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I knew nothing more than any other experienced trader except my risk threshold. The large funds have better tools and information than traders at my level, and know better how to target the top and bottom of a volatile market such as today. Not all of the sell-off was hard sells. Much of it was shorting, guessing the bottom, and buying back in. Too much risk for me. The whole watching world of stocks knew what was likely to happen today.
My statement about closing-out my positions referred to trading only. My investment in WMIH is unchanged.
A lot of millionaires made in the last thirty minutes. A lot of mom & pops suffering.
Too late for the little people to get out. Only the huge guys can get a sell processed. Just like WAMU on Rosen's rant-day.
I closed-out everything on Thursday.
Dow futures down 600-700, oil below $40, and problems in Greece. WMIH closed @ $2.04 in Germany.
Brace yourself for the opening bell.
Preferred Income Equity Redeemable Securities (PIERS)
WAMUQ.
My average price for each of the 500K escrow markers (also known as beneficial interests) is $0.071334. My break-even point on the WMIH side is $2.048187. Like all other shareholders and holders of escrow markers, I wait. Speculation is futile.
I have 500k in escrow. I received 284 new shares yesterday. I now have 17414 shares of WMIH and have never bought or sold any since my original purchases before conversion.
Only 568.
The recent Press Release says very clearly that there are 2.9 million Disputed Equity Escrow shares (shares of old WAMUQ stock), which will be available for distribution to eligible claimants in Class 22 of the bankruptcy. However, there are still ongoing claims against the (old) estate. A claim of an ongoing claimant may be resolved in such a manner that the claimant will receive some of the Disputed Equity Escrow shares, become a member of Class 22, receive a CUSIP number, and be eligible for distribution of those Disputed Equity Escrow shares in the form of WMIH stock (reorganized company). If you have a CUSIP number, you are eligible. When the distribution takes place, if you are eligible, you will receive more shares of WMIH just as you did on August 1, 2012. You are eligible by having a CUSIP number, because you timely submitted relevant documentation, including the release required under Section 41.6 of the Plan.
The distribution by the DTC will be in accordance with the same formula they used for the August 1, 2012 distribution.
The text in the July 30, 2012 PR, which confuses many posters on this message board states: In connection with the Distribution, eligible claimants in Class 22 who held shares of common stock issued by WMI prior to September 25, 2008…
This sentence has nothing to do with who owned shares before or after September 25, 2008; it gives reference to the WMI stock itself, which WMI issued for sale to shareholders until the date of the bankruptcy, which was September 25, 2008. WMI did not issue any more shares of stock after that date.
The argument that WMI (old or new) views pre-bankruptcy shareholders differently than those who bought shares after WMI filed bankruptcy on September 25, 2008 is worthless. Having a CUSIP number and your new WMIH shares are the only facts you need, which shows WMI considers both groups the same. It has never been about the shareholder. It has always been about the share. WMI does not care who owns the share or when you bought it.
There can be no assurances that the Trust will be able to monetize assets...
What assets?
It would be nice to see a list.
The real thing.
I asked (by email) for a current copy of the Statement of Assets and Liabilities in Liquidation (Unaudited) for Washington Mutual Bank, or a web link to the information. They ignored the part about a copy.
FDIC replied to me by mail. They may reply to others by email.
I removed my personal information.
OTS was dissolved on 21 July 2011.
Well! Well!
From the mouths of babes!
The document appears to reflect much of the value of Washington Mutual Bank at the time of the fire sale. The figure of $1,942,656,004 looks like the amount received from JPM for the purchase of WMB. The inception column reflects other assets of the bank, including the value of many of the mortgages. If we had the numbers that reflect the values of what was collected and paid to date, we could determine the value of the missing unicorn.
The link is to a dated copy of the Statement of Assets and Liabilities in Liquidation (unaudited). The source of the link to the document is not FDIC-R, and is not 100% reliable. It would be nice to see the current page from the FDIC-R website.
Thanks!
Large Green,
Do you have a link to the Global Settlement Agreement?
Thanks!
David West
Thanks again.
That all looks good in reference to claims by the unsecured creditors. Do you have any links to debtor claims against FDIC-R being cancelled, settled, expunged, etc?
Thanks.
I recall that action, but cannot find my archived reference. Do you have a link to the court's decision.
The Receivership (FDIC-R).
