JHD it is possible that we could see the 1:3 split for commons.
1. FDIC gets 500Bil for "bank failures" and more ability to save ailing banks. FDIC is in charge of insuring depositors.
2. FDIC hire heavy hitting lawyer from Fed Reserve.
3. JPMC is being sued in 2 different states for "breach of confidentiality" this part of negotiations is at the heart of contract law.
4. JPM needs to make this right, FDIC will work out some sort of deal with JPM to cancel the lawsuit once JPM acquires WMI. If JPM is too acquire WMI, it must be at least the amount they offered. However, 300B in assets 30B liquidity in Sept 2008, makes this possibily a $12-15 PPS buyout. JPM will not pay that, they won't pay that, they will convert commons to JPM commons (which they will issue) they will payoff all Preferreds and plaintiffs n lawsuit n Texas.
5. FDIC will funnel approx. 10-20B to JPM to make all this happen under the radar. Settlement of current DEL lawsuit.
6. James Dimon sits on the NY Fed Reserve. FDIC just hired Mike a Fed Reserve lawyer to help with leagl issues. You don't think these guys do not know each other. Believe they do and a deal has already been worked out. Look for settlement or complete buyout in the next couple of weeks (before actual pre-trial motions in courts). This will end not costing JPM 1 dime, if Jamie is a smart as I think he is, He will actually make money on this deal.
So yes we could see a 1:3 or at the least a 1:4 common conversion. If it is 1:4 then JPM will only need to issue 450M shares. i would expect a lockdown of least 30 days before any converted commons could be sold.
GLTYA Go WAMU! Not pumping, done the DD!
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