Comments on: Revisiting WaMu http://blogs.reuters.com/felix-salmon/2009/05/26/revisiting-wamu/ A slice of lime in the soda Thu, 23 May 2013 23:51:59 +0000 hourly 1 http://wordpress.org/?v=3.4.2 By: Adrian Magnuson http://blogs.reuters.com/felix-salmon/2009/05/26/revisiting-wamu/comment-page-1/#comment-4357 Adrian Magnuson 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 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

]]> By: Cesar http://blogs.reuters.com/felix-salmon/2009/05/26/revisiting-wamu/comment-page-1/#comment-2035 Cesar 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. 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.

]]> By: Thomas http://blogs.reuters.com/felix-salmon/2009/05/26/revisiting-wamu/comment-page-1/#comment-2024 Thomas 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. 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.

]]> By: John Hempton http://blogs.reuters.com/felix-salmon/2009/05/26/revisiting-wamu/comment-page-1/#comment-2017 John Hempton 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 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

]]> By: Robbed http://blogs.reuters.com/felix-salmon/2009/05/26/revisiting-wamu/comment-page-1/#comment-2008 Robbed 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 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

]]> By: gx http://blogs.reuters.com/felix-salmon/2009/05/26/revisiting-wamu/comment-page-1/#comment-2006 gx 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. 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.

]]> By: renholder http://blogs.reuters.com/felix-salmon/2009/05/26/revisiting-wamu/comment-page-1/#comment-2005 renholder 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/managing/Chron/appendixes/table_fdic/index.html 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. 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.

]]> By: Greg http://blogs.reuters.com/felix-salmon/2009/05/26/revisiting-wamu/comment-page-1/#comment-2000 Greg 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). 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).

]]> By: Anonymous http://blogs.reuters.com/felix-salmon/2009/05/26/revisiting-wamu/comment-page-1/#comment-1996 Anonymous 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. 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.

]]> By: Islandcat http://blogs.reuters.com/felix-salmon/2009/05/26/revisiting-wamu/comment-page-1/#comment-1988 Islandcat 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 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.
http://www.wamustory.com

]]> By: AndyXOM http://blogs.reuters.com/felix-salmon/2009/05/26/revisiting-wamu/comment-page-1/#comment-1985 AndyXOM Tue, 26 May 2009 19:03:12 +0000 http://blogs.reuters.com/felix-salmon/2009/05/26/revisiting-wamu/#comment-1985 Well-written perspective, Mr. Salmon. I hope we will see justice in Hon. Walrath's court in favor of WaMu for creditors and equityholders who were effectively hoodwinked by FDIC and JPMorgan Chase. Well-written perspective, Mr. Salmon.
I hope we will see justice in Hon. Walrath’s court in favor of WaMu for creditors and equityholders who were effectively hoodwinked by FDIC and JPMorgan Chase.

]]> By: jonathan http://blogs.reuters.com/felix-salmon/2009/05/26/revisiting-wamu/comment-page-1/#comment-1983 jonathan Tue, 26 May 2009 18:59:40 +0000 http://blogs.reuters.com/felix-salmon/2009/05/26/revisiting-wamu/#comment-1983 My question is where can i find an honest government officials nowaday? including those that we were voting for they are no long to be an honest breed. My question is where can i find an honest government officials nowaday? including those that we were voting for they are no long to be an honest breed.

]]> By: Don the libertarian Democrat http://blogs.reuters.com/felix-salmon/2009/05/26/revisiting-wamu/comment-page-1/#comment-1982 Don the libertarian Democrat Tue, 26 May 2009 18:58:39 +0000 http://blogs.reuters.com/felix-salmon/2009/05/26/revisiting-wamu/#comment-1982 I agree that the WaMu seizure and sale was a mistake, but I think that it follows from Lehman. Now being quite aware that mergers were the only option for large banks and financial entities, they didn't want to wait and chance a Lehman like situation, where the B of A and Barclays deals didn't work out. So, they proactively seized and merged, scaring the hell out of bondholders and creditors. Oddly, Lehman had scared investors that the government wasn't guaranteeing the unwind. Now, WaMu scared investors that, even if the government got involved, they were in for a hellish ride of possible losses. Of course, if you believe as I do, that the government needed to guarantee everything right off, like Geithner, then both of these actions are terrible mistakes.However, in both cases, Lehman and WaMu, I can understand why the government acted as it did. Too bad that's not going to stop them from looking like idiots in the history books, because a good plot needs dunces by which to measure the ultimate heroes intellect. I agree that the WaMu seizure and sale was a mistake, but I think that it follows from Lehman. Now being quite aware that mergers were the only option for large banks and financial entities, they didn’t want to wait and chance a Lehman like situation, where the B of A and Barclays deals didn’t work out. So, they proactively seized and merged, scaring the hell out of bondholders and creditors.

Oddly, Lehman had scared investors that the government wasn’t guaranteeing the unwind. Now, WaMu scared investors that, even if the government got involved, they were in for a hellish ride of possible losses.

Of course, if you believe as I do, that the government needed to guarantee everything right off, like Geithner, then both of these actions are terrible mistakes.However, in both cases, Lehman and WaMu, I can understand why the government acted as it did. Too bad that’s not going to stop them from looking like idiots in the history books, because a good plot needs dunces by which to measure the ultimate heroes intellect.

]]> By: Chris http://blogs.reuters.com/felix-salmon/2009/05/26/revisiting-wamu/comment-page-1/#comment-1980 Chris Tue, 26 May 2009 18:43:47 +0000 http://blogs.reuters.com/felix-salmon/2009/05/26/revisiting-wamu/#comment-1980 Boy your telling me! I just received today a notice stating they are going to be raising my APR to 25.24 percent from 13 percent and I have never missed a payment on any of my cards. I can assure you that I for one will be paying the card off in full by the end of the month (has 370 left on it) and canceling it. I have a feeling there will be a bunch more doing that as well Boy your telling me!
I just received today a notice stating they are going to be raising my APR to 25.24 percent from 13 percent and I have never missed a payment on any of my cards.

I can assure you that I for one will be paying the card off in full by the end of the month (has 370 left on it) and canceling it. I have a feeling there will be a bunch more doing that as well

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