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FDIC HELD 40B ASSETS - FRIED FRANK PARTNER
A REVIEW OF THE FDIC'S LATEST TOOLS
FOR RESOLVING PROBLEM BANKS
By
Thomas P. Vartanian
Gordon L. Miller*
Mr. Vartanian is a partner and Mr. Miller is a special counsel in the Washington,
D.C. office of Fried, Frank, Harris, Shriver & Jacobson LLP. The authors are
former federal bank regulators and regularly represent clients with regard to
matters discussed herein.
Fast forward to 2008, when 25 institutions failed, and open bank assistance was
authorized for five more (as part of a planned rescue that did not occur). Four institutions closed in
the first six months of the year, ten institutions closed in the next three months, and 12 closed in
the final three months.2 One institution, on account of the suddenness of its decline, was closed
mid-week, instead of at the end of the business week as ordinarily occurs.3 In the first two months
of 2009, 16 more institutions closed.4 The FDIC retained assets from closed institutions of
approximately $1.2 billion in 2007, approximately $1.9 billion in the first six months of 2008,
approximately $39.6 billion in the next three months, and $6.8 billion in the final three months.
Pretty much close to Equity Adjusted Amount of $40 Billion on the statement of condition of WMB
http://wmish.com/docs/FDIC/WaMuReceivershipFinancialStatements(unaudited)thru123108.pdf
PLAN TRUST ASSETS
LEHMAN BROTHERS COMMODITY SERVICES INC.
LEHMAN BROTHERS SPECIAL FINANCING INC.
LEHMAN BROTHERS OTC DERIVATIVES INC
LEHMAN BROTHERS COMMERCIAL CORPORATION
LEHMAN BROTHERS DERIVATIVE PRODUCTS INC.
LEHMAN BROTHERS FINANCIAL PRODUCTS INC.
LB 745 LLC
PAMI STATLER ARMS LLC
CES AVIATION LLC
CES AVIATION V LLC
CES AVIATION IX LLC
BNC MORTGAGE LLC
LB ROSE RANCH LLC
STRUCTURED ASSET SECURITIES CORPORATION
LB 2080 KALAKAUA OWNERS LLC
MERIT, LLC
LB PREFERRED SOMERSET LLC
LB SOMERSET LLC
Part A – Derivatives Contracts
Part B – Commercial Loan Agreements
Part C – Commercial Real Estate Agreements
Part D – Residential Real Estate Agreements
Part E – Operational Agreements
Part F – Private Equity Agreements
Part G – Insurance Contracts
Asset - Related Equity Adjustments (Note 8) - 40 Billion
Note 8
. Non-Cash Adjustments: Unrecorded assets and claims determined to have existed as of the institution's failure are deemed discovered assets and liabilities, respectively, and are recorded as non-cash equity adjustments. Other non-cash equity adjustments include the Estimated Loss on Assets in Liquidation, the Estimated Interest on Claims, as well as the write-off of remaining unpaid liabilities prior to the inactivation of a receivership. Note that certain non-cash adjustments such as the estimated loss on assets and probable litigation are reversed when they are recognized as liquidation transactions in the Statement of Operations.
http://wmish.com/docs/FDIC/WaMuReceivershipFinancialStatements(unaudited)thru123108.pdf
Nothing you believe that you dont get any thing.
Sale of Washington Mutual’s credit card assets to Chase
Bank, USA, N.A.
On October 3, 2008, JPMorgan Chase Bank, N.A. sold net credit
card-related assets acquired in the Washington Mutual transaction
to Chase Bank USA, N.A. for $14.7 billion in cash. The sale
included $15.0 billion and $251 million of credit card-related
assets and liabilities, respectively.
251mm liabilities...lol.
15B asset.
CONSOLIDATED FINANCIAL STATEMENTS
For the three years ended December 31, 2010
Page 13
The claims are higher than the money available
Read the foot note of the balance sheet FDIC posted long ago in 2008,still the same balance sheet exists on the website.
Read the foot note.
That is the publicly available cash at receivership.
There is one or more accounts at FBRNY FDIC maintains for Washington Mutual
That money is never counted in this whole balance sheet.
