In late July the whole financial industry was “up in arms” over the unwinding of the toxic mortgages that were out there and what to do about them. The consensus was the enormity of them could crash the entire system and send us spiraling into a new depression that would take years to get out of. Someone was peddling bad toxic mortgages and had to be stopped. Every non-wall street bank that was peddling these mortgages would have to be forced to stop. Indymac (Countrywide) was one of the worst, followed closely by Bear Stearns (who had been bought out by JPM through the Fed), next after them was Lehman Brothers (who carried an enormous amount of debt on the books in this form) after them was Wachovia and last but not least was WAMU. Wamu was flooding the market as early as 2005(Rotella and Co.) with toxic subprime mortgages and many in the industry did not like the practice. There was money to be made, so many more followed along aided by Freddie and Fannie. The Bush Admin was well aware of what was going on and tried to get legislation to stop this as early as 2003. (State of the Union). Tried really hard in 2006, because they knew Fannie and Freddie were out of control, they were stopped by a Senator Dodd and a Freshman Senator from Illinois by the name of Obama. Things continued on as normal until Bear fell in March 2008 and put the entire sector on alert.
“Someone thinks WM is going under. 35,000 Aug. put contracts traded at the 3 strike today, and 12,000 Sept. PUT contracts at the same strike. Both dwarfed open interest, so they’re mostly new positions. This reminds me of activity in Bear Stearns in March.” Interesting that it reminds him of Bear Stearns? This date is July 26th. Keep this in mind as I continue this theory…
In July 2008, rumors were flying all over the place and it was a letter from Senator Schumer of NY to Regulators that caused a “bank run” on Indymac, followed by seizure and operation mode (not sale yet). Cuomo (AG NY) was aware of Schumer’s involvement, but for some reason he has kept quiet about it. Not sure why, but it might have something to do with an Elliot Spitzer type setup. IMO
WAMU CEO Killinger, tried to get on the “do not short list” and had no luck with Paulson (what were the other banks left off that list?) I believe in July right after the seizure of Indymac caused bank runs on banks like WAMU, which seriously de-capitalized them, JPM tried to get the FDIC to seize WAMU and give it to them. My reasoning is simple, it was the best time to prove the substance of their slideshow (825 page doc submitted to the court on 12/21/2009) .“After WMI rejected JPMC's March 25, 2008 bid (Jamie Dimon on the same weekend he was going to buy Bear, sent a team to Seattle to offer $8 PPS for WMI) he was turned down in favor of a $7.2 billion investment from private equity firms, JPMC (dejected and pissed off) continued to meet with regulators to discuss a potential acquisition of WaMu (they never gave up). An internal JPMC e-mail chain from July 17, 2008, states that "we may get more color tomorrow with the regulators" concerning WaMu and potential government assistance in a deal. It goes on to talk about “if we can’t find it, we’ll just make something up!” Keep in mind that this July 18th. What’s the best way to get a bank on its heels.
Answer: Invent a “bank run.” I find it interesting that not less than 1 week later the entire financial system gets affected again, this time by a letter from a US Senator to regulators (that just happened to be leaked) that details the fact that he thinks Indymac is going concern. So if Indymac in LA is a going concern, how does that affect WAMU in Seattle. It doesn’t it only affects WAMU in Seattle, if the true intention from the start was to affect WAMU in Seattle. If Jamie Dimon is as smart as I think he is, he would get his buddies to disguise a “bank run” on WAMU inside a national banking threat. Did you know that most of the depositors who withdrew funds from WAMU were electronic withdrawals and above the 100k limit. Now Dimon has the ball rolling, he has Schumer shaking up a pretty stable market and here we go again. Dimon is trying to create a panic threat for WAMU that will make it beg for mercy. He has spent countless hours giving presentations to all the people involved. Attached to
the e-mail is a presentation disclosing information on "West's,,6 asset and mortgage portfolios
and describing a "Regulatory Relief' option in which JPMC will "[a]sk Fed for relief on DTA
[Deferred Tax Assets] or RWA [Risk Weighted Assets] related to the Option ARMs & Subprime
portfolios" and notes that JPMC had already "discussed with Fed on prior occasions."
