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2010-09-27 11:42:51
Kyle Krol
Wamu TRUTH
I'm also enclosing another link that quotes Judge Hughes from a case against the FDIC that was wrapped up on August 24, 2005; blog.kir.com/archives/2005/08/judge_hughes_ha.asp
"The record shows that the swap was the only reason for this suit. It also shows that the FDIC knew that it had no factual or legal basis for its claims, and that its cases here and in Washington were shams."
As usual, Judge Hughes is acerbic in his opinion regarding the FDIC's conduct, noting in particular that FDIC officials "lied about it all under oath" and they "discarded the mantle of the American Republic for the cloak of a secret society of extortionists."
"It's hard to find a word that captures the essence of the FDIC's bringing this action. Irresponsible is close. Arbitrary, dishonest, exploitative, extortionate, and abusive all fit."
Judge Hughes concluded that Hurwitz and Maxxam "will recover their costs because the record reveals corrupt individuals within a corrupt agency with corrupt influences on it, bringing this litigation."
And now the connection between JPM and the FDIC........
3/26/09 Joe's hired (from JPM) by the FDIC 3/26/09 as "Senior Advisor" to Sheila...to provide "policy and legal advice relating to complex financial transactions, bid structures, and capital markets." I'm sure it was out of the goodness of his heart, service before self, duty to country? ummmmmmm, yeah~
8/05/09 Meets with TPG/Sullivan and Cromwell/and others (as FDIC rep) "to discuss the "Proposed Policy Statement of Policy on Qualifications for Failed BankAcquisitions"
www.fdic.gov/regulations/laws/federal/2009/09c63AD47.PDF
10/06/09 Winning Bidder Announced....drum roll please~~~~TPG www.fdic.gov/news/news/press/2009/pr09183.html
8/04/10 By now, Joe's getting tired, Job Done...."Joe has given the FDIC invaluable service during a challenging time in the FDIC's history. His input on marketing and resolution strategies and substantive expertise on capital markets has contributed to the FDIC's ability to address many complex and difficult failed bank resolutions," www.fdic.gov/news/news/press/2010/pr10177.html
He left his multi-million dollar salary behind at JPM to take a $250,000 position with the FDIC (FOR ONE YEAR) to clean up that "banking mess", and help them unload some banks to the likes of TPG/BONDERMAN?
Mr Examiner/EC members...I always wondered, why was TPG so eager/willing to convert their Preferreds to Commons? Perhaps make it easier and smoother to transition this big old ugly WAMU thing into the hands of the JPM?
Reply
2010-09-27 11:44:29
Kyle Krol
Extraordinary Gain
files.shareholder.com/downloads/ONE/...Discussion_Analysis.pdf
Extraordinary gain
page 11
On September 25, 2008, JPMorgan Chase acquired the banking
operations of Washington Mutual. This transaction was accounted for
under the purchase method of accounting for business combinations.
The adjusted net asset value of the banking operations after purchase
accounting adjustments was higher than the consideration paid by
JPMorgan Chase, resulting in an extraordinary gain. The preliminary
gain recognized in 2008 was $1.9 billion. In the third quarter of
2009, the Firm recognized a $76 million increase in the extraordinary
gain associated with the final purchase accounting adjustments for
the acquisition. For a further discussion of the Washington Mutual
transaction, see Note 2 on pages 151-156 of this Annual Report
NET INCOME
page16
Net income included an extraordinary gain of $76 million and $1.9 billion related to the Washington Mutual transaction for 2009 and 2008, respectively
Page 20
Net revenue was $32.7 billion, an increase of $9.2 billion, or 39%,
from the prior year. Net interest income was $20.5 billion, up by
$6.3 billion, or 45%, reflecting the impact of the Washington
Mutual transaction, and wider loan and deposit spreads. Noninterest
revenue was $12.2 billion, up by $2.8 billion, or 30%, driven by
the impact of the Washington Mutual transaction
Page 21
Total net revenue was $23.5 billion, an increase of $6.2 billion, or
36%, from the prior year. Net interest income was $14.2 billion, up
$3.6 billion, or 35%, benefiting from the Washington Mutual transaction,
wider loan and deposit spreads, and higher loan and deposit
balances. Noninterest revenue was $9.4 billion, up $2.6 billion, or
38%, as positive MSR risk management results, the impact of the
Washington Mutual transaction, higher mortgage origination volume
and higher deposit-related fees were partially offset by an increase in
losses related to the repurchase of previously sold loans and markdowns
on the mortgage warehouse.