They already reduced the claim from 6b to 3B and now again will get reduced even after a settlement?.
https://www.fdic.gov/bank/individual/failed/wamu_dbntc_jpmc_fdic_settlement.pdf Page 5/20
Trustee Allowed Claim. Upon the Effective Date, the Trustee will be deemed to
have an allowed general unsecured creditor claim in the WMB Receivership Estate in the amount
of $3,006,929,660 (the "Trustee Allowed Claim"). The claim will be evidenced by a notice of
allowance of claim from the FDIC~Receiver's claims agent in charge addressed to the Trustee as
provided in Section4.09. The FDIC-Receiver will treat the Trustee Allowed Claim
proportionally with all other allowed general unsecured claims and will not subordinate or
otherwise diminish the Trustee Allowed Claim
Get it yet?
DID ANY ONE READ THIS PROMISE BY LBHI ?
E. Provisions Governing Distributions
1. Obligations to Make Distributions
All distributions to be made to the holders of Allowed Claims pursuant to the Plan will receive such distributions from the Plan Administrator (as agent for the Debtors), which will have sole liability with respect thereto.
From Disclosure Statement, short and sweet GEM.
DID ANY ONE READ THIS LEGAL PROMISE BY LBHI ?
E. Provisions Governing Distributions
1. Obligations to Make Distributions
All distributions to be made to the holders of Allowed Claims pursuant to the Plan will receive such distributions from the Plan Administrator (as agent for the Debtors), which will have sole liability with respect thereto.
From Disclosure Statement, short and sweet GEM.
Whether ex shareholders receive or not will be decided by FDIC as they mention the reply letter to WMI's claim and covered up how the equity(former) would get paid.
My question is if the Receivership has only 2.1B, how did they agree to pay $3B+ and other claims?.
Nothing for EXDIMER for sure.
IF THE WMB RECEIVERSHIP ASSETS ARE 2.7B HOW WILL THAY PAY SETTLED DB CLAIMS OF 3B+ ?
"3.01. Trustee Allowed Claim. Upon the Effective Date, the Trustee will be deemed to
have an allowed general unsecured creditor claim in the WMB Receivership Estate in the amount
of $3,006,929,660 (the "Trustee Allowed Claim"). The claim will be evidenced by a notice of
allowance of claim from the FDIC~Receiver's claims agent in charge addressed to the Trustee as
provided in Section4.09. The FDIC-Receiver will treat the Trustee Allowed Claim
proportionally with all other allowed general unsecured claims and will not subordinate or
otherwise diminish the Trustee Allowed Claim. Any and all distributions on account ofthe
Trustee Allowed Claim will be made by the FDIC~Receiver to the Trustee as and when the
FDIC-Receiver makes distributions to other general unsecured creditors holding allowed claims
. in the WMB Receivership Estate.
I enjoy what you posted about new shares.I read the POR too and i know how difficult it is to understand.I read a word in DS supplement about new shares for old owners of the company.Who are the owners of any company?.LOL.
FDIC PRIORITY
"
As of June 30, 2016, the Receiver had approximately $2.76 billion to distribute to holders of claims allowed by the receivership, according to the priorities established in 12 U.S.C. § 1821(d)(11)(A). The most recent receivership balance sheet summary can be found at the following link: (WAMU Quarterly Receivership Balance Sheet Summary). Before the Receiver can distribute these funds, however, it must pay administrative expenses and resolve a number of lawsuits that have been filed against it, the largest of which was filed by Deutsche Bank National Trust Co. (“DBNTC”) claiming $6 billion to $10 billion in damages arising out of WAMU's alleged breach of representations and warranties made in connection with mortgages sold to securitized trusts. (Amended Complaint - PDF). In June 2015, the court issued a partial summary judgment decision finding that the Receiver retained liability for DBNTC’s claims, to the extent that such claims were not reflected at a stated book value in the financial accounting records of WAMU as of the failure date. (Amended Memorandum Opinion - PDF). The Receiver sought appellate review of the decision."
(11) Depositor preference
(A) In generalSubject to section 1815(e)(2)(C) of this title, amounts realized from the liquidation or other resolution of any insured depository institution by any receiver appointed for such institution shall be distributed to pay claims (other than secured claims to the extent of any such security) in the following order of priority:
(i) Administrative expenses of the receiver.
