PLEASE READ THESE EMAILS TO PUT YOUR MINDS AT EASE
CONSPIRACY, HERE? OR AM I STUPID
Check the dates???? WTF????
10: 38 John Reich defends WaMu
I promise I'll go back to the hearing in a minute, but I've just reviewed emails that show Sheila Bair of the FDIC was interested in marketing WaMu to other banks, unknown to WaMu executives, as early as August 2008, two months before the bank was closed.
In an Aug. 2006 email, she told John Reich: "I'd like to discuss contingency planning for W during the call on Friday. Art talked with Scott about making some discrete inquiries to determine whether there are institutions which would be willing to acquire it on a whole bank basis if we had to do an emergency closing and on what terms. I understand you have strong objections to our doing so, so I'd like to talk this through."
Reich fired back, later that day, defending the bank while on vacation. He threatened to meet with Fed chairman Ben Bernanke about the issue, and potentially former Secretary Treasury Hank Paulson:
"You personally, and the FDIC as an agency, would likely create added instability if you pursue what I strongly believe would be a precipitous and unprecedented action," Reich wrote to Bair. "And if it occurs without my consent, I will not sit quietly by and observe — there would be a public reaction."
He continues: "I also believe there would be a high potential for FDIC actions of the type you are contemplating to cause irreparable harm to WaMu, if, at any point in the near future, WaMu was even mentioned, I would like to see a copy of the signed confidentiality agreement signed by the bank — required in any resolution scenario before an institution is told the name of the failing bank."
He asks: "Are you also trying to find buyers for Citi, Wachovia, Nat City and others?"
And he concludes the page-long email: "The government should not be in the business of arranging mergers — particularly before they are necessary, and we are not at that point in WaMu's situation."
10:34 EDT Internal emails btw WaMu regulators
I'm finally getting a chance to look at some of the emails that were blacked out when I tried to request them through the Freedom of Information Act last year.
It appears that TPG, the private equity firm that in the spring of 2008 led a $7.2 billion infusion of capital into WaMu, was apparently trying to provide more capital in September 2008, according to internal regulatory emails. I had heard last year that executives were looking into this.
Here is this email from one of WaMu's main regulators at the OTS, sent on Sept. 10, 2008, 15 days before the bank is seized:
"...it is clear to me that the FDIC hopes that TPG may be a willing party to inject capital in the bank. I thought it would be helpful if we invited David Bonderman (head of TPG) and his folks to join us for a meeting at our office where we could include the FDIC. The purpose of the meeting would be to discuss the various views of the institution's risk profile, current actions under consideration by the FDIC, and possible capital considerations. We would control the meeting and ensure that we have no repeat of the inappropriate behavior displayed by some of the FDIC in our last session with the bank," wrote Scott Polakoff to his boss, John Reich, former director of the OTS. (Reich will be testifying later this morning.)
Read more: Puget Sound Business Journal (Seattle): WaMu regulators begin testifying
