Honestly, that 140B claim seems pretty weak.
It's largely based on taking $18 billion in cash earnings, capitalizing at 5% discount rate and subtracting $220 B in liabilities.
Where to begin? The $18 billion is based on 60% of a supposed $30 B derived from WAMU assets, as indicated in Jamie Dimon's March 2010 shareholder letter. I just looked at said letter and see no such claim. I see a statement that MOST of a $33 B increase in REVENUES are attributable to WAMU AND increases in the JPM investment banking business. But revenues are not earnings (hello, interest & other operational expenses??), and MOST is not ALL.
Moreover, it's not clear how much of that revenue is some sort of unusual non-recurring gain that should not be capitalized.
In addition, 5% discount rate for bank assets in the fall of 2008 strikes me as ridiculously low. Discount rate reflects perceived risk, and perceived risk was through the roof.
I don't know what WAMU's equity was "worth" in fall 2008, even in a hypothetical world where JPM hadn't engaged in any shenanigans, but it sure as heck wasn't worth $140 billion. What was WAMU's peak market cap in good times, $40-$50 billion? I think best realistic outcome for equity is something like $5-15 billion, which would still be up to a 30-bagger, but nothing even close to $140 billion.
I don't know the precise law on this, but I assume that the standard is something like what an objective third party would value WAMU at at the time (during the crisis, when all assets were depressed), not what they are worth in hindsight.
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