
March 22nd, 2009 at 12:32 pm
Suggestion: OpEd piece for NYT, suggesting just that.
March 22nd, 2009 at 4:52 pm
You fly to DC to talk to the FDIC. They say you need to work on your capital position.
You get back on the plane to Seattle.
You land to find out that while you were in the air the FDIC seized the bank.
That is BULLSHIT.
March 22nd, 2009 at 5:20 pm
Lawyers….
Enough said.
March 22nd, 2009 at 8:12 pm
@franklin411: the point was not how bad the Clinton days were, it was how corrupt they were.
Yeah, sure everyone prospered until the wheels came off. So everyone wants to pin it on Bush, and everyone was so, so happy while BC was in office.
Now they get to pay.
March 22nd, 2009 at 8:35 pm
I find it hard to believe that the judge would even let this go to trial.
I suppose everyone thinks that getting their hands on taxpayer money is now an entitlement.
March 23rd, 2009 at 12:20 am
You’re missing the point. What the FDIC did to WMI, the former holding company of Washington Mutual bank is similar to the following.
You get stopped for drunk driving. The cops impound your car, which they have a legal right to do. Then they confiscate yoru bank accounts. Then they take your wife’s car. Then they take your children. Then… they hold a government auction and sell your car for peanuts and throw in all of the stuff they had no right taking.
There’s a lot more to it that you can read about at http://wamustory.com. But seriously, this lawsuit has little to do with the bank failure and much to do with the FDIC breaking a multitude of their own rules and regulations, including fraudulent tranfers of money and assets from the holding company to ensure JPM stayed solvent.
Just because someone is frustrated with the crooks on wall street doesn’t make it ok for agencies like the FDIC to rape and pillage as they break laws in a scorched Earth like liquidation firesale.
And for the record, WaMu was trying to sell itself… and the FDIC went behind their back and told JPM they were going to seize the bank and instead of allowing WaMu to sell the banks, thus salvaging the bondholders and shareholders, they handed JPM the whole deal for peanuts… which functioned as a wonderful little wipeout of the middle class.
Don’t take my word for any of this… do your own research. http://Wamustory.com is a great place to start.
March 23rd, 2009 at 12:35 am
Maybe, maybe, maybe…the moment we start generally restoring law after all the other #$@#$#@ crimes we’ve been subjected to over the last eight years.
March 23rd, 2009 at 11:11 am
Likely this is a derivative action – launched by shareholders – not management. Does this affect your view?
April 4th, 2009 at 1:27 pm
It’s my understanding that the WMI lawyers have requested a Jury Trial. I hope that they (Weil, Gotshal & Manges) get it and examine (under oath); Paulson, Bair, OTS Officials & Dimon. I expect them to go for triple damages when it’s proven that the FDIC knowingly (or out of negligence, doesn’t matter) gifted more than the “whole bank” to JPM(c) (Providian for example). I’m not a lawyer but it’s obvious to me that JPMC’s recent Proof of Claim was a joke and a mockery of Judge Walrath’s order.
Abraham Lincoln (attributed): “You can fool some of the people all of the time, and all of the people some of the time, but you can not fool all of the people all of the time.”
It’s that simple folks – FDIC/JPM wants you to believe all was well with the fire-sale of WAMU but the truth is: The FDIC has no idea what they conveyed to JPM and as a result has recently resorted to claims of mismanagement and underfunding in an attempt to “thump their chest in public” even though their own sister agency (OTS) was in the WAMU books for months and said WAMU was well capitalized. And JPM while on one hand says (in public mind you) they paid fair value for the assets of WAMU and their purchase of WAMU brought great relief to JPM and its shareholders (you’d have to read JPM’s Shareholders PR), JPM contradicts itself in its own pleadings to the court saying that if there is a reversal of sorts – JPM stands to lose Billions (with an s) not 1.9 Billion…
I hope and hope for a jury trial – the good thing about Bankruptcy court is that they follow the the letter of the law to a “T”. We may not get triple damages but Paulson, Bair and Dimon will be severely damaged by their own words and actions – God Bless America.
April 5th, 2009 at 1:49 am
The outrage is that JPM had the nerve to report over a $1B gain for the fourth quarter based on buying WaMu for less than fair value.
Look at this footnote in their FULL-YEAR 2008 earnings release dated 1/15/2009:
(b) JPMorgan Chase acquired the banking operations of Washington Mutual Bank for $1.9 billion. The fair value of the net assets acquired exceeded the purchase price which resulted in negative goodwill.
In accordance with SFAS 141, nonfinancial assets that are not held-for-sale were written down against that negative goodwill. The negative goodwill that remained after writing down nonfinancial assets was
recognized as an extraordinary gain.