(From) OVERVIEW OF THE FDIC AS CONSERVATOR OR RECEIVER
C. Priority of Claims
1. FDIC Depositor Preference
Link: http://blogs.law.harvard.edu/corpgov/files/2008/10/092608-overview-fdicasconvervator-receiver.pdf
Under the FDI Act, insured depositors are covered by FDIC deposit insurance (with the FDIC as subrogee taking the place of those depositors), claims of FHL Banks receive priority treatment, and secured claims are satisfied based upon the governing security documents. As the term suggests, "depositor preference" elevates the claims priority of depositors over unsecured creditors. Under these provisions, claims are paid in the following order:
1. Administrative expenses of the receiver,
2. Deposit liability claims (the FDIC claim takes the position of the insured deposits),
3. Other general or senior liabilities of the institution,
4. Subordinated obligations, and
5. Shareholder claims.
2. Bankruptcy Law Priorities
1. Any secured claims...
2. Administrative claims...
3. Priority claims in a specified order...
4. Allowed unsecured claims...
5. Subordinated claim...
6. Shareholder claims, generally in the order of priority as between shareholders. (Priority being the order of the tranches in WMILT).
a. Safe Harbor
The goal of the FDIC in addressing the legal isolation concern was succinctly stated by the FDIC’s General Counsel in Financial Institution Letters issued in conjunction with the proposed rule and the final rule as adopted: If the transferred assets [in a securitization or loan participation] are not sufficiently isolated from the insured bank or thrift, its creditors or the receiver, the transfers would not qualify for sale treatment under GAAP and the transferred assets would continue to be reported as assets on the transferor] institution’s balance sheet.
The rule responds to those questions by reassuring interested parties that, subject to certain conditions such as fraud, the FDIC - as conservator or receiver - will not seek to reclaim, recover or recharacterize as property of the institution or the receivership financial assets transferred by the institution in connection with a securitization or participation. Accordingly, the rule should resolve the legal isolation issue for insured depository institutions. The rule confirms existing FDIC practice in dealing with securitization and participation transactions.
(Lenders moor assets (loans) in Safe Harbor routinely before seizure or bankruptcy.)
(From) JPMorgan Chase Notices relating to Washington Mutual Whole Bank P&A
Link: https://www.fdic.gov/about/freedom/wsj-responsiverecords.pdf
What does “substantial claims” mean, and do claims by WMI against the receivership still exist?
Page 2 of the third document: 6. We understand that WMI and its creditors (and possibly stockholders), as well as WMB’s creditors, have submitted substantial claims in the FDIC’s receivership claims process. To the extent that any such claims were to affect or damage JPMC, we would be entitled to indemnity.
The Mortgage Pools.
Also known as “Trusts” as that term relates to Residential Mortgage Backed Securities (RMBS).
Although WMI may have had some “off-the-books” or “hidden in plain sight assets” (none have shown up yet), the bulk of the mortgages belonged to WMB. Before seizure, WMB assigned the mortgages to various Mortgage Pools, selling Mortgage Backed Securities to investors. In accordance with the Purchase and Assumption Agreement, paragraph 2.1, Liabilities Assumed by Assuming Bank, JPM specifically assumes all mortgage servicing rights and obligations of the Failed Bank. In paragraph 3.1, Assets Purchased by Assuming Bank, JPM further purchases all mortgage servicing rights and obligations of the Failed Bank. This may mean WMB was servicing their own loans and loans for other parties.
What happened to the mortgages?
At the beginning of the receivership they still existed, but were not a part of the bankruptcy because they belonged to WMB. The mortgages are now victim to the various ongoing actions by FDIC-R and JPM to identify who owns what and who is going to recover what part of their investment.
The link below is to the Amended Complaint of the Deutsche Bank National Trust Company. It describes in detail how the Mortgage Pools and RMBS processes worked for WMB. It is lengthy, but is well worth the read.
https://www.fdic.gov/bank/individual/failed/wamu_amended_complaint.pdf
As I have posted before:
My opinion on the outcome of the Beneficial Interests (escrow markers):
Historically, the Beneficial Interests are worthless to equity. However, hope is eternal. Sometime between now and the moment they are deleted from our trading accounts we will know.
It is clear the true value of the mortgages owned by WMB is much less than reported, due to the actions required by the WMB repurchase agreement; the FDIC-R is now sorting through this maze of confusion. Because so many investors, like Deutsche Bank National Trust Company, are going to get a piece of the repurchase action, I have called them “hollow mortgages”. Assuming there is anything left after claims against WMB are resolved, the FDIC-R should return it to the WMI Liquidating Trust (because WMI owned 100% of the bank), where it will enter the waterfall. Only time will reveal the outcome. I think there will be value returned; speculation on the value is futile. Currently, the only value that will hit the waterfall will come from those sources clearly owned by WMI, excluding anything from the WMB receivership. Any value that anyone anticipates will come from the reconciliation of the receivership of WMB is purely speculation based on unclear evidence and guesses. However, with 500,000 Beneficial Interest markers in my TD Ameritrade trading account, I sincerely hope I am wrong.