Page22
Retail Banking reported net income of $3.9 billion, up by $921
million, or 31%, from the prior year. Total net revenue was $18.0
billion, up by $5.3 billion, or 42%, from the prior year. The increase
reflected the impact of the Washington Mutual transaction, wider
deposit spreads, higher average deposit balances and higher debit
card income. The provision for credit losses was $1.1 billion, compared
with $449 million in the prior year, reflecting higher estimated
losses in the Business Banking portfolio. Noninterest
expense was $10.4 billion, up by $3.1 billion, or 43%. The increase
reflected the impact of the Washington Mutual transaction, higher
FDIC insurance premiums and higher headcount-related expense.
page26
End-of-period managed loans were $163.4 billion, a decrease of
$26.9 billion, or 14%, from the prior year, reflecting lower charge
volume and a higher level of charge-offs. Average managed loans
were $172.4 billion, an increase of $9.5 billion, or 6%, from the
prior year, primarily due to the impact of the Washington Mutual
transaction. Excluding the impact of the Washington Mutual transaction,
end-of-period and average managed loans for 2009 were
$143.8 billion and $148.8 billion, respectively.
Reply
2010-09-27 12:13:06
Kyle Krol
WaMu has both the capital and the liquidity to justify a 3 rating.(8/8/2008)
The emails below were taken' from the PSI Hearing on Wamu;
hsgac.senate.gov/public/_files/...al_Crisis/041610Exhibits.pdf
-- Original Message --
From: Bair, Sheila C.
To: Reich, John M Cc: Murton, Arthur J. ; Polakoff, Scott M
Sent: Wed Aug
Subject: W
Dear John,
I'd like to further discuss contingency planning for W during the calion Friday. Art talked with Scott about making some discrete inquiries to determine whether there are institutions which would be willing to acquire it on a whole bank basis if we had to do an emergency closing, and on what terms. I understand you have strong objections to our doing so, so I'd like to talk this through. My interest is in assuring that IF we have to market it on an emergency basis, there is multiple bidder interest.
In any event, both the FDIC and the FRB agree that there needs to be a contingency plan in place, so let's talk this through on Friday. I'd really like to develop a plan everyone is comfortable with.
Sheila
--Original Message--
From: Reich, John M
To: Bair, Sheila C.
Sent: Wed Aug 06 17:32:482008
Subject: Re: W
Dear Sheila, You really know how to stir up a colleague's vacation.
I do not under any circumstances want to discuss this on Friday's conference call, in which I mayor may not be able to participate, depending on cell phone service availability on the cruise ship location.
Instead, I want to have a one on one meeting with Ben Bernanke prior to any such discussion - as early next week as possible following my return to the office. Also, I mayor may not choose to have a similar meeting with Secretary Paulson.
I should not have to remind you the FDIC has no role until the PFR (i.e. the OTS) rules on solvency and the PFR utilizes PCA.
You personally, and the FDIC as an agency, would likely create added instability if you pursue what I strongly believe would be a precipitous and unprecedented action. And if it occurs without my consent, I will not sit quietly by and observe - there would be a public reaction. Put yourself in the PFR's shoes in this situation. We have our responsibilities, including the right of primary supervisory determination of this institution's condition, and until Congress changes the statutes under which we operate, our responsibilities as the PFR are not to be simply tendered to the FDIC in a down economic cycle.
It seems as though the FDIC is behaving as some sort of super-regulator - which you
and it are not. I also believe there could be a high potential for FDIC actions of the type you are contemplating to cause irreparable harm to Wamu if, at any point in the near future, Wamu wishes to actually seek a buyer. The potential harm could stem from the fact that any such potential buyer may have been already been contacted by the FDIC.
