Lovin' it !
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"The Man Who Could Salvage Wall Street"
By Rick Newman Rick Newman – Fri Oct 9, 1:26 pm ET
"Are all bankers evil? Maybe not. Over the past year, it's become fashionable to trash Wall Street for unbridled greed and the rapacious use of billions in taxpayer bailout funds. Much of the outrage is justified, since Wall Street firms like Bear Stearns, Lehman Brothers, Merrill Lynch, and Citigroup stoked the flames that nearly torched the entire economy. But there's been rough justice for a few of those firms, now either defunct or de facto wards of the state.
[See 10 gaffes by doomed CEOs.]
Other firms have filled the void, becoming even more prominent. One of them is JPMorgan Chase, whose chief executive, Jamie Dimon, has largely escaped the pitchforks aimed at his fellow Wall Street CEOs. Over the course of the financial crisis, JPMorgan Chase remained profitable, a pillar of relative stability in the midst of an earthquake. The bank absorbed the failed Bear Stearns and Washington Mutual, while accepting $25 billion in bailout money that it paid back with interest once the government allowed it to. Through it all, Dimon consulted frequently with officials in Washington, and news reports have even depicted him as President Barack Obama's favorite banker. A new biography of Dimon, Last Man Standing by Duff McDonald, describes Dimon as a diligent and trustworthy executive who has risen above the swill of Wall Street. I spoke recently with McDonald about the man some think will be the next treasury secretary. Excerpts:
Jamie Dimon is clearly a survivor. Is he that smart or just lucky? Of course there's luck in any career, but wasn't it Seneca who said, "Luck is when preparation meets opportunity"? Jamie is the guy who was ready to take advantage of opportunities when they happened. So I don't really think it's luck at all. Jamie has proved that preparation is all there is on Wall Street.
How do you think of Dimon today? He's the most prominent banker in America, and if there is such a thing as a financial philosopher, Jamie's it. His letter to shareholders in the 2008 JPMorgan Chase annual report was a tour de force of explicatory brilliance. He explained what happened.
[See the best and worst bailouts of the past two years.]
Was it Dimon talking? Or corporatespeak? It was totally Jamie talking. He explained the risk exposures, which were mostly mortgages. Where we went wrong, ways the system can be improved. He explained: Is JPMorgan caught up in this? Yes. But he's aware of the exposure. This is a guy who wrote the letter while still in the midst of the crisis, since he began writing it at the end of 2008.
How is Dimon different from other Wall Street CEOs? I was talking to Warren Buffett about Jamie, and he said, "Banking's not that difficult. You just need to be a banker, and Jamie's a banker." All these other guys weren't being bankers, they were being gamblers. There's a great line from Andrew Ross Sorkin's new book, Too Big to Fail. At some point during the crisis last year, an executive from Morgan Stanley gets a call from Jamie and goes to talk to John Mack [Morgan Stanley CEO]. He says that he just got a call from Jamie Dimon, who asked if he can do anything to help. The executive says, "Jamie is always hanging around the hoop. You know Jamie's saying, 'Let's make friends with these guys before I eat them.' "His entire career he's played it conservatively so he can pounce on opportunity. All these other guys were gamblers. Bear Stearns. Lehman. That's fine, but Dimon was the guy standing around the hoop waiting for the ball.
How do you see the new Wall Street firmament? Goldman Sachs is clearly still a betting house, and that's fine. I understand the debate over taxpayer dollars going to these firms, and that will go on for a long time. But Goldman is clearly the best at what it does. Morgan Stanley is a betting house, and then you have Citigroup and Bank of America, which are just kind of screwed up. The bank of the moment is JPMorgan Chase. Other than Goldman, JPMorgan Chase and Jamie Dimon are the kings of Wall Street. On investment banking they go toe-to-toe with Goldman.
[See how CEOs are conflicted over healthcare reform and the environment.]
