DigitalDave
Sexy Beast!
In the middle of last year, I started following Washington Mutuals Stock. I felt that it was a strong company that could hold its own in a serious downturn with the economy. They had great customer service and found ways to get people to save with them to put more funds in the bank. I thought the stock price was a steal but I knew there was some risk since the ARM loan portfolio was risky, and there was potential for Credit Card defaults to create a problem. Nevertheless, they had enough capital to survive. So I invested. I rode a few waves up and sold some to stay safe. I actually made a profit off of it, but I still held some shares to see where it would go. I knew in a bad economy, it wasn't going to make me rich anytime soon. I didn't hold enough shares for it to make me rich either. Anyways, I kept following them.
A lot of bad news was coming out about them, but also a lot of rumors of being bought were floating around. JP Morgan offered $8 a share earlier in the year, but that was when the stock price was around $12, so that was a bum deal. I didn't think much of it, I just knew JP Morgan was lowballing and being cheap. But they were rumored to be making another offer when it was down below $5 a share. I thought it was good news. I just kept thinking about how Paulson told Killinger that he should have sold to JP Morgan earlier in the year. With all the bad news and Paulson making the statement he did, I started wondering if there was some evil conspiracy to take down the bank, but I though 'Nah, why would they do that'. My fear only got worse when I found out the SEC didn't put WaMu on the short-sell ban list. I held my shares either way, thinking this was a perfect time to buy, when the fear is at it's peak. Then the OTS came out and said we were in the Tier-1 capital range for a bank, and our new CEO mentioned we had enough capital to survive until 2010. I felt safer and thought the price of the stock should go up, but it stopped going up. I started falling harder. Next thing I know, I'm watching the news and there are rumors that the OTS was going to seize the bank, and a deal was already worked out with JP Morgan to buy the bank from the FDIC. Stock just plummetted. Insiders were in the know, they leaked it and the rumor became true that evening when I got home to watch the news. I was pissed. I thought they only did those types of things on Friday's, and I really had no chance to sell my shares. This was all going on right after the TARP funds were being discussed, and the first attempt to get them in place failed. The governement was generating a lot of fear in the market claiming the banks needed this money, and need it now. So I just blamed congress for being slow as hell and not getting the funds out in time. I didn't really agree with the funds, but I figured it was already a done deal and they would pass it. They took a their time, and of course, Washington Mutual became a point of reference for those who wanted these to pass. So they passed the TARP funds a couple weeks later.
The WaMu holding company (WMI) filed bankruptcy the day after seizure, and it was announced JPMorgan bought the bank and all of its assets for $1.88 Billion. That was pretty cheap. Wasn't going to see anything from that.
My shares never got cancelled, and were held in my etrade account, unnoticed, until one day they started to gain in value. I wondered what this was all about, why would a bankrupt stock gain value? I started doing a little research just to see what was behind it, then low and behold, I find that WaMu was preparing to file a lawsuit against the FDIC. So the jump in price was speculation that WaMu had a case. So I wondered, just what is the potential for this case? Once I found out. I felt it was time to 'average down' a lot, and throw some money at the Preferred shares as well. When I saw what WaMu was asking for, I started seeing that this was a great opportunity.
The case was filed on March 20, and the original docket can be seen here:
http://ghostofwamu.com/documents/09-00533/09-00533-0001.pdf
Here is a summary of what they are claiming:
"Promissory Notes" owed from the bank to WMI: $177,075,719
Expenses on recievables : $22,528,014
"Servicing Agreements": $184,849
"Tax Refunds": $3 Billion
"Fraudulent Transfer": $6.5 billion
"Trust Preferred Securities": $4 Billion
"Transfers": $151,934,564
"Improper Asset Sales" - Tables and chairs.. lol
"Deposits" - $4 Billion + damages (interest on accounts)
Pensions plan - already settled
So basically, WMI is sueing the FDIC for $13.5 Billion, since the deposits are held at WMB, and JPMorgan is fighting with WMI over those. But the fact that they existed shows that Washington Mutual should not have been seized. It is possible that WMI look for treble damages on this, and at the time, it was requested to go to trial by jury.
So JPMorgan freaks out when they see this lawsuit, and decides to jump in on it, wanting to become a party against the FDIC, though they really were just protecting themselves. They are working in collusion with the FDIC to try and stay out of trouble. They ended up filing suit against WMI just to protect their stolen goods, and WMI turns around with counter-claims against them, seperate from these claims, to get the Deposits back. They also reference an Insurance company case against JPMorgan, accusing JPMorgan of planting moles in WaMu to obtain private information and leak it.
JPM filed the Adversary Proceeding 4 days later against WMI:
http://ghostofwamu.com/documents/09-50551/09-50551-0001.pdf
On 5/13, WMI asked for 2004 Discovery against JPMorgan:
http://ghostofwamu.com/documents/09-50551/09-50551-0013.pdf
Then the Counterclaims by WMI on 5/29 (warning, this is huge..335 pages or 15MB):
http://www.kccllc.net/documents/0812229/0812229090529000000000010.pdf
I strongly reccommend anyone who has the time to read through the large counterclaims document. It is worth the read and very well written. It's like a novel written by lawyers. Anyways. 2004 discovery was granted, and up until this month, very little of it has been used. They are pressing them now according to the latest billings we see out there. So I intend to keep everyone updated on these cases. I have done so in various threads throughout JPP, but a blog would be a perfect central place to discuss these lawsuits.