My immediate concern is will the BOD up-list WMIH to a major exchange. Don (Bluefoxx) says the agreement with KKR requires WMIH be up-listed within 180 days. If the up-listing occurs, I expect the share price to reach my exit price of $10 by year end.
Mostly fact.
Hiding assets.
Neither Kmart nor Greyhound is an example of hiding assets in plain sight. During their bankruptcies, the appraiser based the value of each company’s “on-the-books” real properties (mostly buildings and land) on the original purchase prices and not their current market value. There is no indication the under-evaluation was intentional on the part of the appraiser, however, each company’s debtors, creditors, and equity should have known something was wrong, as WMI equity investors know something is wrong with the missing $350B in mortgages (arbitrary number). We do not know what is wrong. We simply know something is wrong and we think someone should tell us what it is. Good luck on that.
Enron, however, is a good example of a corporation legally hiding assets in plain sight. The two primary methods used by Enron to do this are Mark-to-Market Accounting (MTM) and Special Purpose Entities (SPE). Check the link below for more information on how Enron used these two methods. There is no evidence that WMI or WMB used either of these two methods, however, it does not mean that they did not.
http://www.investopedia.com/articles/stocks/09/enron-collapse.asp
For another perspective on WaMu consider that IndyMac, a bank about 10% WaMu's size, was seized and later sold for $13.9 billion. Wachovia Bank which the FDIC threatened to seize and tried to force into a sale to Citigroup for $2.1 billion, almost the same price as JPMorgan paid for WaMu, was sold within a week to Wells Fargo without any government assistance for $15.4 billion. There were details to these sales, and there were considerations, but WaMu was easily as viable as either of them, and with a little financial finesse, seized or not, could have easily been sold for considerably more as well.
Above paragraph quoted from this link:
http://www.patenthawk.com/blog/2009/04/wamu.html
Of course!
Good old Charlie, whose name used to be Jharlie, but the 'J' kept confusing the masses until he changed his name!
What a relief to get that cleared up!
Jeff Cox
Jon Najarian
Castboy -
The most important paragraph in the article is:
Going in as and when it did, TPG must have believed WaMu's falling knife had fallen far enough, that WaMu's assets (largely mortgage loans) had already been written down so much that what the firm was paying for wasn't WaMu's loans at all, but the bank's deposit-generating machine.
It shows that TPG was betting on the bank and not the loan portfolio. It also implies what I posted in the past, which is that most of the loans were hollow. This author uses the phrase "written down". Although some value of the loans was still there at the time of seizure, it is a clear indication Large Green's valuation of what will be returned by FDIC-R is a little off.
Time will tell.
Mostly opinion.
Crown Royal and I wish all WAMUers a happy and prosperous holidays. If any of you Okies make it down to Guthrie, say hello to Byron Berline at The Last Stop Fiddle Shop.
Tax confusion:
http://www.costbasis.com/reorgs/washingtonmutual.html
POR-7 Page 107, Subparagraph 41.23:
Closing of Case: The Liquidating Trustee shall, promptly upon the full administration of the chapter 11 cases, file with the bankruptcy court all documents required by Bankruptcy Rule 3022 and any applicable order of the Bankruptcy Court.
No doubt, this happens after any reconciliation.
Chapter 11 Liquidations:
Chapter 11 plans may provide for the liquidation of assets. A typical situation for a liquidation would be one where a business has relatively little value as a going concern but there are sufficient assets so it makes sense to sell off the assets to pay the creditors. In Chapter 11 bankruptcy, there is a liquidating “trust” where assets are sold individually and the proceeds are put in the trust for distribution to creditors. Unlike a Chapter 7 liquidation where the trustee gathers and sells non-exempt assets, Chapter 11 liquidations are controlled by the business owner. The theory is that the business owner is in a better position to get the most value for the sale of business assets. A Chapter 11 can convert to a Chapter 7 for liquidation, but there are many reasons why a Chapter 11 debtor prefers the liquidating trust. The debtor may be able to do a better job liquidating the assets because it knows the market for his assets and believes that it will get more money through a gradual asset sale than could a Chapter 7 trustee who is not familiar with the business or the market for business assets. If there is any money left after liquidation and payments to creditors, that money would go back to the debtor business or its equity holders.
http://www.alperlaw.com/bankruptcy/chapter-11-bankruptcy/chapter-11-debtor-creditor/
An interesting read.