Was the Bear Stearns takeover in March of 2008 a good deal? The Federal Reserve bore a lot of the risk for that deal. Jamie Dimon will tell you he felt a patriotic imperative in doing what he did. He was asked to take over a $400 billion balance sheet from a firm that everybody knew was the dodgiest on Wall Street. In 48 hours. It turned out to be a big loser. They've already booked substantial losses. The assets they backed, they've lost a ton of money on. They got a decent commodities business and a prime brokerage business, but they lost money. Buying Bear Stearns was not a good deal in and of itself. But it worked out beautifully because it made them the bank of last resort. That helps you get customers. No one's leaving Chase, the retail bank. And JPMorgan's institutional business boomed at the end of 2008.
What's Jamie Dimon like? He's a fun person with a sense of humor. He's a CEO, so he's somewhat unapproachable, but he's a nice guy. I've never met a man who has less doubt about who he is. He has a sense of conviction and no second thoughts. He's also a total family man. He has three daughters who love him and a wonderful wife. They have a house in upstate New York and a nice apartment on Park Avenue. He spends time with his family and doesn't do the really obvious things, like golf. He just works all the time. The wonderful thing about the Dimons is they don't seek publicity.
Is he humble? No. He's proud. He knows what he's accomplished. He's well aware of his own capabilities and his achievements. The difference is, he's not resting on his laurels. He thinks. He's diligent.
[See 5 myths about the economic "recovery."]
Does he have a future in public office? I don't think Jamie Dimon would ever run for office. He wouldn't put his family in that position or deal with the attendant issues. But would he accept an appointment? Don't be surprised if he does. When Obama got elected, there were rumors that Dimon would end up in Washington. I asked him why he didn't shoot down the rumors. He said, "Isn't it kind of presumptuous to turn down a job you haven't been offered?" But if he were offered the position of treasury secretary, it's almost a slam-dunk he would take it. It's the only thing he has left to do--public service. He told me that his one regret is never having done any public service, and he'd like to.
He's a Democrat? He's a Democrat.
Why? Because he comes from a free-thinking family. His father played violin in their living room during social events when he was growing up. The family talked about a lot of things beyond just the day-to-day. He was exposed to different ideas.
What have been the toughest moments in his career? Being fired in 1998 by Sandy Weill [Dimon's former mentor and CEO of Citigroup at the time]. He's still hurt.
What did he learn from that? He learned how not to be Sandy. How not to fire your most valuable person in a fit of pique.
Could Jamie Dimon be more than a CEO? Could he be a transformative figure? He could be. There's a deep sense of integrity that guides his decision making. The guy is motivated. He absolutely wanted to be rich, and he is rich. Paired with that is a deep sense of doing the right thing. Despite what populist anger seems to be suggesting these days, these are not inconsistent beliefs in America."
http://news.yahoo.com/s/usnews/themanwhocouldsalvagewallstreet
To anyone who thinks the issues related to the WMI proceedings will be settled "promptly", I suggest you read this post.
Also, in fairness to interested investors, maybe the mods can add the post to a sticky note.
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=42916948
WMI vs JPM Proposed Scheduling Order
Adversary Proceeding 09-50934
Look at these timelines.
#5 Expert discovery shall be completed by March 22, 2010
#8 Pre-trial Conference August 18, 2010
(that’s right August 2010)
#9 Opening briefs on motions in limine shall be served on or before
September 1, 2010
Answering briefs shall be served and filed on or before September 15, 2010
Reply briefs shall be served and filed on or before September 29, 2010
Please keep in mind this is the Proposed Scheduling Order and hasn’t been signed yet, but if you’ve learned anything over the last year, you should have learned that timelines always get pushed back. So, if they are shooting for the reply briefs mentioned in #9 to be served and filed on or before September 29, 2010, it is a safe bet that it will even be later than that.
Sorry, no quick resolution to the complex issues at hand, but as some here like to say, “The LAW is the LAW” !
Welcome to the American Court System !!!!!!
http://www.ghostofwamu.com/documents/09-00533/09-00533-0077-2.pdf
(filed on Pacer and obviously courtesy of ghost)
Really?
Did Bonderman call and tell you that?
Really?
Then why doesn't WMI have their cash?
"The battle is over the offset, and the holding company has the law on its side there as well. "
I disagree.
The claim for the TPS is just about big enough in and of itself to keep the money right where it is even if Walrath rules that the $4b is WMI's, and the claim for the TPS (which are JPM's imo) is just one claim.