A lot of bad news was coming out about them, but also a lot of rumors of being bought were floating around. JP Morgan offered $8 a share earlier in the year, but that was when the stock price was around $12, so that was a bum deal. I didn't think much of it, I just knew JP Morgan was lowballing and being cheap. But they were rumored to be making another offer when it was down below $5 a share. I thought it was good news. I just kept thinking about how Paulson told Killinger that he should have sold to JP Morgan earlier in the year. With all the bad news and Paulson making the statement he did, I started wondering if there was some evil conspiracy to take down the bank, but I though 'Nah, why would they do that'. My fear only got worse when I found out the SEC didn't put WaMu on the short-sell ban list. I held my shares either way, thinking this was a perfect time to buy, when the fear is at it's peak. Then the OTS came out and said we were in the Tier-1 capital range for a bank, and our new CEO mentioned we had enough capital to survive until 2010. I felt safer and thought the price of the stock should go up, but it stopped going up. I started falling harder. Next thing I know, I'm watching the news and there are rumors that the OTS was going to seize the bank, and a deal was already worked out with JP Morgan to buy the bank from the FDIC. Stock just plummetted. Insiders were in the know, they leaked it and the rumor became true that evening when I got home to watch the news. I was pissed. I thought they only did those types of things on Friday's, and I really had no chance to sell my shares. This was all going on right after the TARP funds were being discussed, and the first attempt to get them in place failed. The governement was generating a lot of fear in the market claiming the banks needed this money, and need it now. So I just blamed congress for being slow as hell and not getting the funds out in time. I didn't really agree with the funds, but I figured it was already a done deal and they would pass it. They took a their time, and of course, Washington Mutual became a point of reference for those who wanted these to pass. So they passed the TARP funds a couple weeks later.
The WaMu holding company (WMI) filed bankruptcy the day after seizure, and it was announced JPMorgan bought the bank and all of its assets for $1.88 Billion. That was pretty cheap. Wasn't going to see anything from that.
My shares never got cancelled, and were held in my etrade account, unnoticed, until one day they started to gain in value. I wondered what this was all about, why would a bankrupt stock gain value? I started doing a little research just to see what was behind it, then low and behold, I find that WaMu was preparing to file a lawsuit against the FDIC. So the jump in price was speculation that WaMu had a case. So I wondered, just what is the potential for this case? Once I found out. I felt it was time to 'average down' a lot, and throw some money at the Preferred shares as well. When I saw what WaMu was asking for, I started seeing that this was a great opportunity.
The case was filed on March 20, and the original docket can be seen here:
http://ghostofwamu.com/documents/09-00533/09-00533-0001.pdf
Here is a summary of what they are claiming:
"Promissory Notes" owed from the bank to WMI: $177,075,719
Expenses on recievables : $22,528,014
"Servicing Agreements": $184,849
"Tax Refunds": $3 Billion
"Fraudulent Transfer": $6.5 billion
"Trust Preferred Securities": $4 Billion
"Transfers": $151,934,564
"Improper Asset Sales" - Tables and chairs.. lol
"Deposits" - $4 Billion + damages (interest on accounts)
Pensions plan - already settled
So basically, WMI is sueing the FDIC for $13.5 Billion, since the deposits are held at WMB, and JPMorgan is fighting with WMI over those. But the fact that they existed shows that Washington Mutual should not have been seized. It is possible that WMI look for treble damages on this, and at the time, it was requested to go to trial by jury.
So JPMorgan freaks out when they see this lawsuit, and decides to jump in on it, wanting to become a party against the FDIC, though they really were just protecting themselves. They are working in collusion with the FDIC to try and stay out of trouble. They ended up filing suit against WMI just to protect their stolen goods, and WMI turns around with counter-claims against them, seperate from these claims, to get the Deposits back. They also reference an Insurance company case against JPMorgan, accusing JPMorgan of planting moles in WaMu to obtain private information and leak it.
JPM filed the Adversary Proceeding 4 days later against WMI:
http://ghostofwamu.com/documents/09-50551/09-50551-0001.pdf
On 5/13, WMI asked for 2004 Discovery against JPMorgan:
http://ghostofwamu.com/documents/09-50551/09-50551-0013.pdf
Then the Counterclaims by WMI on 5/29 (warning, this is huge..335 pages or 15MB):
http://www.kccllc.net/documents/0812229/0812229090529000000000010.pdf
I strongly reccommend anyone who has the time to read through the large counterclaims document. It is worth the read and very well written. It's like a novel written by lawyers. Anyways. 2004 discovery was granted, and up until this month, very little of it has been used. They are pressing them now according to the latest billings we see out there. So I intend to keep everyone updated on these cases. I have done so in various threads throughout JPP, but a blog would be a perfect central place to discuss these lawsuits.
