Thanks scrivener. What a snake pit!! OMG. How do these people sleep at night knowing they ruined the lives of thousands of people who lost their jobs and their life savings, not to mention the shareholders and depositors who lost it all.
Our government has no scruples. We've turned into Russia.
—– Original Message —–
From: Bair, Sheila C.
To: Reich, John M Cc: Murton, Arthur J. ; Polakoff, Scott M
Sent: Wed Aug
Subject: W
Dear John,
I’d like to further 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. My interest is in assuring that IF we have to market it on an emergency basis, there is multiple bidder interest.
In any event, both the FDIC and the FRB agree that there needs to be a contingency plan in place, so let’s talk this through on Friday. I’d really like to develop a plan everyone is comfortable with.
Sheila
—–Original Message—–
From: Reich, John M
To: Bair, Sheila C.
Sent: Wed Aug 06 17:32:482008
Subject: Re: W
Dear Sheila, You really know how to stir up a colleague’s vacation.
I do not under any circumstances want to discuss this on Friday’s conference call, in which I mayor may not be able to participate, depending on cell phone service availability on the cruise ship location.
Instead, I want to have a one on one meeting with Ben Bernanke prior to any such discussion – as early next week as possible following my return to the office. Also, I may or may not choose to have a similar meeting with Secretary Paulson.
I should not have to remind you the FDIC has no role until the PFR (i.e. the OTS) rules on solvency and the PFR utilizes PCA.
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. And if it occurs without my consent, I will not sit quietly by and observe – there would be a public reaction. Put yourself in the PFR’s shoes in this situation. We have our responsibilities, including the right of primary supervisory determination of this institution’s condition, and until Congress changes the statutes under which we operate, our responsibilities as the PFR are not to be simply tendered to the FDIC in a down economic cycle.
It seems as though the FDIC is behaving as some sort of super-regulator – which you
and it are not. I also believe there could 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 wishes to actually seek a buyer. The potential harm could stem from the fact that any such potential buyer may have been allready been contacted by the FDIC.
If in fact any meetings or discussions have already taken place by the FDIC with either JPMC, Wells Fargo, or any other entity, in any capacity in which 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.
This is an OTS regulated institution, not an FDIC regulated institution. We make any decision on solvency, not the FDIC, and I have staff equally as competent as staff at the FDIC, whom I know well.
The FDIC can do whatever internal contingency planning it wishes, but should in no way go outside the FDIC. This is a 3-rated institution. Are you also trying to find buyers for Citi, Wachovia, Nat City and others?
Finally, ifWamu were to learn ofthe FDIC’s actions, there may well be a question as to whether these actions may constitute a disclosable event. That, in and of itself, is a reason not to proceed with this approach for a publicly traded institution. 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.
I will attempt to be on the Friday conference call, and I am going to assume this notion is not going to be raised.
John
This excerpt is from John Reich's (OTS) email to Sheila Bair (FDIC) on 8/6/2008 (p264-265) says it all
"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.”
This excerpt from John Reich's (OTS) email to Sheila Bair (FDIC) on 8/8/2008 (p260).
"In my view rating WaMu a 4 would be a big error in judging the facts in this situation. It would appear to be a rating resulting from fear and not a rating based on the condition of the institution. WaMu has both the capital and the liquidity to justify a 3 rating."
This excerpt is from John Reich's (OTS) email to Sheila Bair (FDIC) Sent: Wed Aug 06 17:32:482008
"If in fact any meetings or discussions have already taken place by the FDIC with either JPMC, Wells Fargo, or any other entity, in any capacity in which 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."
