Washington Mutual demanda a la FDIC por 17 billones US$ + daños

Washington Mutual Moves To Squash WaMu Bondholder Claims
By PEG BRICKLEY
Of DOW JONES DAILY BANKRUPTCY REVIEW

Washington Mutual Inc. (WAMUQ) opened up another front in the wide-ranging battle over the collapse of its prized thrift, Washington Mutual Bank, or WaMu--challenging the right of a group of WaMu bondholders to collect from its bankruptcy case.

WaMu's former parent filed for Chapter 11 protection in September 2008 after losing the thrift to a regulatory seizure. On Friday, the parent company moved to squash claims some WaMu bondholders filed in its bankruptcy case, saying they "simply have no legal right" to ask for payment.

The dispute between the parent company and investors in its lost subsidiary erupted in a filing with the U.S. Bankruptcy Court in Wilmington, Del. It comes as the parent company battles J.P. Morgan Chase & Co. (JPM), which bought WaMu, and the Federal Deposit Insurance Corp., which sold WaMu shortly after it was seized.

The FDIC is serving as receiver for WaMu and is responsible for finding money for the thrift's creditors, lawyers for the parent company said in arguing to have their claims thrown out.

If WaMu's bondholders have a claim to bring against the parent company, it's up to the FDIC to bring it, the parent company argued.

WaMu bondholders who are owed $3.7 billion say the parent company "looted" the thrift, leaving it short of capital and vulnerable at a time when the markets had turned against it. At court hearings, their attorneys have said WaMu bondholders are likely to have a gripe against the FDIC as well, because of its role in selling WaMu after the seizure. Thrift bondholders don't want to have to rely on the FDIC for payment, after it sold WaMu at "fire-sale" prices, attorneys have said.

The FDIC sold WaMu to J.P. Morgan for $1.9 billion, leaving two sets of bondholders fuming.

Parent-company bondholders are hoping for a solid payout in Chapter 11, where some $4 billion in parent-company bank deposits and tax refunds that could top $5 billion are at stake.

Washington Mutual's investors don't want to share what they get with WaMu's bondholders, described by the parent company as "sophisticated institutional investors." WaMu bondholders who filed the challenged claims include more than 35 insurance companies, investment funds and fund managers.

When they bought WaMu debt, the investors knew the parent company was making no guarantees, lawyers for Washington Mutual wrote.

Bondholder claims rest in a raft of arguments, including contentions that WaMu paid dividends to the parent company at a time when it was in financial distress and claims that corporate duties were breached. The thrift was beaten down in the collapse of the housing market.

Parent-company attorneys say there's no evidence WaMu was unable to pay its debts when it funneled dividends to its corporate parent. Arguments over the WaMu bondholders' claims have been scheduled for March 4.

(Dow Jones Daily Bankruptcy Review covers news about distressed companies and those under bankruptcy protection.)

---By Peg Brickley, Dow Jones Daily Bankruptcy Review; 302-521-2266; [email protected]

When Weil posted their response to the EC on Monday I started a thread about a letter I intended to write to the court. I sent it express mail on Tuesday and it arrived today.

"Your item was delivered at 1:44 PM on January 27, 2010 in WILMINGTON, DE 19801. The item was signed for by C ORKIS"

I didn't see it posted to the docket (I requested it be posted in my cover letter). So I thought I would share my letter with the board.

(PART 1/2)

The Honorable Judge Mary F. Walrath,

I am a pre-seizure shareholder of Washington Mutual. I recently read the debtor's response in further support to disband the Equity Committee submitted by Weil, Gotshal, & Manges on January 25th, 2010. I found the debtor's reference to a "gift recovery" to be insulting in the extreme and it has prompted me to contact the court. Like many shareholders, I sit on pins and needles as I follow this case closely. I have consumed every scrap of information that makes its way through the court, but ultimately feel like a helpless bystander. Many of us have put our faith and hands in the debtor's savvy council Weil, Gotshal, & Manges over the last 16 months. However, the recent behavior and aggression against the community of retail equity holders has left us baffled. I am also angry by their implication that we are looking for a handout.

My family has suffered greatly. We lost our life savings after WMI's assets were seized by the FDIC. Any hope for a secure future was destroyed in an instant. Worse yet we were left with only IRS debt due to a difference in tax basis of capital loss and income gain. I love my wife dearly and imagined that we would always be together, but we were dangerously close to divorce as we struggled with the pressures of my financial mistakes and the pressure of our 2 infant children (now toddlers). We are still struggling to this day. The only thing we have left is the hope of justice.

The media has blamed both our regulators and financial institutions for these failures, but people like me are the one left to bear the burden. Weil argues voraciously for the creditors, but I wonder who owns this debt now. Is it likely the same people that profited from this to begin with? It saddens me to think that greedy entities purchased distressed debt knowing that they could exploit equity in the end because it was the expedient path.

