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garyc27 (< 20)

WaMu Parent sues FDIC over bank-unit sale, seeks $13 bln damages

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March 22, 2009 – Comments (1) | RELATED TICKERS: JPM , WAMUQ.PK

TEL AVIV (MarketWatch) -- The holding company for Washington Mutual Bank filed a lawsuit, charging that the Federal Deposit Insurance Corp. improperly sold its banking operations to J.P. Morgan Chase and could have gotten more money for those assets, media reports say.

Parent Washington Mutual Inc. saw its banking operations acquired by J.P. Morgan in a late-September sale arranged by the FDIC. Parent WaMu, which wasn't acquired by J.P. Morgan, is demanding more than $13 billion in damages, the media reports say. The suit was filed in U.S. District Court in Washington, the reports say. J.P. Morgan  paid $1.9 billion for the banking assets. Parent Washington Mutual filed under Chapter 11 of federal bankruptcy law after the sale. Among other claims, Washington Mutual wants back $4 billion of trust preferred securities that it said were wrongfully transferred to the banking unit, Reuters reported.

The suit also claims Washington Mutual may be entitled to as much as $3 billion of tax refunds, Reuters reported. Washington Mutual,  which had more than $300 billion of assets and about $900 billion of customer deposits, failed due to the fallout from the subprime-mortgage crisis. The federal Office of Thrift Supervision had closed WaMu and appointed the FDIC as receiver

1 Comments – Post Your Own

#1) On April 04, 2009 at 1:33 PM, Chas2002 (< 20) wrote:

It’s my understanding that the WMI lawyers have requested a Jury Trial. I hope that they (Weil, Gotshal & Manges) get it and examine (under oath); Paulson, Bair, OTS Officials & Dimon. I expect them to go for triple damages when it’s proven that the FDIC knowingly (or out of negligence, doesn’t matter) gifted more than the “whole bank” to JPM(c) (Providian for example). I’m not a lawyer but it’s obvious to me that JPMC’s recent Proof of Claim was a joke and a mockery of Judge Walrath’s order.

Abraham Lincoln (attributed): “You can fool some of the people all of the time, and all of the people some of the time, but you can not fool all of the people all of the time.”

It’s that simple folks – FDIC/JPM wants you to believe all was well with the fire-sale of WAMU but the truth is: The FDIC has no idea what they conveyed to JPM and as a result has recently resorted to claims of mismanagement and underfunding in an attempt to “thump their chest in public” even though their own sister agency (OTS) was in the WAMU books for months and said WAMU was well capitalized. And JPM while on one hand says (in public mind you) they paid fair value for the assets of WAMU and their purchase of WAMU brought great relief to JPM and its shareholders (you’d have to read JPM’s Shareholders PR), JPM contradicts itself in its own pleadings to the court saying that if there is a reversal of sorts – JPM stands to lose Billions (with an s) not 1.9 Billion…

I hope and hope for a jury trial – the good thing about Bankruptcy court is that they follow the the letter of the law to a “T”. We may not get triple damages but Paulson, Bair and Dimon will be severely damaged by their own words and actions – God Bless America.

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