A rearward look at what might have happened if Kerry Killinger was more worried about his shareholders than his ego when he rejected JPM's 8 dollar per share bid for WAMU.......
(1)....JPM was prepared to acquire all of WAMU, liabilities as well from the 299 billion in HELOC loans made against the accumulated equity of shareholders retained earnings of 24 billion dollars, as was handed to the bankruptcy court.......as it was, when Killinger refused the offer, the FDIC took over the liabilities of WAMU when the bank "run" ensued, and WAMU went into receivership... thus, shareholders 24 billion in Retained earnings was "wiped out" due to Kerry's malfeasance for which he was highly paid for..
(2) over a billion dollars in costs for restructuring paid to A/M. lawyers, accountants, and vendors, job losses, real estate assets, losses of some of the best savings and loan institutions. etc, all charged to shareholders losses of retained earnings.
(3)..at the time before the 8 dollar offer was spurned by Killinger, WAMU stock was about 5 dollars per share, and JPM was about 55 dollars per share give, or take, so about 11 shares of WAMU equaled 1 share of JPM...now, in 2024, JPM shares sells for about 200 dollars per share, which is a multiple of about 4... so the value of WAMU shareholders existing shares would now be worth about 8x 4, or 32 dollars per share, and all preferreds would have gotten their interest payments, as well as Bondholders....
(4) ... remember, when Killinger refused the offer and the FDIC took WAMU to receivership, Jamie got the banks and related assets, and did not take the liabilities of the banks... Jamie took the "good stuff" and wrote the rest off to negative goodwill and ended up paying only 1.89 billion for the banking assets....the liabilities of 299 billion in HELOC loans made by Long Beach Mortgage that were written against rising home equity when values skyrocketed during the financial crisis is the housing market ....when the housing market hit the bottom in 2010, foreclosures were rampant during the great recession....all of this crap went to the FDIC , and much of it went worthless when there was the run of 16 billion dollars in savings deposits backing these HELOC loans...
(5) finally, Killinger could not have known in 2008 when the FDIC took WAMU in receivership, that in 2010, the great recession would occur...this is why he was arrogant in not accepting JPM offer... had he been wise, and foreseen what Jamie saw, he would have been a winner, and stuck Jamie with the mortgage loan losses...this was the reason Jamie made an 8 dollar offer for WAMU... even at that, Jamie was prepared to absorb the liabilities of WAMU's 299 billion of chicken sh$t loans.... Killinger should have accepted the offer and would today be a hero...Lodas
AI