(ii) Any deposit liability of the institution.
(iii) Any other general or senior liability of the institution (which is not a liability described in clause (iv) or (v)).
(iv) Any obligation subordinated to depositors or general creditors (which is not an obligation described in clause (v)).
(v) Any obligation to shareholders or members arising as a result of their status as shareholders or members (including any depository institution holding company or any shareholder or creditor of such company).
(B) Effect on State law
(i) In general
The provisions of subparagraph (A) shall not supersede the law of any State except to the extent such law is inconsistent with the provisions of such subparagraph, and then only to the extent of the inconsistency.
Ofcourse the tranches were created based on the recoveries and valuations of certain assets.Hence the inclusion of Tranch 6 for equity which was added after the POR approval ,around 1st week of April 2012.
Why is it important?
From FDIC's mouth
The DBNTC-JPMC-FDIC Settlement remains subject to judicial approval in a procedure to be filed by DBNTC in California, and if approved, will result in the dismissal of the four WAMU-related actions pending in the U.S. District Court for the District of Columbia and the appeal pending in the U.S. Court of Appeals for the District of Columbia Circuit.
https://www.fdic.gov/bank/individual/failed/wamu_settlement.html
4 cases get dismissied,FDIC can start resolving distributions to WMB note holders and shareholders of WMB and WMI as per the priority.
DISPUTED CLAIMS PROBALY WERE EQUITY CLAIMS
Why would the Disputed Claims had a preference over sr.note holders claims?
So LT receives LTIs for Disputed Claims before Note Holders claims and rest?.
From DS.
b. Allocation of Liquidating Trust Interests
Within ten (10) Business Days after creation of the Liquidating Trust, the Disbursing Agent shall allocate, or cause to be allocated, (i) to the Liquidating Trustee on behalf of holders of Disputed Claims, (ii) to each holder of an Allowed Senior Notes Claim, an Allowed Senior Subordinated Notes Claim, an Allowed General Unsecured Claim, an Allowed CCB-1 Guarantees Claim, an Allowed CCB-2 Guarantees Claim, an Allowed PIERS Claim, an Allowed Late-Filed Claim, an Allowed WMB Senior Notes Claim, and Postpetition Interest Claims in respect of the foregoing, and (iii) to each Accepting Non-Filing WMB Senior Note Holder, such holder’s share, if any, of Liquidating Trust Interests, as determined pursuant to the Seventh Amended Plan. In addition, in the event that all Allowed Claims and Postpetition Interest Claims are paid in full, the Liquidating Trust Interests shall be redistributed to holders of Subordinated Claims and, after such Allowed Claims and Postpetition Interest Claims are paid in full, holders of Preferred Equity Interests, Dime Warrants and Common Equity Interests as set forth in the Seventh Amended Plan.
------------
Disputed Claims probably included Equity claims, IMHO.
It should be, because EC put a condition to come up with a figure for final claims resolution amounts.Valuation Company was hired and provided tranche level recoveries just before the approval.Sept of 2017 is key,IMHO.
Receivership can proceed with WMB noteholders payments and stakeholders as per the priority set by FDI Act.
LOANS OR OTHER ASSETS CHARGED OFF BEFORE/AFTER
LOANS OR OTHER ASSETS CHARGED OFF before or after the seizure date is the key.
As per the ASSETS PURCHASE PRICE section 3.2 of P&A
3.2 Asset Purchase Price.
(a) All Assets and assets of the Failed Bank subject to an option to purchase by the Assuming Bank shall be purchased for the amount, or the amount resulting from the method specified for determining the amount, as specified on Schedule 3.2, except as otherwise may be provided herein. Any Asset, asset of the Failed Bank subject to an option to purchase or other asset purchased for which no purchase price is specified on Schedule 3.2 or otherwise herein shall be purchased at its Book Value. Loans or other assets charged off the Accounting Records of the Failed Bank prior to the date of Bank Closing shall be purchased at a price of zero.
So the assets of 30Billion or 40Billion JPM wrote off after the seizure shall or should be purchased at book value IMHO.