For those of us who have had messages deleted.
http://investorshub.advfn.com/boards/Terms.aspx
The legalese of taxation after exercise of warrant:
There are numerous references on the Internet, which attempt to describe a tax liability when an owner exercises a stock warrant. Authors who have a penchant for exhibiting their legalese, instead of giving a clear understanding of the process, write most of them. To make the understanding even more confusing the authors attempt to describe taxation of options and warrants without much differentiation between the two, stating that understanding the language and intent in the IRS publication is also unclear. To make matters worse, there are different types of warrants.
Whether the information I posted on the topic of ‘Tax at Exercise’ is correct or incorrect, I selected the reference I posted to this topic because it parallels what Don was describing in his last post (#409026), and because the author wrote it at a ninth grade level of reading comprehension.
If the information were correct, KKR would be prudent to exercise their warrants as close as possible to their strike price to avoid paying a higher tax rate based on normal income. If they exercise the warrants at the strike price, all they have to do is hold the stock for a year and a day to qualify for Capital Gains tax, which is 15% instead of a higher rate based on normal income.
As stated by WithCatz, anything that affects KKR affects WMIH, and particularly anything that affects the relationship between the two.
WMIH has a plan that does not include keeping us informed, but they know exactly what they and KKR are doing. Until the events unfold according to their schedule, and according to their reasons, as always, we wait.
Anon.
Best regards,
David West
Tax at Exercise
When you exercise warrants to buy the underlying stock, you pay the stated strike price to the issuing company. The difference between the strike price and the price of a share, minus the cost basis, is taxable income. Suppose you exercise warrants with a strike price of $30 per share to buy 100 shares of XY Company and you originally paid $500 for the warrants. Your total investment is thus $3,500. If the market price on the day of exercise is $50, the stock is worth $5,000 and the difference is $1,500. This $1,500 is taxable as ordinary income in the year of exercise. It is not a capital gain because you did not own the shares prior to exercising the warrants.
Capital Gains and Losses
You can sell the shares you acquire by exercising stock warrants immediately. If instead you decide to hold on to the stock, the exercise price becomes your cost basis. Any further gains or losses are capital gains or losses. If you sell the shares one year or less from the date of exercise, you have a short-term capital gain (or loss) that is taxable as ordinary income at the same rate as your other income such as wages or salary. If you hold the shares for more than a year after exercise, it’s a long-term gain or loss. Long-term gains are taxed at a maximum rate of 15 percent as of 2013.
http://finance.zacks.com/taxation-stock-warrants-7458.html
The above explanation is in line with what may be a concern of KKR, as they consider exercising their WMIH warrants.
Another good effort Don. It should be clear to all why it is to KKR's benefit to exercise the warrants as closely as possible to the strike price, without shorting. However, it might be construed as using inside information to exercise the warrants before the announcement. However they do it, I feel certain they will know exactly how to do it and without worry.
Best regards,
David West
Good effort Don. I like the date 01/01/15.
The current daily trading of WMIH is the real thing, but I think nothing good will come to WMIH until M&A happens. At that time investors will have to rely on all of their accumulated knowledge and ability to make good decisions. If WMIH is not uplisted, it will be tragic for us in that the BOD can keep us in the dark forever.
Another one bites the dust.
MassMutual Senior Vice President Found Dead, Stabbed In Chest In Apparent Homicide.
http://www.zerohedge.com/news/2014-11-24/massmutual-senior-vice-president-found-dead-stabbed-chest-apparent-homicide
$1.78571 per share marker.
Some might add that the attorney of note at the link I listed in my last post is somewhat of an ambulance chaser and they would be accurate. However, all should keep in mind, a prerequisite for being an ambulance chaser is that an ambulance exist to be chased. Our ambulance at one time was worth as much as $300B-$350B.
In time we should know what the final tally will be.
It could be nothing.
It could be large green.
Pun intended.
Large Green -
I have posted several times that the FDIC-R process of unraveling the status of the mortgages is like a rat maze. Here is a link of other inquiring minds who want to know where $300B went:
http://livinglies.wordpress.com/tag/wamu/
We are not alone.
Best regards,
David West
WithCatz –
The answer to your question is I do not know.
