I had hoped that the SPI hearings on Wamu could, on the condition if Killinger can win a few key points about Wamu's financial and business conditions (solvent and on the mend), help us neutralize the political clout of fdic and jpm so that the Court can have greater freedom to decide the outcome of the case independently. Well, that did not happen. Killinger held his ground at the hearing. But it was clear to me Levin was more sympathetic with the fdic's points of view. The testimonies by Killinger, Reich, and Bowman, as well as released exhibits/emails, nonetheless, raised plenty of questions and doubts about the fdic's actions in the final days of Wamu bank. Those materials will likely benefit the shareholders' cause.
The subsequent events were even more interesting. On the same day the SPI grilled the regulators on Wamu, SEC filed fraud charges against Goldman Sachs. Then in the following week, Levin's committee put a show of grilling Goldman's executives on TV for more than 8 hours. The keywords here are "public perception" and "Wall St. vs. Main Street". Fraud charges against the firm may or may not be materialized until the Court can prove it one way or the other. But the perception is certainly very bad, not only about Goldman, but all Wall St. bankers. Deception, betting against your own clients, shorting the housing industry to benefit a few, etc., painted a very dramatic and bad picture of Wall St. vs. Main Street. It raised not only concerns/questions but also anger over Wall St.
In this political climate, it's hard for any politicians to side with major Wall Street banks directly or indirectly. Because of the clear failure of government regulators, it's also difficult for regulators such as fdic to seek political cover for themselves. No more favors for either of them. The intimidating political clout enjoyed by jpm and fdic, in my view, were somehow diffused by the current events surrounding Goldman and Sachs.
Mr. Susman and his team may just happen to come on board at the right time. It's absolutely a masterpiece for Susman and the EC to waste no time to file the motion for the appointment of the Examiner to investigate every suspicious parties in Wamu case including wmi BD, weil&co., jpm and fdic. In the current political climate, it's hard to argue against any legitimate investigations into the housing bubble, financial frauds and regulators' responsibilities. I was initially intrigued by THJMW's speedy decision to grant the motion to shorten the time for Examiner hearing. Now I realized, the Judge is a master on political maneuverings herself. She must sensed that this is the right moment to expedite the hearing on the motion for the appointment of an examiner for the case of the "largest bank failure" in u.s. history, and certainly wasted no time to do it.
I'm not sure how long this political climate will last. But at the moment, it favors the EC's motion for the examiner. It's just that so hard for Rosen to argue against it. We shall know soon.