Now that Dimon has Sheila Bair’s attention diverted to Indymac, he is working overtime on his plan to take WAMU. What happened to the stock in July? It got shorted down to $3 PPS. I believe Jamie Dimon tried to get Sheila Bair to take WAMU on July 25th, ( Stock dropped an entire 100% in value from July 18th –July 25th) but she could not do this because Reich of the OTS would not let her. He blocked her every step of the way, he stood in her way, he believed WAMU could and should survive. All she wanted to do was penalize all the banks that were responsible for the subprime toxic mortgage crisis, except for the main Wall Street banks. Down goes Bear, down goes Indymac, down goes Lehman, down goes WAMU, down goes Wachovia (oops not so fast Sheila), down goes Colonial, and many other smaller ones. Bank of America a Charlotte, NC based bank got saved, only because they took Merrill off Paulson’s hands and when they wanted to exercise their legal right to get out of the contract, Paulson threatened Lewis and told him no or things could get bad for you. Citi, JPM, are big “too big too fail banks” TARP was designed to bail the USA out of the toxic mess it had unloaded onto the world and using AIG and Goldman to do this, they accomplished it on a secret society basis.
In Sept, Paulson decided to not bail out Lehman, instead he let if fail and head off into BK. Why did he do this? He has never really explained why he let Lehman go down, but here is a half-assed attempt at it “I never once considered that it was appropriate to put taxpayer money on the line in resolving Lehman Brothers”. Really only a couple of days later, he put a ton of taxpayer money on the line in Freddie and Fannie. Why? Because he had to. He had no choice, the world was watching , they were holding a ton of toxic mortgage debt. We packaged the bad loans up into instruments and sold them throughout the world, leaving the good ones in America. Lehman was a clearing house for this type of practice. The political pressure to let Lehman fall off the earth, was tremendous (which I think Volukas will tell us soon) Here is another explanation… As subsequent events have shown, in particular when the first rescue package was rejected by the US Congress, opposition to providing the financial sector with public funds came not only from within the government, but also from parliament. The Members of the US Congress, many of whom face voters at the beginning of November, feared that such a decision would compromise their re-election. There was opposition to rescuing Lehman Brothers, therefore, not only from within the Administration, but also from Congress and, more broadly, from public opinion. In other words, the decision was largely the result of a democratic process. Ultimately, it was the US citizens who did not want to rescue Lehman Brothers. Of course that all changed days later with Fannie and Freddie, there was no avoiding that “time bomb.” Now Paulson was in a precarious position, he was running around trying to figure out how to save the financial system, while the evil “Dr No” Dimon was plotting his takeover of WAMU. He once again was engaging Bair to help him and he would in turn help her by taking the risks out of WAMU’s deposit base away from the FDIC. If the FDIC just followed the procedures laid out by JPM in July, everything would be fine. IMO Dimon used his inside influences to short the hell out of WAMU stock and cause a “bank run” using the media and rating agencies at the same time. It was a well orchestrated takedown of a well-capitalized bank.
Last but not least.
