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FDIC may owe JPMorgan Chase billions

The JPMorgan Chase building is seen in New York City.

TEXT OF STORY

Kai Ryssdal: Two years ago, the financial crisis brought us the biggest bank failure we'd ever seen. Washington Mutual going broke and being bought by JPMorgan for less than $2 billion. Now, it seems JPMorgan Chase is getting ready to ask the FDIC for its money back -- three times its money back, actually.

Marketplace's Alisa Roth reports.


Alisa Roth: JPMorgan Chase wants the FDIC to pay billions of dollars in claims from lawsuits related to Washington Mutual's failure. The deal JPMorgan signed when it took over the dying bank could hold the FDIC responsible for those liabilities. It's not clear whether the FDIC will have to absorb those losses.

William Isaac was chair of the FDIC in the 1980s. He says the agency usually has a pretty good idea of how much a failure will cost.

William Isaac: They look at the assets and try to figure out what they're worth, what kind of recovery they're going to get on those assets, how long it's going to take and they also make estimates about how good legal claims might be.

So he thinks it's unlikely all the bank failures will end up costing much more than the FDIC has estimated. And he thinks the pace of failures will slow down, as long as the economy doesn't go into a double dip.

Karen Petrou is a banking analyst. She thinks given the number of banks on the watch list, more failures are inevitable -- as are more lawsuits demanding money from the FDIC.

Karen Petrou: There are always lawyers, there's always going to be litigation. But I don't think any of it as game changers in terms of the FDIC's cost of recovery or redefining taxpayer risk for the banking crisis.

In any case, JPMorgan has made out pretty well in spite of the lawsuits. Among other things, it's said interest on Washington Mutual loans could bring in as much as $25 billion. And it got a network of bank branches across the country.

In New York, I'm Alisa Roth for Marketplace.

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Wamu TRUTH....

JPMorgan committed corporate fraud???

http://www.kccllc.net/documents/0812229/0812229090501000000000002.pdf

Wamu's claims against JPMorgan/Chase;

http://wmish.com/doc/gov/0603/JPM_V_WMI_-_ANSWER.PDF

Debtors seek the Rule 2004 examination of the following Knowledgeable Parties: (Pg. 443 onward shows internal emails of JPM talking about wiping out Wamu shareholders many months before the seizure. "Project West")

http://www.kccllc.net/documents/0812229/0812229091214000000000008.pdf

Examiner’s Preliminary Report and Motion for Additional Relief

http://www.kccllc.net/documents/0812229/0812229100907000000000002.pdf

Wamu TRUTH....

I'm enclosing a document filed through the BK court in regards to a declaration of Thomas M. Blake ( http://www.crai.com/ProfessionalStaff/listingdetails.aspx?id=1276 ).

The declaration can be found in 103-4.pdf at http://www.mediafire.com/?sharekey=3b830df9f3d0e6fce7c82ed4b8f0c380aff12...
Quoting:
12. Based on my review to date, there is no indication that the OTS performed a solvency analysis consistent with the test for insolvency specified in the Bankruptcy Code. There is no indication that the OTS assessed the fair sale-able value of the assets of WMB (or WMI). Nor is there an indication that OTS compared the fair sale-able value of the assets of WMB (or WMI) to the total amount of either company’s respective liabilities. There is no indication that the OTS performed a comprehensive cash flow analysis of WMB (or WMI). Instead, the OTS found that “WMB met the well-capitalized standards through the date of receivership.”8 Thus, without a thorough analysis of the assets, liabilities and capital of WMI and WMB, it is not possible to come to a reliable conclusion concerning the financial solvency of either entity, whether on a consolidated or stand-alone basis.

Wamu TRUTH....

I'm enclosing a document filed through the BK court in regards to a declaration of Thomas M. Blake
( http://www.crai.com/ProfessionalStaff/listingdetails.aspx?id=1276 ).

The declaration can be found in 103-4.pdf at http://www.mediafire.com/?sharekey=3b830df9f3d0e6fce7c82ed4b8f0c380aff12...
Quoting:
12. Based on my review to date, there is no indication that the OTS performed a solvency analysis consistent with the test for insolvency specified in the Bankruptcy Code. There is no indication that the OTS assessed the fair sale-able value of the assets of WMB (or WMI). Nor is there an indication that OTS compared the fair sale-able value of the assets of WMB (or WMI) to the total amount of either company’s respective liabilities. There is no indication that the OTS performed a comprehensive cash flow analysis of WMB (or WMI). Instead, the OTS found that “WMB met the well-capitalized standards through the date of receivership.”8 Thus, without a thorough analysis of the assets, liabilities and capital of WMI and WMB, it is not possible to come to a reliable conclusion concerning the financial solvency of either entity, whether on a consolidated or stand-alone basis.

Enclosed is a link to the affidavit of Doreen Logan who is the Controller/ Assistant Treasurer of Wamu who states that there was no liquidity problems;

http://www.google.com/search?hl=en&ie=ISO-8859-1&q=%20Ex.%20D%20to%20Aff...

Wamu TRUTH....

Here is a document that says as of August 14, 2008:
"We propose to decapitalize WMBfsb by returning $20 billion of capital to its parent. The $20 billion will include the master note of approximately $7 billion, proceeds from $3.5 billion of Discount Notes and cash generated through additional wholesale deposits and advances from FHLB Seattle. We propose the payment of at least $10 billion by September 30, 2008 and the remaining $10 billion through December 2009."

"The net balance sheet of WMBfsb will be approximately $34 billion to $36 billion after Project Fillmore. The leverage ratio will decrease to 25% from 62%. A well-capitalized institution requires an 8% or higher leverage ratio."

Read reference page 45 of DOCUMENT 103-1.pdf from here:
http://www.mediafire.com/?sharekey=3b830df9f3d0e6fce7c82ed4b8f0c380aff12...

Included, is the form to the OTS requesting a decapitalization of WMBfsb. Pg. 117

http://www.kccllc.net/documents/0812229/0812229100208000000000003.pdf

The evidence is overwhelming that Washington Mutual should not have been seized. Shareholders are wiped out in 99% of corporate bankruptcy proceedings - in WaMu's case, it won official representation by the Bankruptcy Court and won a motion to appoint an Examiner to investigate these events (much like Lehman Examiner Anton Valukas' report). The Official Committee of Equity Security Holders is represented by Susman Godfrey (NY, WA) and Delaware counsel Ashby & Geddes. The Examiner motion was won in judge's chambers by presenting a confidential JPMorgan document accounting for WaMu's assets. Washington Mutual common stock still trades on Pink Sheets OTC as WAMUQ.PK.

Information about the court cases and filings can be found at http://ghostofwamu.com/

The web site for WaMu shareholders' rights is http://wamuequityrights.org/

Information about JPMorgan, the FDIC, and others' roles in the seizure of Washington Mutual is hosted at http://madblab.com/

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