127] In Re Washington Mutual, Inc. Debtors. Chapter 11. Case No. 08-
122229 (MFW) Jointly Administrated. January 11, 2011.
[128] Washington Mutual Bank was headquartered in Henderson, Nevada
and Washington Mutual Bank FSB was headquartered Park City, Utah.
[129] As of July 21, 2011, OTS will transfer its authority over thrift
holding companies to the Federal Reserve. The Office of the
Comptroller of the Currency then will supervise all federal thrifts.
OTS will cease operations 90 days later.
[130] Department of the Treasury and FDIC Offices of Inspector
General, Evaluation of Federal Regulatory Oversight of Washington
Mutual Bank. Report No. EVAL-10-002. (Washington, D.C.: April 2010).
[131] Joshua R Hochberg. Final Report of the Examiner. In re
Washington Mutual, Inc. et al. Case No. 08-12229 (MFW).
[132] The Federal Home Loan Banks are 12 regional cooperative banks
that member financial institutions use to access credit and liquidity.
Washington Mutual Bank FSB was also a member of the Federal Home Loan
Bank of Seattle.
[133] Purchase and assumption agreements are an FDIC resolution
mechanism that involves transferring some or all of the failed
institution's deposits, certain other liabilities, and some or all of
its assets to an acquirer.
[134] On March 16, 2011, FDIC filed a complaint in the U.S. District
Court in the Western District of Washington at Seattle against three
former executives of Washington Mutual, Inc. and their spouses,
seeking to recover damages for gross negligence, ordinary negligence,
breaches of fiduciary duties, and for assets FDIC said were
fraudulently transferred conveyances.
[135] The examiner also found that: (1) JPMC was the only potential
purchaser of Washington Mutual Bank that did not want government
assistance or guarantees, and the institution had an advantage in
calculating the value of the bank because of its work in the spring of
2008; and (2) FDIC could be more transparent in its actions, better
inform potential purchasers of the value of assets, and should require
better documentation of assets being sold.
[136] In re Washington Mutual, Inc., 442 B.R. 314, 322 (Bankr. D.Del,
2011).
[137] A detailed discussion of the disputed accounts can be found in
the Examiner's report.
[138] A fraudulent transfer could imply the holding company was trying
to hinder, delay, or defraud creditors (such as FDIC) and would have
to be unwound. The fraudulent transfer provision of the Bankruptcy
Code is 11 U.S.C. § 548.
[139] Pub. L. No. 111-92 § 13.
[140] See, e.g., In re Washington Mutual, Inc., 442 B.R. 314, 321
(Bankr. D. Del. 2011).
[141] Trust preferred securities are securities having characteristics
of both debt and equity that often are issued by bank holding
companies through a trust. In this case, the trust preferred security
holders own a preferred equity interest in Washington Mutual, Inc.
[142] In the proceeding brought by trust preferred securities (TPS)
holders, Black Horse Capital LP v. JPMorgan Chase Bank, N.A., 442 B.R.
297 (Bankr. D. Del. 2011), the court granted the defendants' motions
for summary judgment and denied the TPS holders' motion for summary
judgment, finding that the TPS holders no long have any interest in
the TPS because the interests were converted to interest in preferred
stock of Washington Mutual, Inc.
[143] In the litigation tracking warrant proceeding, known in the
context of the WMI bankruptcy as the "Anchor Litigation," the court
ruled that although a genuine dispute remained concerning the status
and valuation of the claims, the holders' interests are adequately
protected by the debtor's Chapter 11 plan. See In re Washington
Mutual, Inc., 442 B.R. 314 at 324-25, 339-341 (Bankr. D. Del, 2011).
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