Wie weit gehts wieder hoch ? WAMUQ

seekingalpha.com/article/98319-was-wamu-worth-it?source=feed

Was WaMu Worth It?
posted on: October 02, 2008 | about stocks:  JPM / WM

Does anybody really know what a good deal is in this market? Everyone seems to agree JPMorgan (JPM) received the sweetheart deal of the year when they took over ailing Bear Stearns (BSC) in a government-backed over the weekend shotgun wedding in June.

When JPMorgan announced in September that JPMorgan had done it again, this time picking up Washington Mutual’s (WM) assets for a song, especially when the deal is compared to Bank of America’s (BAC) inexplicable and drastically overpriced takeover of Merrill Lynch (MER), it seemed to confirm what everyone has long suspected - that Jamie Dimon truly has the Midas touch.

The proof it seems will be in the WaMu portfolio pudding, so to speak, and mounting evidence indicates the taste may not be as sweet for Mr. Dimon as was first thought.

The rapidly evaporating market value of WaMu’s assets is indicative of the biggest problem the nation faces in deciding how best to deal with the mortgage backed securities (MBS) and other toxic instruments that are pulling world markets into recession: How much is this stuff worth?

First of all, WaMu’s assets could be worth less than originally disclosed in the terms of the deal with JPMorgan, as “negotiated” by the FDIC in what has been purported to be an illegal action by the government in favor of JPMorgan, as we enter this new age of “preemptive” bank failures.Are we just setting ourselves up for another taxpayer funded bailout of the financial industry and Wall Street a year or two down the road if the market determines that these assets are not even worth the supposed “firesale” prices?

   The $32.9 billion in total assets Washington Mutual Inc. listed in its Chapter 11 bankruptcy filing could be much lower than originally disclosed because at least part of the assets are company stock that is now worth next to nothing.

   While WaMu has not disclosed how much of its assets are tied up in company stock, it said in a recent regulatory filing that “it does not anticipate that there will be any recovery to the company for the common stock interest.”

   The company listed debts of $8.2 billion in its bankruptcy filing.

   If a large chunk of WaMu’s assets is tied up in its stock, the pool of money available to the company’s dozens of creditors is diminished, said Mark Northrup, a bankruptcy attorney and shareholder of Graham & Dunn in Seattle.

   “It means that a substantial percentage of those assets may not be worth very much because they represent the holding company’s interest in a company that has essentially failed,” said Northrup.

This is the kind of evidence that will drive the “survivors” - like JPMorgan, Wells Fargo (WFC), Citigroup (C), Bank of America and the other “chosen” few - to demand more in the way of taxpayer dollars and guarantees before they comply with an invitation by the Feds to take over institutions under threat of insolvency and seizure.

Establishing a valid market value for the toxic assets is not the only threat to JPMorgan’s investment in WaMu, as well as the investment the American taxpayer is being asked to make in the entire financial system. Pending civil lawsuits, criminal investigations and endless bankruptcy proceedings may eat up a sizeable portion of the anticipated value of these and future acquisitions.

   In the same filing with the Securities and Exchange Commission, Washington Mutual noted that is has about $5 billion in cash in deposit with its subsidiary bank and “is in the process of confirming the status of those deposits and other assets.”

   If it is an asset of the holding company, the $5 billion would be used to pay creditors as part of the bankruptcy, Northrup said.

   The holding company declined to comment.

   JPMorgan Chase purchased Washington Mutual’s banking operations after the thrift was seized by the federal government on Thursday, and the holding company - along with the company’s stock - is now tied up in bankruptcy.

   WaMu’s stock has since been delisted from the New York Stock Exchange and is now trading on the Pink Sheets, an over-the-counter listing of stocks.

   On Wednesday, it was trading between 9 and 14 cents, with a volume of about 278 million shares. On Sept. 29, the day it was delisted from the NYSE, WaMu was trading at 16 cents. A year ago, it was trading for $35.69 a share.

   As Washington Mutual’s bankruptcy progresses, one aspect under consideration for Seattle lawyers is where the drama will unfold.

