Comments on: Revisiting WaMu http://blogs.reuters.com/felix-salmon/2009/05/26/revisiting-wamu/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: Adrian Magnuson http://blogs.reuters.com/felix-salmon/2009/05/26/revisiting-wamu/comment-page-1/#comment-4357 Fri, 17 Jul 2009 19:12:02 +0000 http://blogs.reuters.com/felix-salmon/2009/05/26/revisiting-wamu/#comment-4357 I tend to believe that JP Morgan Chase is culpable and that Dimon is probably at the bottom of the spider’s trap. But instead of crying in our beer about it (I lost a lot of money in WAMU bonds when the FDIC double-dealt it into JPM’s hungry hands), why not return to the tenets of our founding fathers: revolution, but a quiet one. Let’s convince every depositor of the original WAMU to “switch rather than fight” to turn an old cigarette slogan on its head. Let us agree to close all our accounts with JPM and find another bank. Charles Schwab anyone? Or choose a local bank. You know the kind, the one just around the corner with ties to your community, like WAMU had before they got greedy. Or do you really believe that a bunch of New York bankers have your best interests at heart? Adrian

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By: Cesar http://blogs.reuters.com/felix-salmon/2009/05/26/revisiting-wamu/comment-page-1/#comment-2035 Wed, 27 May 2009 14:38:25 +0000 http://blogs.reuters.com/felix-salmon/2009/05/26/revisiting-wamu/#comment-2035 I think this is all seller speak from Dimon. The assumptions they used when writing down the WaMu portfolio by 29b were unemployment at 8% and peak to trough declines in house prices of 37%. Of course they will generate cash flows from mortgages, but they will also incur in painful costs that will leave them losing money at the end of this period. The wording of all these releases is very ambiguous because their goal is to push their stock price today hoping for the future to be better.

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By: Thomas http://blogs.reuters.com/felix-salmon/2009/05/26/revisiting-wamu/comment-page-1/#comment-2024 Wed, 27 May 2009 12:28:31 +0000 http://blogs.reuters.com/felix-salmon/2009/05/26/revisiting-wamu/#comment-2024 I will tell you one thing about all of this: BS! FDIC took over WAMU and GAVE IT to JPM for free. When is the media going to pick this crap up because if this doesn’t show how nothing has changed since OBAMA hit the office I don’t know what else will. Us shareholders that have held onto this stock for years are left with nothing except for .11 a share. Let’s not forget the fact that JPM is holding 4.4 BILLION in WAMU money and won’t give it back. Let’s not forget that JPM short WAMU share to bring the price down. Hey FDIC… what about Citi when it’s share price was at .97 and members withdrew accounts?
Thanks for writing this article but this case will never get the press it needs because the damn government is in bed with JPM.

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By: John Hempton http://blogs.reuters.com/felix-salmon/2009/05/26/revisiting-wamu/comment-page-1/#comment-2017 Wed, 27 May 2009 05:33:58 +0000 http://blogs.reuters.com/felix-salmon/2009/05/26/revisiting-wamu/#comment-2017 Can we quit saying it was ceased because of liquidity purposes.

It had 50 billion of liquidity at quarter end – and 12 billion ran (at least half that because of self-fulfilling rumours it was going to fail).

However the money that fled was the bulk of their non-insured deposits. THey had enough liquidity to cover a run by ALL of their non-insured deposits.

J

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By: Robbed http://blogs.reuters.com/felix-salmon/2009/05/26/revisiting-wamu/comment-page-1/#comment-2008 Wed, 27 May 2009 01:44:50 +0000 http://blogs.reuters.com/felix-salmon/2009/05/26/revisiting-wamu/#comment-2008 Thank you Felix for keeping the focus on this greatest of all bank robberies. Here’s a link to the best video I’ve found on the subject:
http://tinyurl.com/wamu-robbery

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By: gx http://blogs.reuters.com/felix-salmon/2009/05/26/revisiting-wamu/comment-page-1/#comment-2006 Tue, 26 May 2009 23:42:36 +0000 http://blogs.reuters.com/felix-salmon/2009/05/26/revisiting-wamu/#comment-2006 Great article in analyzing the details and effects of the Wamu seizure. Mainstream media has been reporting this as simply a bank failure without analysis of the ripple effect it has created in the economy. Right off the bat, reports are incorrect in stating it was a failure when the seizure effectively removed any chance to fail. Basically, the seizure was a preemptive strike due to FDIC’s fear of being unable to cover the deposits of a bank as large as Wamu.