Weil argues on the one hand, that they sufficiently represent the interests of equity, while on the other, imply that they have no intent to pursue difficult and lengthy litigation that could result in recovery. It is clear to me that they do not have equity's interest at heart. It would appear that they seek the path of least resistance in an effort to expedite the recovery for creditors. If there has ever been the need for an equity committee in bankruptcy then this case is it. There is pending litigation for claims that potentially exceed 52 billion dollars, but the debtors would wipe any chance of equity participating in that recovery by ignoring us a seat at the table.

(PART 2/2)

They endeavor to throw out the baby with the bath water due to mysterious unnamed complexities. Indeed, this is a complex case involving potential malfeasance and corruption on the federal level. By this very logic equity should not be left out of an attempted resolution. Striving to reduce the complexity in this manner would be as fruitless as trying to subtract one from infinity in the hopes of something smaller. This would be an injustice. It would be a further injustice if it were done because of the perception that equity is looking for a "gift recovery". At best Weil is being disingenuous with their response. Far worse they may be ignoring a fiduciary duty to the shareholders by arbitrarily limiting the scope of recovery. Even a reasonable settlement figure of 25% would likely result in recovery for all classes of equity. Weil refers to $50 billion of unsecured claims against the debtor’s estate but they make no mention of the legitimacy of these claims. It stands to reason that if WMI is seeking full value of seized property in the DC action against the FDIC that this would constitute recovery for equity. Otherwise, their obligations would have rendered them hopelessly insolvent long before seizure.

I take full responsibility for my financial mistakes and the risks of investing. However, my generation does not expect to have social security. What other option do we have? If the integrity of that system is eroded at every turn by corruption then there is little hope. The 2004 discovery has intimated at potential corruption of federal institutions that have been charged with the duty of maintaining stability and hungry competitors willing to push the limits of the law. If there is the chance that WMI's insolvency was a result of misdeeds by our government and corporations then shareholders such as myself deserve a say in the outcome no matter what arguments the debtors may espouse.

We pray for a just recovery. We perceive this as a gift from God and the integrity of the judicial system; not a "gift" from the alleged perpetrators of fraud who may have unjustly enriched themselves off the backs of shareholders. That is restitution.

Thank You,

Dale E. Spencer

Just had a thought about Bonderman(the inside man) and TPG planned everything together.

From filing BK, hiring Weil trying to wipe out the shareholders, and then gain substantial ownership of the new WMI(as bondholder) after reorganization plan and then benefit from the lawsuit against FDIC/JPM.

FDIC's seizure of WMB was probably predictable by Bonderman since he probably had many information that were not publicly available, and he may know JPM will not give up on the piece of meat they want.

After the seizure, Bonderman filed BK protection as soon as he could, so he can start working on his plan of getting large stack of ownership in the 'new' WMI, and the lawsuit down the road. And TPG's probably buying many WMI bond at dirt cheap price right after BK, so they can be a large(or largest) bondholder of WMI, therefore their voice will weight a lot in any negotiation down the road.

While TPG's buying bond, their largest shareholder position is the PERFECT CAMOUFLAGE for them. TPG's equity holder position will give other investors/equity holders an illusional thought of being SAFE because TPG is the largest shareholders, and they think TPG will use the influence TPG have to get some recovery on the equity TPG purchased. But what TPG really wanted is to be the largest owner of the new WMI, through their bondholder position, and then benefit from the lawsuit against JPM/FDIC.
(or through settlement in the future, after TPG/Bonderman wipe out the owners of the OLD WMI and become the owner of the NEW WMI. They probably have enough time to wipe out the old shareholders and get big ownership on their hand before the legal battle get into the stage where JPM/FDIC want to settle)

Everything's IMO.

Bernanke is not, but Ms. Sheila Bair is the culprit of world financial crisis

If Fed Chairman Bernanke ever made any mistake, before or during the financial crisis, he did not intend to. But FDIC’s Ms. Sheila Bair was the culprit who caused world financial crisis by illegally seizing WaMu because of her personal interest.

Founded in 1889, WaMu was the largest savings bank in the U.S. until Bair intentionally killed it in September 2008. JP Morgan’s CEO Jamie Dimon wanted to steal WaMu for a long time. In order to help her friend Dimon to get WaMu, Bair played all kinds of games to kill WaMu as soon as possible to give it to Dimon virtually for free.

The first game Bair played was to downgrade WaMu. After an in depth review, WaMu’s regulator, the OTS stated on September 8th, 2008 that WaMu had enough capital and liquidity to operate as a well capitalized institution. On Sep 9, 2008 S&P downgraded WaMu and stated it would downgrade again over the next two years. Two days later, Moody’s also downgraded WaMu. WaMu responded immediately with a statement that the downgrade was baseless, inaccurate and biased because WaMu had enough capital and liquidity, significantly above the requirements for a well- capitalized bank. Having been scrutinized by regulators everyday inside the bank, WaMu dared not and did not lie.

However, Bair did not want to wait for two years. Orchestrated by her, within one week, WaMu was downgraded again by S&P, Moody’s and the OTS to "junk" status. There was never in history of the U.S. that a well funded bank was downgraded over and over again within one week. American people now all believe it was Bair who orchestrated all these downgrades to collapse WaMu. All communications between Moody’s, S&P, and the OTS/FDIC should be investigated by Congress.

