Mr Cooper Group Inc (COOP)

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Goldman Sachs, Barclays, Lehmans, JP Morgan and Washington Mutual:

http://seekingalpha.com/instablog/415296-truth-and-transparency/41647-open-letter-to-the-financial-crisis-inquiry-commission-and-permanent-subcommittee-of-investigations

The deals that were struck between all the large financial institutions were made to temper the financial meltdown and to encourage the flow of money - at least that was the public was led to believe, but there was also an epic battle for power being waged between the institutions (not only to make or reserve money but also to limit exposure to debt) and recent discoveries indicate that the playing field was not fair, in fact, according to some investigative journalists, the rules of the playing field changed, were modified or ignored based apparently on the whim of the federal regulator and the bank to which the rules were being applied.

In March, 2008, JP Morgan Chase, in conjunction with the Federal Reserve Bank of New York, agreed to provide a (up to) 28-day emergency loan to Bear Stearns in order to prevent a market crash that would result from Bear Stearns becoming insolvent. Days later, on March 16, 2008, Bear Stearns signed a merger agreement with JP Morgan Chase in a stock swap worth $2 a share or less than 10 percent of Bear Stearns' market value just two days before. This sale price represented a staggering loss as its stock had traded at $172 a share as late as January 2007 and $93 a share as late as February 2008. In addition, the Federal Reserve agreed to issue a non-recourse loan of $29 billion to JP Morgan Chase, thereby assuming the risk of Bear Stearns's less liquid assets.

The Fed, Bear Stearns and JPM deal netted JP Morgan Chase all of the assets of Bear Stearns and an additional $29 Billion in a non-recourse loan - - meaning that the lender, the Fed, would take the loss if the collateral wasn’t good. It’s important to highlight the Bear Stearns deal to show how Mr. Paulson could benefit Goldman Sachs while brokering the deal between Bear Stearns and JP Morgan. While the deal certainly benefitted JP Morgan in the ‘deal’ terms agreed to by the Fed and Stearns assets, it also benefitted Goldman Sachs by eliminating a competitor.(5)

The Bear Stearns deal was only the start of what has proven itself to be phenomenal positioning by JP Morgan to rid itself of bad debt/collateral with (once competitive) banks while, in turn, gaining their assets, the next to fall to JPM was Lehman Brothers. True, JPM did not buy Lehman’s but they did freeze 17 Billion of funds, on account at JPMorgan Chase, belonging to Lehman Brothers which hastened its failure.

Simply put, the Lehman Brothers deal with Barclays was the deal of the century for JP Morgan. The events that lead up to the deal are astounding when one considers the other institutions that were in trouble (orchestrated rescue of AIG for example) and how they were being handled by Mr. Paulson and Mr. Bernanke. Why was Lehman Brothers treated differently? Could be and it’s true that JP Morgan was Lehman's bank. For the benefit of JPM, Lehman’s could not be saved by TARP nor could it be allowed to go into traditional bankruptcy as any of these options exposed JP Morgan to a possible loss of $69 Billion. TARP or a liquidated bankruptcy would place JP Morgan as a creditor along with everyone else - there are 69 billion reasons why this could not happen. (6)

The only option that would benefit JP Morgan was to somehow package up the bad collateral that existed between Lehman’s Financial Services division and JP Morgan and pass it onto a buyer. While it’s true the Lehman’s did file for Bankruptcy, it was only for one day, and then sold to Barclays in a deal that closed five days later. What many in the public don’t know is that along with the deal being brokered at the Fed, JP Morgan was allowed to package bad collateral in the deal. In fact the deal almost didn’t go through because JP Morgan felt slighted in that it wasn’t allowed to package even more bad collateral.

Between March and September of 2008, JP Morgan accomplished the impossible - benefitting repeatedly and handsomely from the financial crisis. Three major financial institutions failed, two of which should have had a ripple effect to the very core of JP Morgan – yet JPM came out smelling like a rose, packaging and removing billions in bad debt/collateral and gaining nearly $550 billion in assets -prompting record percentage gains for the second and third quarter of 09 and with the purchase of WaMu, JPM gained a solid footprint into the West Coast banking system.

By all accounts, JP Morgan Chase purchased the whole bank assets of Washington Mutual for $1.88 billion in September of 2008. Anyone would agree that 1.88B for a 110 year old organization that had 270 billion on deposit, 29 billion in liquid cash, 2200 banks, 8000 ATM's, and a credit card company is an unjust deal that deserves scrutiny.

The deal becomes even more unjust when one considers the impact it has to JP Morgan - - the deal creates the nation's second-largest branch network. A combined network reaching 42% of the U.S. population, with strong positions in attractive markets such as California, Florida, New York, Texas, Arizona, Illinois and Washington. With the assumption of WaMu’s assets, JP Morgan will have $900 billion in deposits, 5,400 branches and 14,000 ATMs in 23 states.