Mr Cooper Group Inc (COOP)

[dianebRN]

your post reminded me of something I read recently. I know people on the board don't like to discuss any similarity between lehman and Washington Mutual. I did find this article interesting.

kind of explains the "run" on the bank too... just who did pull all that money from wamu and who clued them in as to what was about to go down?

Bank of America Must Return $500 Million to Lehman
November 17, 2010, 11:30 AM EST
Nov. 17 (Bloomberg) -- Bank of America Corp., a lender to Lehman Brothers Holdings Inc. in September 2008, must return $500 million of deposits it seized in violation of bankruptcy law, a judge ruled.

“BOA’s seizure of the deposited funds was an unauthorized and impermissible setoff in violation of the automatic stay in LBHI’s bankruptcy case,” U.S. Bankruptcy Judge James Peck in New York said yesterday in a written decision.

The case is one of several involving big banks such as Barclays Plc and JPMorgan Chase & Co. that Peck is considering as Lehman, which filed the biggest bankruptcy in U.S. history two years ago, sues to recover money to pay creditors. The defunct firm has said creditors stand to get an average of 15.8 cents on the dollar.

“We are disappointed with the court’s decision, and we continue to believe that our actions were fully supported by well-established New York law and the unambiguous language of the Bankruptcy Code,” Shirley Norton, a spokeswoman for Charlotte, North Carolina-based Bank of America, said in an e- mailed response to questions. “We are considering our appellate options.”

Lehman’s lenders, including Bank of America, became “increasingly uneasy” about the investment bank’s financial health in the summer of 2008, Peck wrote, citing a report by examiner Anton Valukas into Lehman’s failure. To mitigate its exposure, Bank of America used its right to set off a secured collateral account posted by Lehman a few weeks before the firm’s Sept. 15, 2008, bankruptcy filing, Peck said.

The account had been created to cover overdrafts. Routine overdrafts by Lehman “became a major preoccupation” at Bank of America when it discovered a $650 million overnight overdraft in a Lehman account in July 2008, he said.

‘Attention-Grabbing’

“That unexpected attention-grabbing event, along with deepening apprehension about the state of the financial markets in general and Lehman in particular, caused BOA to review its relationship with Lehman and take action,” the judge said. The result was a newly funded cash collateral account subject to newly negotiated terms, he said.

On Nov. 10, 2008, Bank of America took the deposited funds “against amounts allegedly owed by LBHI” on unrelated derivatives deals, according to the ruling. The bank didn’t first seek relief from the bankruptcy law prevision that prevents such seizures, called the automatic stay, Peck said.

Peck ruled that the final security agreement drawn up by Bank of America related only to intraday overdrafts and shouldn’t have been used to offset derivative transactions. The bank’s actions in setting off the funds “did not fall within any applicable exemption to the automatic stay,” he said.

The bankruptcy case is In re Lehman Brothers Holdings Inc., 08-13555, U.S. Bankruptcy Court, Southern District of New York (Manhattan). The lawsuit is Bank of America NA v. Lehman Brothers Holdings Inc., 08-01753, U.S. Bankruptcy Court, Southern District of New York (Manhattan).