United Western Bancorp Inc (fka UWBKQ)

[mrholty]

I disagree. Winstar was much more than breach of contract. My personal opinion is that these banks had a stronger case as they had a contract to go back on against the gov. If you read the rights the FDIC has its sickening. There is no limit to their power.

a) The banks in the Winstar litigation were over 100 (140 I think). These were banks that bought up assets of failed banks and in order to take them over (from the FDIC's equal for Savings and Loans) they worked out a deal where they would take over 100% of the failed banks deposits and the failed banks loans. These banks failed because of loans being worth less than the deposits.

In the banking world to a bank their deposits by a customer are its liabilities and the loans are its assets. They would generally take 100% of the performing loans on their books with some sort of agreement on the failed loans which would be covered by the Feds. This would leave them with L>A that they took on so therefore to balanace their books the Feds allowed them to fill the gap with goodwill that would be depreciated over 25 years. A few years went by and the Feds cancelled that immediately putting these banks who had just helped the Feds buy absorbing poor banks in trouble themselves. The FDIC depending on their mood would allow some banks to work out the issues, some they immediately seized and some they gave some time to. Many of these banks ended up being seized by the Feds or they sold ahead of time to someone else.

These banks have generally filed individual claims against the Federal government for wrongful breach of contract. These cases have dragged on years with crazy tactics by the Feds. Even the main judges opinion on this has stated the Federal Government is acting irresponsible and immoral yet his hands are tied. The banks could not file a class action as one cannot class-action the gov, nor does the gov't have to pay penalties such as interest so there is no reason for them to settle like a normal defendant.

I'm not saying that there won't be a settlement announced soon but that we have history in how the government has acted in the past on similar cases and the timeline is very wrong. A good think in my opinion is that this case is being managed out of Denver and not out of the DC as the Winstar cases are.

Mesa is a great cheerleader and has done a great job of DD and compiling all the thoughts. However there is one thing in his DD that I disagree with. Yes, the documents show that they signed a deal two days before the acquiring bank before shutting them down even when they were aware of a financing transaction. I argue who cares. You don't think they magically shut down a bank on Friday afternoon and it reopens on Monday with a new bank. These things are all preworked out. Much of the other DD is fine but this one in particular bothers me.

Carry on with your cheerleading but don't be surprised if you are still here in two or three years.