Why have we not settled? In March 09, we know that the parties were at the table and almost to agreement, when a quarrel broke out over the 4.4 Billion in cash. JPM wanted it without paying for it, how does that work? The parties could not come to agreement, so they parted ways and moved on to the courtroom. Here we are 1 year later. Why are we not done with this? If the FDIC is hampering a settlement, why would they do such a thing? Why is every document they release as part of the FOIA redacted beyond recognition, what do they have to hide? If I know Jamie and I think I do now, he was demanding the FDIC kick in at least 75% of the settlement monies and JPM would kick in 25%. However Mrs. Bair figured out she had been setup and burned, so she started putting up roadblocks against Dimon, just to make him throw down his hand and head into the courtroom, because she knew once he was in there, he could not get out (you know what they say about “making your bed”). Here we are almost 1 year later and guess who is still in the courtroom. Sure Sheila tried to hide behind Firrea, which clearly did not work. Dimon and crew disclosed confidential information to the FDIC, helping reinforce their decision to pursue and eventually gift WMB to Dimon. Why did Dimon and Co want WMBfsb and all subs? It seems they would just be extra baggage that would weigh down the bank. Dimon and crew used the “main income from banks approach” when they presented their case to Bair in July. They told the FDIC that WMI’s subs really didn’t make them any money, their main source of income was from the banks. Once you take the banks away, the holding company would basically be a shell. We all know this a “flat out lie!” We (as well as Rotella and the moles) know those subs hold considerable resources that potentially could be worth more than the total assets of the holding company. Dimon knew this to, because Garry Denke and Company had been hired by WMI to estimate the values, based on the mineral and oil rights. I think this was part of the TPG takeover in late June. Bonderman is not an idiot, he is also a Texas man and Texas men understand dirt. Why would he take on 50.4% of WMI with all of its debt, if he did not think there was “gold in them thar hills!”
All Bair was concerned with was the deposits and would they be covered, so her depleted fund would not be used. Dimon suckered her into the 500mil indemnity. There is a clause in that indemnity that reads as section 12.6 in the P&A and it has specifically to do with criminal claims. JPM will not be covered if criminal complaints are brought forward and proven, the FDIC will not be responsible. IMO Bair was burned by JD, everytime WAMU is mentioned she gets all flustered and goes into “one-liner” mode. She knows she got screwed, so she is going to use the full power of the US government to return the favor. I feel retribution will come to WMI and its shareholders, in due time, first Dimon needs to hang himself along with all the other cronies who worked so hard to screw shareholders and the FDIC. The FDIC is not going to idly sit by and let some bank CEO dictate the terms of an agreement in “bad faith” if the FDIC can hold this up long enough to get Congress, Senate, FBI and their own version of Internal Affairs investigating, she knows they will clear her and her staff of all wrongdoing and prosecute the real criminals who ruined her career and the economy with their malfeasance, collusion, corruption and machinations of her office. Yes, Dimon is arrogant, this is why we are still here on this board, but now the stakes have gotten much higher and now even if JPM buys their way out of this mess, they will not escape the justice of the US Government and the scorn of a very powerful woman.
Have any of you noticed, that JPM has not been privy to any new banks lately? You did notice they were recently left out of the AIG 10 Bil Asian Unit IPO offering. Don’t you think with all the influence they have in the government that this could never happen? HA! Karma’s a Bitch Jamie! AbigHammer has your bracelets ready and Bernie has rolled out your new mattress. I seriously think Bair and The FDIC as well as Treasury and the Fed are very aware of what went down, hence the cooperation. Notice it was SEC, FDIC and Moody’s who were vigorously opposing Rule 2004-1 discovery, because they have something to hide. These docs will be made available to Congress and we will eventually get our hands on them. I seriously believe the JPM executives misrepresented and falsely conveyed their case to the FDIC. Reich saw through this and fought them the whole way, until he finally caved in the midst of an orchestrated bank run and stock drop.
JPM provided the FDIC the appropriate legal language that is supposed to be what the 3.1A includes and details to. What happened to that pesky 3.1A of the Purchase and Assumption agreement. If we do not have a copy of it, then it is not a legal document RIGHT? How can one detail the terms of a contract (worth billions) if the main clause in the contract detailing the asset sales is missing and presumed dead? Help Legal Minds! IMO
This contract should and will be “null and void” by this court Real Soon. If the 3.1A is not produced, then we do not have a valid contract.
Now that we have the “who shafted who” answer out there, the main question is “what is the end result?”
You tell me!
~Fish~