Out of this fear, resulted gross errors in decisions that brought down the US and world economy. The decision to seize Wamu effectively destroyed creditors and the bond market. When investors see that it is possible for even safer investments to be wipe out they start pulling their money out. Hence, post seizure you see the US economy decline to its lowest point so far during this recession.

Obviously the sale of Wamu was a rushed and uncalculated move. It does not make sense to sell over $300 billions in assets, 2200 branches in premier locations unpenatrated by JPM, $9 billion credit card service, $188 billion in customer deposits, $29 billion gain on the acquired loans over their lifetime, and 4 BILLION IN CASH…all for a mere $1.9 billion when each item alone is worth more than the sale price.

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By: renholder http://blogs.reuters.com/felix-salmon/2009/05/26/revisiting-wamu/comment-page-1/#comment-2005 Tue, 26 May 2009 23:37:49 +0000 http://blogs.reuters.com/felix-salmon/2009/05/26/revisiting-wamu/#comment-2005 WAMU was seized because of liquidity reasons. They were rapidly losing the ability to fund and half of the new Fed / FDIC programs weren’t in place at the time. I suspect that they had pledged money to the fed / fhlb who tightened collateral requirements on them. The bottom line was that there was nobody willing to buy the bank holding company, and the FDIC can’t force a bank holding company into receivership, only the bank. Secondly JP Morgan’s price was dictated by the fact that the loan losses would not be tax-deductible at that point.

Also you made a pretty specious claim in regards to bank failures, please cite that. “In other bank failures, even the junior lenders generally emerged unscathed”. See this WP that says no such study has been done: http://www.fdic.gov/bank/analytical/cfr/ 2005/jun/CFRSS_2005_Bliss_Kaufman.pdf

See this chart to see FDIC losses as a percentage of total assets. http://www.fdic.gov/bank/historical/mana ging/Chron/appendixes/table_fdic/index.h tml

If the FDIC is suffering a loss due to national depositor preference the junior senior and equity holders have all been wiped out. on a MTM / Fire-sale basis very few banks in crisis are going to be sold at any price to fully compensate junior lien holders.

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By: Greg http://blogs.reuters.com/felix-salmon/2009/05/26/revisiting-wamu/comment-page-1/#comment-2000 Tue, 26 May 2009 21:59:44 +0000 http://blogs.reuters.com/felix-salmon/2009/05/26/revisiting-wamu/#comment-2000 With all the suits and countersuits now flying around over the WaMu seizure, perhaps what surprises me more than anything else is that I haven’t yet seen anyone directly challenging the OTS/FDIC seizure action as being illegal under our Fifth Amendment. While they have the authority to seize insolvent banks in order to protect our banking system, I view the seizure of a solvent bank, which was well-capitalized by regulatory standards at the time, as clearly exceeding their statutory authority. And especially so, when it’s obvious they were already negotiating the sale of the company BEFORE they saw the need to seize it (based on my understanding of the sequence and timing of events).

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By: Anonymous http://blogs.reuters.com/felix-salmon/2009/05/26/revisiting-wamu/comment-page-1/#comment-1996 Tue, 26 May 2009 20:49:11 +0000 http://blogs.reuters.com/felix-salmon/2009/05/26/revisiting-wamu/#comment-1996 Felix, are you claiming that in September 2008 JPM should have priced WaMu’s loans under the assumption that the Fed would reduce the Federal Funds Rate to 0 for the indefinite future?

I don’t think Dimon would have been doing his job, if he had assumed current circumstances in pricing the assets.

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By: Islandcat http://blogs.reuters.com/felix-salmon/2009/05/26/revisiting-wamu/comment-page-1/#comment-1988 Tue, 26 May 2009 19:11:36 +0000 http://blogs.reuters.com/felix-salmon/2009/05/26/revisiting-wamu/#comment-1988 The truth will come out, WAMU was illegally seized and given to JPM, it was used to prop up the failing JPM and scare the American Tax payers into supporting the TARP.
www.wamustory.com

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