JP Morgan Chase & Co (JPM)

[BullNBear52]

The examiner's job was to determine if Wamu was solvent at the time of seizure since the bank was an asset of the holding company WMI. If he had discovered that Wamu was indeed solvent then he would have advised the BK court that the FDIC had gotten it wrong and that the shareholders had a compelling argument to make that an asset of the holding company was improperly seized.

Once he determined that Wamu was insolvent his job was done. That asset got wiped off the books of the holding company making WMI insolvent with regards to the reserve requirements that they are compelled to maintain with the Fed per the bank holding company act.

That is one of the reasons bank holding companies are set up so as to insulate the parent corp from the bank. They could technically still be able to survive by filing BK under chapter 11.

The unfortunate thing is that the remaining assets get dispersed in a totem pole fashion with common shareholders getting wiped out since they are at the bottom.

I have had this happen to me personally when I worked for a savings bank back in the late 1980s early 1990s during the S&L failures. I was sitting on a boatload of options and even though I knew the lenders had given the bank away I couldn't exercise and SHORT the company as an insider. I got over it and changed careers when the FDIC seized the bank.

Banks are failing on a daily basis.

investorshub.advfn.com/boards/read_msg.aspx?message_id=55874854

It's all a result of stupidity by lenders and Congress. The latter not realizing what they unleashed when they repealed Glass Steagall.

BTW as far as you other post on the run on the bank, when a bank needs deposits they boost their interest rate on Jumbo CDS which extend beyond the FDIC limits of insurance. It is known as hot money. The caveat to the item below is they'll yank the deposit in a heartbeat if there is any clue the bank will fail.

hot money

Funds that are controlled by investors who seek high short-term yields when the funds are likely to be reinvested somewhere else at any time. Some financial institutions attract hot money by offering above-average yields on certificates of deposit. However, if the rate is lowered, the funds are likely to be lost to another institution or investment.

http://business.yourdictionary.com/hot-money

You can check current rates at

http://www.bankrate.com/funnel/cd-investments/cd-investment-results.aspx?prods=24

The national average is 0.56% APY. Discover Bank is chasing hot money. I wonder why?

http://en.wikipedia.org/wiki/Discover_Card

Finally with regard to the short selling of WMI. It is not the SEC's job to protect an investor who has an interest in a failing company.

From your post,

And speaking of stock prices being manipulated, this is in direct relation to the Bank's Tier 1 Capital ratio. If someone shorts the stock to nothing which is the case of Wamu, not only does their Capital ratio change but also brings on public fears that the bank is unstable

They were shorting WMI it had nothing to do with the bank. They were shorting the holding company. As I previously posted above I would have done the same thing with regard to the holding company I worked for.

The issue of shorting only dealt with the forebearance agreements regarding bond holders. The stock price drops the interest rate goes up on the bonds. It had nothing to do with the bank failure. The FDIC would have been ill-advised to suggest to the SEC that WMI get added to the no short list.