If in fact any meetings or discussions have already taken place by the FDIC with either JPMC, Wells Fargo, or any other entity, in any capacity in which WaMu was even mentioned, I would like to see a copy of the signed confidentiality agreement signed by the bank - required in any resolution scenario before an institution is told the name of the failing bank.
This is an OTS regulated institution, not an FDIC regulated institution. We make any decision on solvency, not the FDIC, and I have staff equally as competent as staff at the FDIC, whom I know well.
The FDIC can do whatever internal contingency planning it wishes, but should in no way go outside the FDIC. This is a 3-rated institution. Are you also trying to find buyers for Citi, Wachovia, Nat City and others?
Finally, if Wamu were to learn of the FDIC's actions, there may well be a question as to whether these actions may constitute a disclosable event. That, in and of itself, is a reason not to proceed with this approach for a publicly traded institution. The government should not be in the business of arranging mergers - particularly before they are necessary, and we are not at that point in WaMu's situation.
I will attempt to be on the Friday conference call, and I am going to assume this notion is not going to be raised.
John
This excerpt is from John Reich's (OTS) email to Sheila Bair (FDIC) on 8/6/2008 (p264-265) says it all
"The government should not be in the business of arranging mergers - particularly before they are necessary, and we are not at that point in WaMu's situation."
This excerpt from John Reich's (OTS) email to Sheila Bair (FDIC) on 8/8/2008 (p260).
"In my view rating WaMu a 4 would be a big error in judging the facts in this situation. It would appear to be a rating resulting from fear and not a rating based on the condition of the institution. WaMu has both the capital and the liquidity to justify a 3 rating."
This excerpt is from John Reich's (OTS) email to Sheila Bair (FDIC) Sent: Wed Aug 06 17:32:482008
"If in fact any meetings or discussions have already taken place by the FDIC with either JPMC, Wells Fargo, or any other entity, in any capacity in which WaMu was even mentioned, I would like to see a copy of the signed confidentiality agreement signed by the bank - required in any resolution scenario before an institution is told the name of the failing bank."
Gruß Homer
Kyle Krol
Wamu TRUTH
I'm also enclosing another link that quotes Judge Hughes from a case against the FDIC that was wrapped up on August 24, 2005; blog.kir.com/archives/2005/08/judge_hughes_ha.asp
"The record shows that the swap was the only reason for this suit. It also shows that the FDIC knew that it had no factual or legal basis for its claims, and that its cases here and in Washington were shams."
As usual, Judge Hughes is acerbic in his opinion regarding the FDIC's conduct, noting in particular that FDIC officials "lied about it all under oath" and they "discarded the mantle of the American Republic for the cloak of a secret society of extortionists."
"It's hard to find a word that captures the essence of the FDIC's bringing this action. Irresponsible is close. Arbitrary, dishonest, exploitative, extortionate, and abusive all fit."
Judge Hughes concluded that Hurwitz and Maxxam "will recover their costs because the record reveals corrupt individuals within a corrupt agency with corrupt influences on it, bringing this litigation."
And now the connection between JPM and the FDIC........
3/26/09 Joe's hired (from JPM) by the FDIC 3/26/09 as "Senior Advisor" to Sheila...to provide "policy and legal advice relating to complex financial transactions, bid structures, and capital markets." I'm sure it was out of the goodness of his heart, service before self, duty to country? ummmmmmm, yeah~
8/05/09 Meets with TPG/Sullivan and Cromwell/and others (as FDIC rep) "to discuss the "Proposed Policy Statement of Policy on Qualifications for Failed BankAcquisitions"
www.fdic.gov/regulations/laws/federal/2009/09c63AD47.PDF
10/06/09 Winning Bidder Announced....drum roll please~~~~TPG www.fdic.gov/news/news/press/2009/pr09183.html
8/04/10 By now, Joe's getting tired, Job Done...."Joe has given the FDIC invaluable service during a challenging time in the FDIC's history. His input on marketing and resolution strategies and substantive expertise on capital markets has contributed to the FDIC's ability to address many complex and difficult failed bank resolutions," www.fdic.gov/news/news/press/2010/pr10177.html
He left his multi-million dollar salary behind at JPM to take a $250,000 position with the FDIC (FOR ONE YEAR) to clean up that "banking mess", and help them unload some banks to the likes of TPG/BONDERMAN?