   WaMu filed its bankruptcy petition in Delaware. But if a majority of the bank’s dozens of creditors are located in the West, it’s possible there could be a push by local lawyers to move the bankruptcy to Seattle, said Northrup.

   That’s an unusual and difficult move to make and has only happened once in recent memory, he said.

   In the mid-1990s, the national chain of home improvement stores Ernst Home & Nursery, based in Seattle, filed for bankruptcy in Delaware, and local lawyers successfully moved the filing to Seattle because a majority of the company’s creditors were located in the Pacific Northwest.

   Whether lawyers push for a move to any other city will depend on where the majority of creditors are located, and a full list has not yet been disclosed.

   “There would have to be a really heavy concentration in a different location,” said Northrup.

   Washington Mutual has 67 branches in Oregon.

And what of the billions of dollars worth of MBS the government is itching to buy off these lenders in the bailout boondoggle? Are we, the taxpayers, going to get a “sweetheart” deal, or are we going to end up in a trillion dollar whole for generations to come?

Whose side is Paulson, Bernenke and the rest of the “civil servants” really on in all of this? The taxpayer or Goldman Sachs and Wall Street?

These developments at WaMu should be taken into consideration in the crafting of this bailout. This rush to pass vague and ill-thought legislation will certainly be viewed as a major blunder in hind-sight, but they still have a chance to fix it today in the House of Representatives - but don’t count on it.

We need to take some more time to fully investigate the whole of the problem, with all variables in the analysis, and not let the Bush Cartel bum-rush us into what will most likely be the first in a series of failed bailouts ultimately costing taxpayers trillions.

Köpferollen bei Washington Mutual

Angestellte bangen um ihre Arbeitsplätze


Washington (pte/03.10.2008/11:48) - Das Köpferollen bei der größten US-amerikanischen Sparkasse Washington Mutual (WaMu) www.wamu.com hat begonnen. Nach der schwersten Bankenpleite der US-Geschichte und der Rettung des Instituts durch JPMorgan Chase (pressetext berichtete: pte.at/pte.mc?pte=080926013) zeigt sich die Tragweite des Zusammenbruchs nicht nur beim bisherigen WaMu-Vorstand. Zudem stehen den 43.000 Mitarbeitern umfassende Maßnahmen zur Umstrukturierung bevor, wie US-Medien berichten. Neben CEO Alan H. Fishman werden fünf weitere leitende Angestellte das Haus verlassen. Aufgrund der Zusammenlegung der beiden Finanzkonzerne seien ihre Positionen überflüssig geworden, heißt es in einem Mitarbeiter-Memo von Charlie Scharf, CEO des Privatkundengeschäfts bei JPMorgan. Zudem müssen die WaMu-Mitarbeiter bis Anfang Dezember um ihre Jobs bangen.

Bis 1. Dezember sollen die Angestellten der Sparkasse darüber informiert werden, ob sie ihre Arbeit unter der neuen Firmenspitze JPMorgan fortsetzen können, in andere Bereiche transferiert oder ihre Posten vollständig eliminiert werden. "Die meisten der 43.000 Mitarbeiter" würden ihren Job aber behalten, heißt es von JPMorgan. Darüber hinaus werde die Bank die Zusatz-Pensionspläne der WaMu-Angestellten anerkennen. Das Institut hatte seinen langzeitigen Wunsch-Übernahmekandidaten WaMu nach der Pleite vor einer Woche zum Schnäppchenpreis von nur 1,9 Mrd. Dollar übernommen.