It was these downgrades that scared the American people and induced what the FDIC claimed a “bank run” in deposits between Sept. 15 and 24, 2008. The FDIC then had an excuse to claim that WaMu did not have enough capital and liquidity and should be seized immediately. As a matter of fact WaMu did have enough capital and liquidity with $5 billions in cash on deposit. According to official reports withdraws of only $16.7 billion out of total deposits of over $200 billion which means that 90% of WaMu's deposits were still left intact during the period. However, the FDIC seized WaMu anyway and gave it to JP Morgan for next-to-nothing.

The second game Bair played was to scare all the potential buyers of WaMu. The OTS advised WaMu to look for buyers without a deadline, indicating that WaMu was well capitalized by then. WaMu was then discussing terms with 6 potential suitors including J.P. Morgan through investment bank Goldman Sachs. However, the FDIC went behind WaMu to forge a dirty deal with JP Morgan, knowing that JP Morgan was negotiating with WaMu in the front. Unbeknownst to WaMu, the FDIC threatened all the potential buyers that the FDIC was going to seize WaMu soon, so that nobody would dare to make an offer.

The third game Bair played was to seize WaMu and give it to Dimon without an open bid. Looking back on it, all the games Bair played was to benefit Dimon for her own personal interest. That was why JP Morgan was able to submit over hundreds of pages to get WaMu within a few hours. According to WSJ, the FDIC had already informed a planned seizure of WaMu to JP Morgan 3 weeks before WaMu’s seizure. http://blogs.wsj.com/deals/2008/09/29/ho...
The possible inappropriate relationship between the FDIC chairwoman Sheila Bair and JP Morgan CEO Jamie Dimon should be investigated by Congress.

One week before FDIC seized WaMu, then Secretary of Treasury Henry Paulson asked Dimon whether he is interested in Morgan Stanley for one dollar per share. Dimon did not have time to do the homework because his focus was to get WaMu with the help of Bair as soon as possible.

On 9/25/2008, Bair seized WaMu. Moments later, Dimon acquired the deposits,
assets of WaMu for $1.9 billion which was pocketed by Bair.

Because Bair’s wrongdoing was not condemned by Congress, this most powerful woman in the US proudly did it again to Wachovia bank within a few days. It was Bair’s misconduct to wipe out the two large U.S. banks all of a sudden in a few days which triggered world financial crisis. Dimon who stole WaMu’s 307 billion asset and 2239 profitable branches for free and later stole American taxpayers another $29 billion by claiming tax credit on behalf of WaMu now becomes a “hero” of world financial crisis.

Jamie Dimon is not a hero. A hero is someone who sacrifices himself to save others. At most he was just lucky and exposed less in mortgage crisis because of his greedy policy and few people were willing to do business with them. He was the only winner in this crisis because he is a thief who knows how to bribe the government officials to help him to steal from millions of American middle class who invested at WaMu. If we have more people like Dimon, our nation will become a corruptor zoo. "For what if he shall gain the whole world and lose his soul?"

Ayer a última hora pudimos leer como se ha añadido un hearing adicional para el viernes dada la cantidad de temas a tratar, aunque creo que los asuntos importantes se trataran hoy.

La aprobación del EC para mi es una realidad la pinten como la pinten.

Llama la atención la cantidad de hearings 28, 29, 5 feb, 22feb, 10 mar... se nota que hemos entrado en modo supersónico tras meses de inoperancia.

Tengo paciencia para aguantar sin pestañear hasta finales de Mayo y preveo al menos un 100% de rentabilidad adicional de aquí hasta entonces como mínimo.

Hay indicios por doquier de negociaciones para acuerdo extrajudicial así que si Quinn retoma las riendas y empieza a dar caña a JPM + FDIC es probable que claudiquen antes de esa fecha.

Suerte a todos hoy, mañana y siempre. :)

PD: Hoy reportaran los amigos de GOW desde el epicentro de la noticia. Estoy seguro que merecerá la pena oirles. Teneis twitter con audio así que mejor imposible. Ya me gustaria tener mi próximo Ipad para bichearlo un poquito mientras escucho los hearings con este nuevo gadget...a ver si se enrollan los que lo comercialicen en España y respetan los precios.

No se si lo entiendes pero en el momento que el EC este aprobado el Plan de los Bonos de Bonderman no funcionará pues será la equidad la que este en control en cuanto los activos superen a los pasivos. Y no deberia de pasar mucho tiempo para que eso ocurra

Yo lo veo así y comparto el pensamiento de muchos. El EC va a poner en cintura a todos los pesos pesados y demandará auditorias de todo.
NINGUN ACUERDO PODRÁ APROBARSE SIN SU CONSENTIMIENTO

La clave como bien has dicho es que A>P, para que la equidad tome las riendas, pero para eso la juez tiene que empezar a tomar decisiones yaa''. Porque si seguimos A