Mr Examiner/EC members...I always wondered, why was TPG so eager/willing to convert their Preferreds to Commons? Perhaps make it easier and smoother to transition this big old ugly WAMU thing into the hands of the JPM?
Reply
2010-09-27 11:44:29
Kyle Krol
Extraordinary Gain
files.shareholder.com/downloads/ONE/...Discussion_Analysis.pdf
Extraordinary gain
page 11
On September 25, 2008, JPMorgan Chase acquired the banking
operations of Washington Mutual. This transaction was accounted for
under the purchase method of accounting for business combinations.
The adjusted net asset value of the banking operations after purchase
accounting adjustments was higher than the consideration paid by
JPMorgan Chase, resulting in an extraordinary gain. The preliminary
gain recognized in 2008 was $1.9 billion. In the third quarter of
2009, the Firm recognized a $76 million increase in the extraordinary
gain associated with the final purchase accounting adjustments for
the acquisition. For a further discussion of the Washington Mutual
transaction, see Note 2 on pages 151-156 of this Annual Report
NET INCOME
page16
Net income included an extraordinary gain of $76 million and $1.9 billion related to the Washington Mutual transaction for 2009 and 2008, respectively
Page 20
Net revenue was $32.7 billion, an increase of $9.2 billion, or 39%,
from the prior year. Net interest income was $20.5 billion, up by
$6.3 billion, or 45%, reflecting the impact of the Washington
Mutual transaction, and wider loan and deposit spreads. Noninterest
revenue was $12.2 billion, up by $2.8 billion, or 30%, driven by
the impact of the Washington Mutual transaction
Page 21
Total net revenue was $23.5 billion, an increase of $6.2 billion, or
36%, from the prior year. Net interest income was $14.2 billion, up
$3.6 billion, or 35%, benefiting from the Washington Mutual transaction,
wider loan and deposit spreads, and higher loan and deposit
balances. Noninterest revenue was $9.4 billion, up $2.6 billion, or
38%, as positive MSR risk management results, the impact of the
Washington Mutual transaction, higher mortgage origination volume
and higher deposit-related fees were partially offset by an increase in
losses related to the repurchase of previously sold loans and markdowns
on the mortgage warehouse.
Page22
Retail Banking reported net income of $3.9 billion, up by $921
million, or 31%, from the prior year. Total net revenue was $18.0
billion, up by $5.3 billion, or 42%, from the prior year. The increase
reflected the impact of the Washington Mutual transaction, wider
deposit spreads, higher average deposit balances and higher debit
card income. The provision for credit losses was $1.1 billion, compared
with $449 million in the prior year, reflecting higher estimated
losses in the Business Banking portfolio. Noninterest
expense was $10.4 billion, up by $3.1 billion, or 43%. The increase
reflected the impact of the Washington Mutual transaction, higher
FDIC insurance premiums and higher headcount-related expense.
page26
End-of-period managed loans were $163.4 billion, a decrease of
$26.9 billion, or 14%, from the prior year, reflecting lower charge
volume and a higher level of charge-offs. Average managed loans
were $172.4 billion, an increase of $9.5 billion, or 6%, from the
prior year, primarily due to the impact of the Washington Mutual
transaction. Excluding the impact of the Washington Mutual transaction,
end-of-period and average managed loans for 2009 were
$143.8 billion and $148.8 billion, respectively.
Reply
2010-09-27 12:13:06
Kyle Krol
WaMu has both the capital and the liquidity to justify a 3 rating.(8/8/2008)
The emails below were taken' from the PSI Hearing on Wamu;
hsgac.senate.gov/public/_files/...al_Crisis/041610Exhibits.pdf
-- Original Message --
From: Bair, Sheila C.