Fishman übte seine Tätigkeit als WaMu-CEO nur wenige Wochen aus, bevor das Haus von der Bankenaufsicht aufgrund zu hoher Einlagenabflüsse geschlossen und an JPMorgan verkauft wurde. Einem Sprecher zufolge verzichte Fishman gänzlich auf die im Vertrag mit WaMu festgesetzte Abfertigung in Mio.-Höhe und lehne jegliche Art von Abfindung "unter diesen Umständen" ab. Neben dem CEO müssen COO Stephen Rotella, Todd Baker, Leiter Unternehmensstrategie und -entwicklung, Daryl David, Leiter der Personalabteilung, Michael Solender, Leiter der Rechtsabteilung sowie CEO-Assistent Frank Baier das Haus verlassen. (Ende)

www.pressetext.ch/pte.mc?pte=081003011

biz.yahoo.com/ap/081003/financial_meltdown.html

House plans second vote on $700 billion bailout

Friday October 3, 6:40 am ET

By Julie Hirschfeld Davis, Associated Press Writer
Converts in House reluctantly embracing $700 billion bailout ahead of make-or-break 2nd vote

WASHINGTON (AP) -- Rejected once amid public fury about bailing out reckless financiers, a $700 billion rescue package is getting a second chance in the House as voters anxiously ponder an economic meltdown that could wipe out their ability to borrow, plunder their savings and put them out of work.

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Republicans and Democrats were jumping aboard the bailout as the House sped toward a make-or-break vote -- a much-anticipated do-over after the plan met with a stunning defeat Monday, triggering a historic stock market plunge.

It was still unclear, though, whether leaders would have the dozen or so supporters needed to pass the measure.

The plan lets the government spend billions of dollars to buy bad mortgage-related securities and other devalued assets from troubled financial institutions. If it works, advocates say, that would allow frozen credit to begin flowing again and prevent a serious recession.

Black lawmakers said personal calls from Democratic presidential nominee Barack Obama helped switch them from "no" to "yes," as Republicans and Democrats alike said appeals from credit-starved small businessmen and the Senate's addition of $110 billion in tax breaks and other sweeteners had persuaded them to drop their opposition.

"I hate it," but "inaction to me is a greater danger to our country than this bill," said GOP Rep. Zach Wamp of Tennessee, one of the 133 House Republicans who joined 95 Democrats in rejecting the measure Monday, sending the stock market plummeting.

Others said they were agonizing as they decided whether to change course and back the largest government intervention in markets since the Great Depression. "I'm trying desperately to get to 'yes,'" said Rep. Carol Shea-Porter, D-N.H.

Obama and his Republican rival, John McCain, phoned reluctant lawmakers for their help.

Rep. John Lewis, D-Ga., told a closed-door meeting of House Democrats that he would support the bill after speaking with Obama about it.

Congressional leaders worked over wayward colleagues wherever they could find them.

Rep. Steny Hoyer, the second-ranking House Democrat, said Thursday there was a "good prospect" of approving the measure but stopped short of predicting passage -- or even promising a vote.

"I'm going to be pretty confident that we have sufficient votes to pass this before we put it on the floor," Hoyer said.

Lawmakers were expecting to use at least some of 90 minutes scheduled for debate in choreographed question-and-answer sessions known as "colloquies," in which lawmakers ask for assurances about what the legislation will or won't do. That could make it easier for people switching their votes to explain why they did so.

The top Republican vote-counter, Rep. Roy Blunt of Missouri, did predict the measure would be approved.

President Bush said "a lot of people are watching" the House and was calling dozens of lawmakers searching for support for the rescue, a spokesman said.

Slowly but surely, converts were coming forward.

GOP Rep. Ileana Ros-Lehtinen of Florida, said she was switching her "no" vote to a "yes" after the Senate added some $110 million in tax breaks and other sweeteners before approving the measure Wednesday night.

"Monday what we had was a bailout for Wall Street firms and not much relief for taxpayers and hard-hit families," Ros-Lehtinen told The Associated Press. "Now we have an economic rescue package."

Republican Rep. Jim Ramstad of Minnesota also switched to "yes," partly because the Senate attached the bailout to legislation he spearheaded to give people with mental illnesses better health insurance coverage.

Rep. Gresham Barrett, R-S.C., also said he'd back it.

Democratic Rep. Emanuel Cleaver of Missouri was switching, too, said spokesman Danny Rotert, declaring, "America feels differently today than it did on Monday about this bill."

