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Just a little Research and all IMHO

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wwhatthe Member Profile
 
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wwhatthe   Wednesday, 09/30/15 12:07:45 AM
Re: None
Post # of 499595 
Just a little Research and all IMHO

Here’s a Thought with a little bit of hindsight…

Generally speaking…
If a liability is a debt or a financial obligation… and we know JPMC is not assuming any debt… than all of the liability JPMC assumed is of a financial obligation type…



We know each obligation is with respect to a specific Asset and we know a Asset is a item of value. So the Asset (the item of value) with the obligation would be expressed as a liability… and not simply as a Asset or as a obligation… but together as a liability.

IMHO when a assuming Bank assumes the liability… the liability moves from the old Bank to the new Bank and the new Bank takes on the obligation and buys the Asset… and the Asset is purchased at Book Value.

Looking at the Deposits we know JPMC assumed $188 Billion in liabilities…

Some might ask why would someone as knowledgeable as JPMC assume $188 Billion Dollars in liabilities… and on top of that… pay $1.9 Billion Dollars for them…

We know the $188 Billion Dollars belong to the customers and the Bank pays interest on this money… this is the obligation…. We also know the $188 Billion Dollars represent a percentage of loanable funds which the Bank can loan out, it also represents hundreds of thousands of customers which would be the west coast foot print JPMC desperately wanted…this is the item of value or Asset…

So the Asset (the loanable funds and West Coast foot print) with the obligation (having to pay interest) together would be the ASSUMED LIABILITY… and was bought for $1.9 Billion Dollars…

So the auctioning set a new Book Value for the Deposits at $1.9 Billion Dollars

From Page 8, P&AA - 2.1 Liabilities Assumed by Assuming Bank
…the Assuming Bank expressly assumes at Book Value…
…and agrees to pay, perform, and discharge, all of the liabilities of the Failed Bank which are reflected on the Books and Records of the Failed Bank as of Bank Closing
…including the Assumed Deposits…

Or perhaps the auction only determined that the assuming Bank chose whole Bank Purchase and the $1.9 Billion Dollars is only a payment for the actual Book Value of the Deposits.

ARTICLE II - ASSUMPTION OF LIABILITIES
From Page 8 - 2.1 Liabilities Assumed by Assuming Bank. Subject to Sections 2.5 and 4.8, the Assuming Bank expressly assumes at Book Value (subject to adjustment pursuant to Article VII) and agrees to pay, perform, and discharge, all of the liabilities of the Failed Bank which are reflected on the Books and Records of the Failed Bank as of Bank Closing, including the Assumed Deposits and all liabilities associated with any and all employee benefit plans, except as listed on the attached Schedule 2.1, and as otherwise provided in this Agreement (such liabilities referred to as "Liabilities Assumed"). Notwithstanding Section 4.8, the Assuming Bank specifically assumes all mortgage servicing rights and obligations of the Failed Bank.

In the AMENDED MEMORANDUM OPINION - (AMO) (link at Bottom)

From Page 48 - and JPMC assumed liabilities under the P&A Agreement of roughly $300 billion.

So $300 Billion is roughly the total amount of assumed liabilities and would include the $188 Billion in assumed Deposits…Which were purchased for $1.9 Billion Dollars.

From Page 48 - JPMC knew it would acquire WaMu’s RMBS liabilities

Mortgages used in a pool of Mortgage Back Securities have a similar structure. The obligation (having to repurchase or replace the mortgage if it failed) and the corresponding Asset (the Mortgage) together is the liability.

From Page 2 - JPMC does not dispute that it assumed a certain amount of WaMu’s mortgage repurchase liabilities, but argues that it only assumed such obligations up to their “Book Value”

This statement above from Page 2- shows that JPMC assumed the liability and it took on the obligation (having to repurchase or replace the mortgage if it failed) and bought the Asset (the mortgage)… and stating that the Asset was purchased at Book Value.

So if JPMC assumed $1 Billion Dollars in RMBS liabilities… than they bought $1 Billion Dollars in corresponding mortgages.

In the January 13, 2010 - Testimony before the Financial Crisis Inquiry Commission
JPMC states…
…With the acquisition, we purchased approximately $240 billion of mortgage and mortgage related assets,
….with $160 billion in deposits
…. and $38 billion in equity.
….We immediately wrote down most of the bad or impaired assets (approximately $31 billion)
…. and established proper reserves for the remaining assets,
….as well as for severance and close-down costs.

So if a liability is a debt or a financial obligation… and JPMC took all the financial obligation (roughly $300 billion) …than all of the debt was left…and the debt would have to be paid…

Debt is paid with the proceeds from the sold Assets. It would be difficult to pin point the exact amount’s but IMHO the remaining sum of the sold Assets would be LARGE…

Sorry for the long post…this just a thought…

All IMHO and GLTA…

Jiminy…
Jiminy Christmas…

PURCHASE AND ASSUMPTION AGREEMENT

AMENDED MEMORANDUM OPINION

Just my opinion, research and curiosity…
Not intended to serve as a basis for investment in any security of any issuer. GLTA



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