To: Reich, John M Cc: Murton, Arthur J. ; Polakoff, Scott M
Sent: Wed Aug
Subject: W
Dear John,
I'd like to further discuss contingency planning for W during the calion Friday. Art talked with Scott about making some discrete inquiries to determine whether there are institutions which would be willing to acquire it on a whole bank basis if we had to do an emergency closing, and on what terms. I understand you have strong objections to our doing so, so I'd like to talk this through. My interest is in assuring that IF we have to market it on an emergency basis, there is multiple bidder interest.
In any event, both the FDIC and the FRB agree that there needs to be a contingency plan in place, so let's talk this through on Friday. I'd really like to develop a plan everyone is comfortable with.
Sheila
--Original Message--
From: Reich, John M
To: Bair, Sheila C.
Sent: Wed Aug 06 17:32:482008
Subject: Re: W
Dear Sheila, You really know how to stir up a colleague's vacation.
I do not under any circumstances want to discuss this on Friday's conference call, in which I mayor may not be able to participate, depending on cell phone service availability on the cruise ship location.
Instead, I want to have a one on one meeting with Ben Bernanke prior to any such discussion - as early next week as possible following my return to the office. Also, I mayor may not choose to have a similar meeting with Secretary Paulson.
I should not have to remind you the FDIC has no role until the PFR (i.e. the OTS) rules on solvency and the PFR utilizes PCA.
You personally, and the FDIC as an agency, would likely create added instability if you pursue what I strongly believe would be a precipitous and unprecedented action. And if it occurs without my consent, I will not sit quietly by and observe - there would be a public reaction. Put yourself in the PFR's shoes in this situation. We have our responsibilities, including the right of primary supervisory determination of this institution's condition, and until Congress changes the statutes under which we operate, our responsibilities as the PFR are not to be simply tendered to the FDIC in a down economic cycle.
It seems as though the FDIC is behaving as some sort of super-regulator - which you
and it are not. I also believe there could be a high potential for FDIC actions of the type you are contemplating to cause irreparable harm to Wamu if, at any point in the near future, Wamu wishes to actually seek a buyer. The potential harm could stem from the fact that any such potential buyer may have been already been contacted by the FDIC.
If in fact any meetings or discussions have already taken place by the FDIC with either JPMC, Wells Fargo, or any other entity, in any capacity in which WaMu was even mentioned, I would like to see a copy of the signed confidentiality agreement signed by the bank - required in any resolution scenario before an institution is told the name of the failing bank.
This is an OTS regulated institution, not an FDIC regulated institution. We make any decision on solvency, not the FDIC, and I have staff equally as competent as staff at the FDIC, whom I know well.
The FDIC can do whatever internal contingency planning it wishes, but should in no way go outside the FDIC. This is a 3-rated institution. Are you also trying to find buyers for Citi, Wachovia, Nat City and others?
Finally, if Wamu were to learn of the FDIC's actions, there may well be a question as to whether these actions may constitute a disclosable event. That, in and of itself, is a reason not to proceed with this approach for a publicly traded institution. The government should not be in the business of arranging mergers - particularly before they are necessary, and we are not at that point in WaMu's situation.
I will attempt to be on the Friday conference call, and I am going to assume this notion is not going to be raised.
John
This excerpt is from John Reich's (OTS) email to Sheila Bair (FDIC) on 8/6/2008 (p264-265) says it all
"The government should not be in the business of arranging mergers - particularly before they are necessary, and we are not at that point in WaMu's situation."
This excerpt from John Reich's (OTS) email to Sheila Bair (FDIC) on 8/8/2008 (p260).
"In my view rating WaMu a 4 would be a big error in judging the facts in this situation. It would appear to be a rating resulting from fear and not a rating based on the condition of the institution. WaMu has both the capital and the liquidity to justify a 3 rating."
This excerpt is from John Reich's (OTS) email to Sheila Bair (FDIC) Sent: Wed Aug 06 17:32:482008
"If in fact any meetings or discussions have already taken place by the FDIC with either JPMC, Wells Fargo, or any other entity, in any capacity in which WaMu was even mentioned, I would like to see a copy of the signed confidentiality agreement signed by the bank - required in any resolution scenario before an institution is told the name of the failing bank."
Gruß Homer