And Democratic Rep. Shelley Berkley of Nevada said she would back the bill after business leaders in her Las Vegas-area district made it clear how much it was needed. She said, "There isn't a segment of the population that hasn't been slammed and is not asking for some relief."

Rep. Elijah Cummings, D-Md., said he was on the verge of voting "yes," based on conversations with Obama. "I've got a man who I'm hoping will be president who's saying that's he's going to do the very things that I want done," he said. "It makes me feel a lot better."

Rep. Bobby Rush, D-Ill., also said Obama was asking him to reconsider his vote. "I'm seriously listening," Rush said.

The same tax breaks that helped satisfy some Republican critics angered conservative "Blue Dog" Democrats who are concerned about swelling the deficit. Still, Hoyer predicted the number of Democratic defectors "is going to be minimal."

The Senate breathed new life into the measure Wednesday after the stinging House defeat, voting 74-25 to approve the bailout, with additions designed to appeal to key constituencies.

In efforts to appease GOP opponents, it included raising, from $100,000 to $250,000, the limit on federal deposit insurance.

The bill also extends several tax breaks popular with businesses, provisions that are favorites for most Republicans. It would keep the alternative minimum tax from hitting 20 million middle-income Americans, which appeals to lawmakers in both parties. And it would provide $8 billion in tax relief for those hit by natural disasters in the Midwest, Texas and Louisiana.

www.bloomberg.com/apps/news?pid=20601208&sid=aewwuk6b1xWM

Washington Mutual, JPMorgan May Fight Over $5 Billion (Update1)

By Steven Church

Oct. 3 (Bloomberg) -- Washington Mutual Inc., the bankrupt holding company of the biggest U.S. bank to fail, and JPMorgan Chase & Co., the new owner of that bank, agreed to delay any attempt to withdraw $5 billion in cash both sides may claim.

The parties said they would give two days notice before trying to access the funds. WaMu attorney Marcia Goldstein told U.S. Bankruptcy Judge Mary Walrath in Wilmington, Delaware, today that her client owns the money. The delay would give each side time to formally ask Walrath to intervene in the dispute.

``There was a fair amount chaos, frankly, Thursday evening,'' Goldstein said, referring to Sept. 25, the day before WaMu's bankruptcy filing. ``We are trying to work with JPMorgan to resolve any remaining confusion.''

The holding company sought court protection after its banking subsidiaries, including Washington Mutual Bank, which is not in bankruptcy, were seized by U.S. government regulators and sold to New York-based JPMorgan for $1.9 billion. The $5 billion in cash is being held by Washington Mutual Bank.

One of the first actions by JPMorgan after taking over WaMu was to deny the Seattle-based bank holding company access to the computer systems of Washington Mutual bank, Goldstein said.

JPMorgan attorney Hydee Feldstein told Walrath that JPMorgan is trying to work out a service contract that would allow WaMu access to its former computer system.

Lawyers for WaMu bondholders and its former bank have said they may lay claim to the cash.

JPMorgan fell 37 cents to $49.48 at 11:25 a.m. in New York Stock Exchange composite trading.

The case is In Re Washington Mutual Inc., 08-12229, U.S. Bankruptcy Court for the District of Delaware (Wilmington).

To contact the reporter on this story: Steven Church in U.S. Bankruptcy Court in Wilmington, Delaware, at schurch3@bloomberg.net.
Last Updated: October 3, 2008 11:31 EDT

biz.yahoo.com/ap/081003/washington_mutual_bankruptcy.html

WaMu debt holders stake claim in bankruptcy court

Friday October 3, 12:10 pm ET
By Deborah Yao, AP Business Writer

Washington Mutual debt holders tussle for assets in first day of bankruptcy hearing

WILMINGTON, Dela. (AP) -- Lawyers for Washington Mutual Inc. and its bondholders stood before a Delaware bankruptcy court judge on Friday to tussle over assets -- including $5 billion in cash -- and set timelines for the organized demise of what was once the nation's largest savings and loan.

