Things that seem to be pointing to imminent settlement....
1) legal discussions of G reorganization - could be JPM acquiring WMI to make this go away
2) Delay Delay Delay by court system for no apparent reason - could be marking time to allow all 'ducks to be in a row'
3) Auction of warrants - could pave to way to remove restrictions preventing the settlement assuming both sides have come to agreement
4) Seemingly asinine statements by lawyers in court - these guys are smarter than that - could be just throwing sand to aid in the delay
5) Patience of big money buyers to get low prices - if you understood that there was a IRON WALL preventing a reasonable settlement from happening until some other PUBLIC event took place, then why get in a hurry
6) Willingness of Shorts to maintain their limited gain / unlimited risk position - if they are long JPM and short WAMUQ then the play becomes one of predicting how many shares will swap instead of what price will WAMUQ trade at. If one believed in this kind of settlement, there are all kinds of plays that can be made. This position could be smart to maintain if it were put on at a more favorable ratio than exists today.
I, personally, would rather have cash on the barrelhead. However, I don't expect it. I would be happily surprised if ANY cash changes hand in a possible settlement. Cash is too valuable in today's environment.
I, personally, also believe that the smartest thing JPM can do is acquire WMI lock, stock, and barrel and then make this whole lawsuit thing go away.
I, personally, also beleive that FDIC would like to see that happen.
I, personally, also believe that this may have been the plan ALL ALONG. These people are not stupid. They are nefariously smart.
JPM's logic would go like this:
We can't afford to pay more than $8 per share because there is trouble brewing on the horizon. If they survive the coming meltdown, they will be too strong to acquire. The only way to do this is to pull the rug out from under them, get them for a song and a dance, and then (after the dust settles) pay them off with stock valued such that they won't mind the bump on the head from when we pulled the rug out from under them.
In the final analysis (not considering those stockholders who sold after the price cratered), everyone gets paid off, JPM gets what they wanted, FDIC is not financially damaged and the whole story can be spun to be one of 'LOOK - WE SAVED THE ECONOMIC SYSTEM'.
I am out on a limb here, and it is creaking, but wait and see.
