Gloves are off now and the snowball begins to roll...

DigitalDave

DigitalDave

Sexy Beast!
Yesterday, WMI filed a document: (big download, 750 pages)

http://www.kccllc.net/documents/0812229/0812229091214000000000008.pdf

In this document, you get to see some of the information WMI has on JPM, accusing them of colluding to bring down WaMu. They not only convinced the FDIC to give them a great, but illegal, deal. They also did their best to convince potential bidders from making an attempt to outbid JPM, worked with ratings agencies to downgrade WaMu, and media outlets to spread misinformation. If the judge sides with WMI, they could pursue treble damages. It's getting serious,and media outlets like the AP and Rueters are finally picking it up. But before that, Kirsten Grind of the Seattle Puget Sound (who's article is also cited in the court document) broke the story. In my previous blog post, you can hear the interview she did with Dave Ross. Peg Brinkley, who has been following the case closely, also wrote up an article, full text below:

By Peg Brickley
Of DOW JONES DAILY BANKRUPTCY REVIEW


The former parent of failed savings-and-loan group Washington Mutual Bank, or
WaMu, said it has evidence that JPMorgan Chase & Co. (JPM) plotted WaMu's
takeover by way of a federal regulatory seizure weeks before its deal plan
played out, with regulators performing the role assigned to them in JPMorgan's
script.

The alleged role: Grab WaMu in a receivership and sell it to JPMorgan, a
spurned suitor that had long coveted the Seattle thrift.

Now Washington Mutual Inc. (WAMUQ), WaMu's former parent, wants to question
federal banking regulators "to determine the extent to which JPMC and the
regulators worked together to craft a deal for JPMC to acquire [WaMu] at a
fire-sale price," according to a filing Monday in the U.S. Bankruptcy Court in
Wilmington, Del.

JPMorgan has declined to comment on allegations it engineered the largest
banking collapse in U.S. history in order to get WaMu for $1.9 billion, a price
that was far too low, according to creditors left behind with billions of
dollars in unpaid debts.

Federal Deposit Insurance Corp. spokesman David Barr said in an email Tuesday
that the agency doesn't comment on active litigation.

Documents filed Monday in the Wilmington court were turned up in a probe into
suspicions that JPMorgan manipulated regulators and other potential suitors in
the months leading up to the seizure of WaMu. Some documents indicate JPMorgan
and regulators were working hand-in-hand by early September 2008, weeks before
WaMu was taken over.

In an internal JPMorgan email dated Sept. 11, 2008, executives discussed a
deal to "acquire the assets and liabilities of West's [believed to be a code
word for Washington Mutual] thrift subsidiaries but leave behind senior and
unsecured debt with the FDIC ($15.2 billion)."

By Sept. 19, 2008, JPMorgan presentations indicated it had been "contacted by
FDIC about interest in West" and "had spoken to FDIC about bank only in
receivership with protection."

That is exactly what happened--JPMorgan bought WaMu in a deal that offered
extra indemnification against trouble, after the thrift was placed under a
receivership. However, it wasn't until Sept. 23 that the FDIC opened up the
bidding on WaMu. JPMorgan won the bidding, and WaMu, in about a day.

Parent company Washington Mutual cited the documents in support of its
request to throw a dragnet over everyone from the board of governors of the
Federal Reserve Board to ratings agencies Standard & Poor's Corp. (MHP) and
Moody's Investor Service (MCO) to Goldman Sachs Group Inc. (GS), in a spreading
probe.

(part 1 of 2)

(part 2 of 2)

WaMu's former parent
is already quizzing JPMorgan about allegations that
JPMorgan exploited confidential information and access to government regulators
in its pursuit of WaMu.

The WaMu parent company's main weapon is Rule 2004, a powerful tool of the
bankruptcy code that allows creditors to gather evidence that could lead to
lawsuits.

Monday's court filing said the spreading suspicions that WaMu was set up for
a takeover can produce value for parent-company creditors if others can be held
to account for the potentially improper handling of the troubled thrift.

WaMu was in distress due to chancy home loans but wasn't in such a dangerous
condition that it needed to be seized, critics of the deal have said.

WaMu's former parent said it has turned up documents that suggest JPMorgan
misused confidential information to frighten off other suitors, including Banco
Santander SA (STD, SAN.MC).

In June 2008, JPMorgan Chief Executive Jamie Dimon told Banco Santander
Chairman Emilio Botin that he didn't buy WaMu in the spring because the
thrift's losses would be higher than estimated. Such communications lowered the
parent company's chances of finding a good buyer, lawyers for Washington Mutual
Inc. claim.

JPMorgan and the FDIC are battling WaMu's former parent company over who has
rights to $3.7 billion in cash that was in the parent company's accounts at
WaMu when the thrift was seized and sold.


(Dow Jones Daily Bankruptcy Review covers news about distressed companies and
those under bankruptcy protection.)


-By Peg Brickley, Dow Jones Daily Bankruptcy Review; 302-521-2266 302-521-2266;
peg.brickley@dowjones.com


(END) Dow Jones Newswires

12-15-09 1310ET

Copyright (c) 2009 Dow Jones & Company, Inc.
Click to expand...


Here are some other sources:

CBS: http://www.cbsnews.com/stories/2009/12/15/ap/business/main5984139.shtml

Barrons: http://blogs.barrons.com/stockstowa...ve-some-payout-wells-offering-oversubscribed/

MSN: http://news.moneycentral.msn.com/provider/providerarticle.aspx?feed=OBR&date=20091215&id=10890963

Reuters: http://www.reuters.com/article/idUSTRE5BE5SW20091215

and some others:
http://www.execdigital.com/Wamu-asks-to-probe-Fed-over-collapse_40197.aspx

http://abcnews.go.com/Business/wireStory?id=9346133

And the snowball keeps rolling...
 
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