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On the first day of hearings in the Chapter 11 bankruptcy filing of Seattle-based WaMu, bondholders who hold $800 million of senior notes expressed concern about control over the $5 billion and called for greater transparency.

"We have precious little in the way of facts," said Thomas Lauria, a lawyer for the 16 bondholders. "We are very concerned about the status of our debt holders and ... how fast things seem to be moving outside the court."

Lawyers also asked Judge Mary F. Walrath of the U.S. Bankruptcy Court in Wilmington, Dela. for joint administration of cases, an extension of the date by which they must file a list of creditors, statement of financial affairs and other documents.

They sought approval for these and other actions that the bankruptcy filing said will let WaMu "operate in Chapter 11 with minimal disruption and loss of productivity."

The court's matter-of-fact tone stood in stark contrast to the dramatic and painful end of a 119-year-old financial institution that built its fortune on home loans and, ironically, went down in flames as a result of a bad bet on home mortgages.

The thrift, rising from the ashes of The Great Seattle Fire of 1889 to extend loans to homeowners for rebuilding, was sold last month in a $1.9 billion firesale to JPMorgan Chase & Co., which also assumed secured debt. It is the largest ever failure of a U.S. bank.

Now holders of unsecured debt are fighting for JPMorgan's $1.9 billion payment and whatever is left of WaMu -- other companies, real estate assets -- that the investment bank didn't buy.

WaMu's end was dictated by a swift toppling of financial dominoes that involved credit ratings agencies, talk of instability, and quick action by federal regulators.

During the housing boom, WaMu ran into trouble after getting caught up in loans to people with bad credit, known as subprime borrowers. Troubles then spread to other parts of WaMu's home loan portfolio, namely its "option" adjustable-rate mortgage loans. Option ARM loans offer low introductory payments and let borrowers defer some interest payments until later years.

WaMu was initially strengthened by restructuring efforts and a $7.2 billion investment in April by investors led by TPG Capital. But its stability would soon be challenged, the bankruptcy filing said, by credit ratings downgrades with which WaMu took issue.

These actions and the market's growing unease "brought an intense amount of public focus on WaMu and its ability to withstand the latest economic crisis," court documents said. People panicked and withdrew "significant" amounts of money, and forecasts of instability "became a self-fulfilling prophecy," the company said in its filing.

An outflow of deposits began on Sept. 15 and reached $16.7 billion, leaving the thrift without enough cash to meet obligations.

A seizure of WaMu also had been widely anticipated because of the company's heavy mortgage-related losses. It reported a $3 billion loss in the second quarter -- the biggest in its history -- after boosting reserves to more than $8 billion to cover losses on bad loans. Over the last three quarters, it added $10.9 billion to its loan loss provisions.

Meanwhile, the Federal Reserve Bank turned off the primary credit spigot to WaMu after the thrift got a low rating on its overall condition from the Federal Deposit Insurance Corp. Primary credit from the Fed banks' lending facility is typically an overnight loan for sound financial institutions. It carries a lower interest rate than secondary credit.

At this time, the Office of Thrift Supervision and the FDIC strongly urged WaMu to seek a sale or merger deal with a stronger financial institution. Interested suitors were Citigroup Inc., Wells Fargo & Co., Toronto-Dominion Bank, JP Morgan and Banco Santander SA of Spain.

TPG and its investor group agreed to waive a provision that would require WaMu to pay or issue up to $1.5 billion in cash or common shares in the event of a big equity sale or major change in the thrift's ownership, such as a merger, at a price lower than $8.75 per share.

But WaMu said sale talks were unsuccessful and pursued alternatives including debt for equity swaps and divestitures designed to boost capital and liquidity levels. The thrift said that while it was going after these options, on Sept. 25 federal thrift regulators began bank receivership proceedings and WaMu's assets were sold to JPMorgan Chase on the same day.

The following day, WaMu filed for Chapter 11 reorganization. It listed assets of $32.9 billion and total debt of $8.2 billion on the holding company level.