However, the FDIC is in place to protect the depositors, and it would seem logical to me that returning the depositor’s money to their bank accounts would be at the top of any list of priorities. As you know, depositing money into an FDIC protected bank account is “risk free” to the depositor up to $250K; the key phrase here being “risk free”. Contrarily, the word “invest” implies “risk”, and that is what all investors, including the MBS purchasers, know and accept before investing. I mentally include the purchasers of the MBSs as members of claimants. In the past, I have seen a small hierarchy of how FDIC-R assigns priorities in a receivership, but it has lost its way in the myriad of research documents I have read. If I were one of our self-serving, criminal politicians and had a lot of money invested by a large hedge fund into WMB MBSs, I know who would be next on the list after the depositor if I could wield the power to make it so. If the FDIC-R recovered a value of $100M, the bank (depositors) would get any part of it needed to make the deposits whole, and then claimants would be satisfied in order of the FDIC-R priority list. I feel certain the WMI estate will be at the very bottom of the list.
FDIC-R does not recognize “safe harbor” or “exempt assets” as they relate to bankruptcy. This maneuver protects no one and no asset in a receivership, including the MBS purchasers, because it is relevant only in bankruptcy court. As assets “hidden in plain sight” do not exist to the court, the protection of those assets does not exist to FDIC-R. This very topic is probably what FDIC and the court had a small spat about. The court probably stepped out of bounds on the subject of “safe harbor” and “exempt assets”, and the FDIC forcefully reminded the court of the power of the FDIC on their side of the line in the sand. The court had no power over FDIC except in bankruptcy matters (remember, the protected assets were not a part of the bankruptcy), and agreed with FDIC. FDIC-R could and would do whatever was legal with the protected assets. Additionally, this subject was probably the topic of many of the “behind doors sessions” of the court, and the redacted documents. The debtors did not want others (equity) to know this information. However, it was impossible to suppress the topic during negotiations, and equity did know after the Trustee authorized the Equity Committee. Even then, the EC could not use the value of the protected assets as an argument to prevent cancellation (enter Nate Thoma, insider trading, equitable disallowance, etc.).
WMI/WMB hid the assets “in plain sight” before OTS seized WMB, and the maneuver is useful in a bankruptcy only by the debtor to justify cancelling equity, showing there is not enough value in allowable assets to pay creditors and equity. You can bet the creditors knew about the “hidden in plain sight” value of the mortgages, and knew that FDIC-R would return “value-in-kind” during the receivership.
We have absolutely no control over the outcome of the receivership. Whatever the final tally, we will have to accept it and move on.
We are the ones who did not know how it worked. We still do not know.
Mostly opinion.
Best regards,
David West
Donotunderstand,
In answer to your question:
In its simplest form, WMI/WMB registered many of their mortgages in “Mortgage Pools” or “Trusts” by way of legal maneuvering. This maneuver is similar to having “exempt assets” in an individual Chapter 7 or Chapter 13 bankruptcy, and prevents a bankruptcy court from listing them as assets. As far as the court was concerned, the “hidden in plain sight” mortgages did not exist, and the debtors and creditors could not use the value of the mortgages in any of the bankruptcy negotiations. The object of this maneuver was to convince the court there was no money for equity, so that the debtors could cancel equity. Later, the estate would pay the creditors from the spoils, and the rest would belong to the estate.
Other posters have listed much information on this aspect of bankruptcy, including links.
There are many complicated details of this legal maneuver, which include selling multiple Mortgage Backed Securities (MBS) on a bundle of mortgages, often for a greater aggregate value than the mortgages. Unravelling the rat maze of MBSs, determining where the money came from to fund the mortgages, determining the value of each mortgage, determining who owns the mortgages, who services the mortgages, and liquidating the mortgages etc., is what the FDIC-R has been doing since the receivership began. The receivership is not a part of the bankruptcy, and does not have to follow bankruptcy rules as they do their job. Remember it was WMI who filed bankruptcy and not WMB. WMB is in receivership and not WMI.
WMI/WMB had $300B-$350B in mortgages as of the date WMI filed bankruptcy. If $300B of this amount came from bank depositors, it does not leave very much to make it to the waterfall after all creditors have been satisfied, and all other claims paid.
If there were $300B left after the receivership finishes its job, why would FDIC-R return the money to the WMI estate? If the bank repossesses your car and sells it for more than your loan value, they must return the excess amount to you after they deduct collection and sale expenses. The subsidiary of WMB belonged to WMI. It no longer exists, but a value above the $1.88B sales price does exist. Once the FDIC-R liquidates everything above this purchase price, they will return the excess (if any) to the owner of the subsidiary (WMB) before the seizure – the estate of WMI.
The questions remain. How much? Who will get it? When?
Current evidence indicates the answers are “none”, “no one”, and “never.”
In time, the process will reveal all.
Best regards,
David West