I know the S & C team look and sound like sloppy lawyers, but they know exactly what they are doing, and just like in the LEH case, they will not be turning over any money to the estate.
imo, that money isn't going anywhere.
"Even if Washington Mutual recovers some of the disputed assets from the FDIC or JPMorgan, that doesn't mean its bankruptcy will move swiftly. The holding company for Bank of New England, which failed in 1991, managed to recover $140 million in a suit against the regulator. Its 18-year-old bankruptcy case is still in court, while the creditors fight over their shares. "
Just think, that is only $140 Million they are fighting over.
"McIntyre said the university will know if it has received the grant by late October."
That's what it says .
I don't know when the selections will actually be announced, and I expect that since we are talking about the Government, it might not be known exactly on schedule.
Either way, glad I'm in, and the next few weeks should get interesting.
That is a great question !
Providian was merged into WMB. WMB is owned by JPM now.
End of story.
Receivership is a nasty, nasty thing.
"The respective Boards of Directors of each of Washington Mutual and Providian have determined that it is in the best interests of their respective companies and stockholders to consummate the business combination transactions provided for herein pursuant to which Providian will merge with and into Washington Mutual (the “Merger”) and immediately thereafter Providian National Bank (“PNB”) will merge (the “Subsidiary Merger”) with and into Washington Mutual Bank, FA (“WMB”)."
http://www.secinfo.com/dsvR3.z3w6.d.htm
So, unless this SEC filing is fraudulent, Providian was merged into WMB . Providian was part of WMB, and WMB now owns all of WMB.
FACTS ARE FACTS !
Providian is not the holding company's . The credit card business WMI used to have now belongs to JPM.
It's time to deal with it.
I am well aware that the FDIC was present in court last week.
The Providian card business belongs to JPM, and it will not be returned to WMI.
Look at the company structure, and you'll see that Providian was under the bank.
Sorry.
It is part of JPM now.
Providian was under the bank, and it is indeed JPM's. Providian will not be returned.
All of the bank business now belongs to JPM, Providian and all, Dimon isn't going anywhere anytime too soon and neither is Bair. If you want to talk about lying to shareholders, I suggest you talk to Killinger and the other genius execs that killed the stock and the company. JPM is not quaking in their boots, and yes, they do own everything. WMI no longer has any bank business at all. Those are the facts.
WMI does need the money, which is exactly why they are selling their interest in the windfarms.
Exactly. JPM got what they wanted, and it still amazes me that people think that somehow someone is going to buy them for $12+ per share.
PEACH. I'm likin' the visible growth of the company. It's nice to see the verified expansion.
Hope you are well !
What assets do you think WMI will be getting back?
Just curious.
WAMU should have listened to Paulson and taken the offer.
It is too bad for shareholders he did not take the offer.
Don't forget to send a thank you note to Killinger.
You are incorrect.
Details, details, details.
The FACT "IS" they will not be getting $500 "PLUS" MILLION.
Also, you claim that the $4 B is pocket change and that the subs have tons of cash.
If that is the case, then why would WMI be selling their interest in the wind farms if they didn't need cash?
Answer the question? Let's hear it. I'm waiting.
Gooooo WAMU 12+
Does $99,000,000 = $ 1 billion or $500 Million ?
Nice DD.
Sorry bud. The range is tens of millions, not hundreds of millions.
You'll have to wait and see the actual amount.
WMI's interest in the windfarms isn't worth even close to $1 billion.
Goldman's bid came in over $15 Million, but how much more?
I assure you that the bid did not come in at $985 million more than $15 million.
The sale of their wind farm interests will show up on their books soon enough, and those that think they will be getting $1 billion are going to be VERY disappointed.
Have a good day everybody!
Hey, I'll tell you what buddy, the best thing that common shareholders have going for them is the present value of $1.
Why? I'll tell you why.
Let's just pretend that all of WMI's debt (approx 8 billion) isn't due for 20 years.
Let's also pretend that all of WMI's debt is discounted at 5%.
This means that the actual present value of what is owed to creditors would be $8,000,000,000 x .377 which equals $3,016,000,000.00 .
I don't know what their terms are with their creditors, but if the above example were true, in order for the creditors to be paid at 100 cents on the dollar (in value, which must happen in order for equity holders to see even 1 penny), the creditors would have no choice but to accept $3,016,000,000 in value , as that would be the present value of amount payable in the future.