P&A
https://www.sec.gov/Archives/edgar/data/19617/000095012308014621/y72204exv10w1.htm
page 9
So they bought a bank with 40B in equity for 1.9B, not from shareholders?.
When will they write up?.FDIC was expecting a $40+ Billion loss to their fund and JPM claimed the same amount as equity and, wrote down?.
If it is all said and done, why are they still running the receivership?.Why is JPM saying that there are pending cases of collapse?.JD would do to prolong this case until he dies,imho.He graduated from Harvard, clubby with Harvard friends like CNBC,DC,BS,KKR....the list goes on.The previous gov had a good case to dwell thru, they just ignored for 8 yrs.
Who would do justice?.
Could be CIT too.
JPM stated they received WMB with $40 Billion equity in their SEC filings.What does it mean?.Dont they have to pay for it?.
Re: The assets were reported and right
Preference Claims:150MM+ Intercompany Receivables 22.5MM + American Savings Litigation 55MM
Anchor Savings Litigation: 350-500MM
TPS 4B
FC 2B in July 2008
500MM in Sept 2008
FC 07-08 - 4B
Tax Refunds 5.54B
Intercompany loans 180MM
Deposits 4B
Cash 900MM
D&O 238-500MM
Pensionplan and Visa 200MM
BOLI/COLI 5B
WMMRC 5.5B NOL
As per EC and all values are were in $s.
-----------
IP+D&O Liability+FDIC Tort Claims+Third party claims+JPMC Business Tort Claims ---UNKNOWN
Late in the game?.Check out "Tower Of Babel" power point presented in court by S&G team.
WMI LIQUIDATING TRUST ISSUES STATEMENT ON ESCROW CUSIPS
WOW
http://www.wmitrust.com/wmitrust/document/8817600170531000000000001
Espanol
Chinese
Middleeast
Those flags on the website for languages indicating something
http://us-stemcell.com/
So you think original investors invested based on what you quoted from ???.It is not the law of the land.What is Priority?.If they fail, they lose around $53B in NOLs.They are not dumb, they know how to play dumb,INHO.
Guaranteed to distribute debentures
CT holders can sue and get it done.
Claims were FULLY allowed.
ALLOWED claims should get paid, may be delayed, but should be paid IMHO and as per FAQ released by LBHI .
IMHO, everybody in these cases would get a new stock on par,just my opinion.
Yeah you are so true
class 3 and others classes not needed to be paid FULL.They need to be satisfied in FULL before CTs get paid their face + interest.
Read FAQ by the estate about ALLOWED CLAIMS.
I know what you mentioned.But inorder to distribute anything to former equity, CTs should get paid in full with unpaid interest too.If the NOLs need to survive, former equity should get paid.
"It was obvious by reading the disclosure state in 2011 that these shares would end up worthless. "
Why did the estate allow CTs claims, all flavors?.
What did Blackstone exactly did for WMI or WMIH or any of the shareholders?.They were appointed, KKR got in and BS left, same show is still running.Mean while BS was on a buying spree of Apartment complexes all over the US in Billions and Billions, it is amusing to see how these well connected guys run the show.BS guy and JPM guy are good old friends from Harvard.
My question is , how did JPM and Black stone had so many assets waterfall and showed it in their sec filings immediately after collapse of WMB?.
Hughes Hubbard
Is a party to the settlement agreement of DB JPM and FDIC, why?
These guys are the representatives of WMB bond holders.
If their issue is addressed by this settlement,along with certain class 18 claims(probably false claims of some WMB bond holders), class 19 thru 22 will be inline, IMHO.
This is good LG.Good summary.
KKR ofcourse taking the control( or the AAOC and KKR ) already gained the control by replacing MW with Gene Davis as CEO.Now KKR is jacking up the board with their team, slowly but gradually.MW acquired shares recently, so , i dont thing some thing of any kind of deal happens near soon.
They are sitting on many MNPI, i dont know they can dare to deal immediately with all that insider info and acquiring shares at the same time.
BNY is the new trustee for CTs.
THE GREAT BENEFIT IS
JPM can make the final payment to FDIC and FDIC could distribute ,eventually to old equity holders.
JPM could pay WMILT for assets it bought using GSA,IMHO.
This settlement settles other cases also.
AIMHO