Not affiliated with WaMu, or JPMorgan Chase, not an organization, just a burned shareholder seeking compensation.
These questions are not all aimed at any one specific person, and answers from anyone involved would be interesting.
1.) It seems odd that of the only two institutions responsible for preventing bank runs, both exploited this responsibility, by preemptively seizing WaMu on the slim reason a real bank run would ensue, and that these same two institutions are also the beneficiaries of the plundered WaMu. The FDIC didn’t have to risk spending a dime of its reserves or borrowing on its credit with the Treasury, while paid to insure deposits, and the Federal Reserve/JP Morgan Chase now owns WaMu and paid a pittance for it. Could you explain?
2.) The 26% of WaMu’s float that was short, about 429,000,000 shares, never covered, as required. Why has nothing been said about this? Were the banks, or their confidants, that were attending the secret meetings held by the FDIC leading to the sale and seizure of WaMu, also shorting WaMu? Will these banks, or confidants, if short, be prosecuted for insider trading? Is anyone investigating this?
3.) JPMorgan Chase is a major stockholder of the Federal Reserve, and JPMorgan Chase CEO Jamie Dimon sits on the board of the Federal Reserve Bank of New York. The Federal Reserve provides liquidity through its Federal Funds program and the Discount Window for the banks. A bank seizure as large as WaMu most certainly required contact and discussions with The Federal Reserve. WaMu was seized for lack of liquidity, and then JPMorgan Chase buys WaMu at a secret auction. There seems to be huge totally self serving agenda here, from which tens of thousands of WaMu investors got financially raped and murdered. Will there be an FBI, Justice Dept. or Congressional investigation?
4.) On Sept 11, 2008 WaMu announced it had $50 billion dollars in liquidity. On September 25th it was seized for a bank withdrawals totaling $16.7 billion. Was the seizure necessary when they still had $33.3 billion dollars in liquidity and the bailout meetings were already well underway? Wouldn’t WaMu have survived without a problem through the bailout meetings and then like the other banks have been shorn up by the bailout. Wouldn't a buyer for WaMu have appeared now that the income value of their assets was finalized. Why the seizure and immediate firesale on WaMu?
5.) The FDIC told the auction participants three weeks before the seizure that they anticipated seizing WaMu and having an auction. Partly this would be so they could begin the secret review of WaMu's assets, using the material supplied by WaMu to the FDIC, and partly to arrange their bid and the finances to support it. JPMorgan Chase for example then contacted ten other parties to arrange financing (1). Surely the other firms did likewise. Hundreds of people on Wall St knew the deal was going down. Not only does this suck the wind out of WaMu's own efforts to find a buyer, as all the main interested parties know a better deal - a seizure and auction are in the works, but it makes it look as if something is wrong with WaMu as there are no takers. Worst none of this was disclosed to investors, and many people bought the stock during those three weeks. This stab in the back double cross by the FDIC, and the auction participants is totally unethical, and the FDIC knew this full well and should have made certain the shareholders were compensated in the deal. Instead they ignored their deception and let innocent shareholders get crushed by their diabolatry. This is abuse of government power, the FDIC suckered, double crossed, and then stabbed in the back, WaMu and its shareholders, by essentially stealing the bank, and then immediately passing it to JPMorgan, all late in the night, and answers to no one for doing it. Is this how America treats it citizens. The WaMu shareholders deserve compensation for their seized assets. Will Congress seek a bill to correct this injustice?
6.) The OTS/FDIC was privately talking to JPMorgan and the other banks about seizing and auctioning off WaMu three weeks prior to the seizure of Sept 25, 2008, so as early as Sept 4, 2008. The OTS/FDIC then did seize WaMu and blamed it on a rush of withdrawals starting Sept 15, 2008, which goes back to the very day WaMu released that it had $50B in liquidity. The seizure was obviously being discussed before the reason for the seizure existed. It looks like the OTS/FDIC just could not wait to seize WaMu and were just looking with baited breath for a reason to do so, and just seized upon this rush of withdrawals reason to the convenience of the shorts and before WaMu could possibly benefit from the bailout, and to gift JPMorgan. Isn't this just a thinly veiled theft? Why was the FDIC so diligently sabotaging every effort and chance for WaMu to find a buyer willing to pay a fair price?
7.) Per the presidents ban on short selling, all shorts had to be covered by the close of Wednesday September 24th. The short positions never covered in WaMu. At the time, the scheduled date for the completion of the bailout meetings was Friday September 26th. Wamu was scheduled to be given new life blood, or liquidity, from the bailout. This would relieve depositors fears and satisfy buyout customers need to know questions on WaMu’s asset values, and thus make the final sale of WaMu a certainty. A rumor was leaked on Thursday September 25th that the OTS/FDIC decided necessitated an immediate seizure of the WaMu bank. The seizure saved and protected the 429,000,000 million uncovered short shares from scrutiny. It also destroyed all plans for due process and an organized sale of WaMu, and subsequent just compensation due to the shareholders. It is amazing how lucky well connected millionaires can be during disasters. Do you really expect us to believe this? Have you ever deliberately started a rumor?
8.) Due to being at its legal reserve limits, the FDIC did not collect insurance premiums from the banks for ten years, from 1996-2006 (1 & 2). This was when the economy was strong and few banks failed. Now as the economy weakens the FDIC has very quickly run out of money. Is it fair to make one particular bank and all the people who invested in it, bear the financial burden of the FDIC's financial illiquidity? If the FDIC had been allowed to maintain higher reserves the FDIC would not have been in the panic situation they were when they seized WaMu, and instead WaMu would have been sold to another bank and the $30 billion investors lost would not have happened. The nation as a whole should be responsible for bailing out the FDIC and not just one small select group of citizens, who are financially ruined by it. Will Congress act to correct this thievery?
9.) The Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA 1991), in
SEC. 141. Least-Cost Resolution, subsection 4Gi (Sec 141/4Gi) says
that with the appropriate votes from the Board of Directors from both the Treasury and the Federal Reserve that to avoid Systemic Risk "the Corporation (FDIC) may take other action or provide assistance under this section as necessary to avoid or mitigate such effects”. In other words the FDIC does not automatically have to take the course of the bare bones least-cost resolution, if it will cause economic disruption, although this is still exactly what they chose to do with WaMu.
Did you really think that double crossing, and back stabbing and seizing the largest thrift in the country, and sixth largest bank, late at night, in the middle of bailout resolution meetings, and in anticipation of a buyout merger resolution, destroying all shareholder and bond holder wealth, in a time of economic crisis, and then pawning it off for a few pennies on the dollar, in a secret invite only blind auction, to a proxy of the Federal Reserve, was not going to cause systemic risk? That is absolutely incredible. Did you think that it was going to build confidence in the system? Were you possibly so blinded by the money you would make, and the money that you would save, that you completely ignored the systemic risk? Did you even care?