However, I still feel it would be unlikely that WMI's laywers/consultants would tell them to fork over almost all of their cash to their creditors. That would be silly. imo, new paper is the logical and reasonable way to go. If pre-seizure shareholders feel that they were wronged, then they could feel free to file suit against whomever they feel is responsible for their loss. If I were on their legal team, there would be absolutely no doubt that the smart move is to wipe-out shareholders, make creditors whole by issuing them new stock, and re-emerge as a viable business.
We'll have to wait and see what happens..............
???? Good questions. Providian isn't theirs anymore, and the wind farm interest isn't worth enough to put the commons in the money ( I know that much), and one also has to take into account that when someone is selling assets because they basically have to, then all bidders involved are going to go low. Some claim that the subs are worth "HUGE BILLIONS" , but no past filings show that, and certainly neither do any recent filings.
ok, NOW I have to try and get some sleep......
Thanks buddy. Any verbage related to taxes (especially related to acquisition taxes)is probably something that ideally wouldn't be tackled early in the morning. lol
I would definitely like to hear input from mordicai and/or anybody else with legal experience.
I have my own opinions about what is going on, but the board doesn't value what I have to say.
The bottom line, however, is that Type G reorganizaton was mentioned in the billing referenced, nobody else brought it up (even though I have a hard time believing that nobody else saw it), and now it is out in the open.
Thanks warcton.
Person mark for you my friend!
As of 12/31/08 JPM had $26,895,000,000.000 of cash reserved for future use.
If they took all of their cash and paid their creditors (which won't happen), then they would be left with no money, and subs that have no money, which would result in the inability to continue to operate.
The most reasonable way out of bk, is to cancel the commons, issue new paper, pay off the creditors in part cash part new paper (or all new paper if they would agree) wipe out the stockholders (common move in bk AND smart), and continue operations with a new business plan.
No matter what, they don't have crap for cash and neither do their subs.
Here is what the bank and ALL OF THEIR SUBS had in June of 2008.
WASHINGTON MUTUAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(UNAUDITED)
Cash and cash equivalents
$ 7,235,000,000
http://investing.businessweek.com/research/stocks/financials/drawFiling.asp?docKey=137-000104746908009146-3LHC7FD3JJ2I56DJVCP9H8G53A&docFormat=HTM&formType=10-Q
After the seizure, they don't even have that much, but even if they still did have that much, they would have to give it all to their creditors.
Tell yourself whatever you want about the subs and how much cash they have, but WMI and its subs hardly have any cash whatsoever, and that is a FACT.
You are correct sir. I guess what I was driving at was what kind of assets they had and/or what the true value of those assets were.
Here is a bulk of them.
WASHINGTON MUTUAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(UNAUDITED)
Loans held in portfolio, net
$231,171,000,000.00
Total available-for-sale securities
24,375,000,000
A bunch of crappy loans and securities held for sale totalling 250 billion, and after being in business for 110+ years, here was their cash/cash equivalents as of June 30, 2008.
Cash and cash equivalents
$7,325,000,000.00
http://investing.businessweek.com/research/stocks/financials/drawFiling.asp?docKey=137-000104746908009146-3LHC7FD3JJ2I56DJVCP9H8G53A&docFormat=HTM&formType=10-Q
(subscription to www.secinfo.com ran out a while ago)
They didn't have enough cash and/or real assets to absorb the huge losses from their crappy loan portfolio (aka assets).
Do you think they had enough cash and/or real assets to be considered a safe and sound company? Do you know how much cash JPM has?
I think the most recent #s and negative equity speak for themselves, but hey, maybe the OTS (the ones who allowed backdated capital infusions into certain entities) is right. Maybe WMI was well capitalized.
"I will definitely be looking into current rules for type G reorganization for further clarification."
I would appreciate it if you would look into it further, as would many on this board I'm sure.
I will be looking into it more closely as well, but won't be able to until Sunday.
Check this link out.
This is the most informative one I could find in a short period of time. The guy seems to provide several examples to help portray the differences between the different types of reorgs.
http://books.google.com/books?id=lLw8sU0uzEUC&pg=PA575&lpg=PA575&dq=G+reorganization+examples&source=bl&ots=TY1ZAUS4kE&sig=PEcBrkfiYaJtfEc7xPK-IO6CckY&hl=en&ei=4HriSoPFJ9Cf8Aa5pdjnAQ&sa=X&oi=book_result&ct=result&resnum=8&ved=0CBsQ6AEwBw#v=onepage&q=&f=false
I'm not certain they are asking for a jury trial regarding the cash, only a trial with full discovery which, imo, will be argued in front of the judge (not a jury).
Plus, don't forget that the average american has the mental capacity of a fruitfly, which is why , imo, neither side should want a jury involved in any of this.
(for the record, fruitflies can not spell correctly, do not understand grammar or punctuation, and certainly do not understand accounting , finance, or banking)
I was wondering if you could weigh in on this post.
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=42853118
Thanks.
You don't have to convince me that they got MORE than a good deal, but that is the beauty of receivership. That is the way the BIG BOYS role, be they Institutions, or BIG DOGS like Wilbur Ross. They have billions and billions, but they don't want to buy anything unless they get it for pennies on the dollar.
BTW, the negative goodwill they recorded wasn't even nearly as much as they should have recorded, but don't forget, they initially wrote off a ton of losses, which WMI would not have been able to absorb. Now I know that there were several banks that wouldn't have been able to absorb their losses without Gov. assistance, but that is neither here nor there. Even if WMB was well capitalized as the OTS said, it doesn't matter. If regulators feel that an institution is unsafe or unsound, they can seize them and sell them. In this case, they sold the bank for far less than fair value and the FDIC and/or JPM will have to pay for the bank, but the bank bondholders will be the ones that get the money as they were the creditors of the bank and they come first. Anything paid over what the bank bondholders are owed will go to WMI , but I feel it is very unlikely that anybody but the bank bondholders/noteholders will see a penny.
We'll see.
BTW, I suggest you read my post about type G reorganizations.
Gotta get some sleep. I've been reading tons of documents since early this morning.
Have a good weekend everybody!
What do you all know about acquisitions as they relate to Type G-Reorganizations?
I am not an expert, however, I just learned the type G reorganization easily satisfies the continuity-of-interest doctrine that must be satisfied by all forms of corporate reorgs. If a company is acquired in other reorgs, the IRS requires that shareholders of the acquired corporation receive an equity interest in the acquiring corporation as consideration for atleast 50% of the value of their equity in the acquired corporation. However, in a type G reorganization, THE CREDITORS are considered shareholders for the purposes of the continuity-of-interest requirement. So, in a type G reorganization, the continuity-of-interest requirement may be met where creditors of a bankrupt corporation have a continuing interest in the acquiring corporation in the form of stock ownership but the shareholders retain no equity interest.
Why do I bring this up?
9/16/2009 A.I Horowitz Review briefs and memoranda and organize response to district court discussion of significance of G reorganization treatment"
(middle of page 20 on the following billing statement PDF)
http://www.kccllc.net/documents/0812229/0812229091023000000000003.pdf
Could be nothing, or it could be a hint at the end of the road for shareholders.
Only time will tell.
I'm not trying to scare people, I am simply sharing as much information as possible so that you all can make the most informed decisions possible.
Let me make this understandable, WMI never had $300 Billion in assets. Look at their SEC filings. I repeat, they never had $300 bilion in assets. They had 300 billion in assets and deposits.
Look at the 10-ks for 2006, 2007, and 2008, and I guarantee they never had $300 Billion in assets.
Last post of the day..................
I suggest you do a little more research on the subject, and apparently you aren't aware that JPM is sitting on a MOUNTAIN OF CASH, and unlike WMI, $4B is nothing to JPM. To suggest that somehow WMI getting the $4 billion back would do damage to JPM's financial condition is more than laughable. JD takes profits and puts them into CASH RESERVES, unlike WMI's former BIG DOGS. BTW, if WMB really was well-capitalized, then guess what? The WMB creditors are going to get paid. The FDIC is going to have to pay the WMB creditors, and imo, it is unlikely they will fork over any cash on top of what they owe the WMB creditors to WMI.