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Actions @ WamuTruth.com Forums 

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You need to register an account name here WamuTruth.com Forums  and then send me an email: Michael.Rozenfeld@Wamutruth.com with your account name and why you need an account and some sort of reference to who you are.

I apologize in advance that these accounts are going to be limited to people involved in court objections.

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Washington Mutual Bank (WAMU) shareholders are uniting to challenge the actions of the FDIC (the Federal Deposit Insurance Corporation) and JPM (JP Morgan) prior to the seizure of Washington Mutual bank. Shareholders contend: 1) that these actions were unjustified 2) that they were unethical 3) that Washington Mutual Bank was not failing 4) that JP Morgan behaved in an illegal manner . As evidence of our claims, reports now surfacing indicate the liquidity of the bank was much better than the public was led to believe and that JP Morgan had weeks to plan the takeover of the bank; by most accounts, the bank had enough funds to cover the withdrawals by depositors. Washington Mutual executives knew these facts; however, their claims made days before the seizure that the bank was in good health were ignored. We the concerned shareholders of WAMU contend that the FDIC was not right in doing so and has caused irreparable harm to the WAMU stockholders, to the banking community and to the markets in general. As a result of this action, shareholders of thousands of companies throughout the world have lost trillions of dollars since.

The FDIC seized Washington Mutual Bank saying there had been a bank run amounting to 16.7 billion dollars in 10 days. The reason this money was withdrawn from the bank is unknown. The FDIC saw money moving out of larger accounts and assumed a run was in progress. Just 2 weeks before the FDIC seized the bank WAMU had worked out a solid business plan with the OTC (Office of Thrift Supervision). At the time of seizure, WAMU had access to $50 billion in assets: sufficient liquidity to handle all their obligations. The situation, however, seemed different to the FDIC, whose reserves were low as a result of not collecting insurance premiums from 1996-2006 and the bank failures in the previous weeks. Appointed officials at the FDIC were concerned that if the failure of Washington Mutual was followed by other bank failures as well, the agency would not be able to handle the situation. Despite this concern, the FDIC had the ability to borrow $30 billion from the Federal Reserve; however, for some reason it did not do so. The FDIC’s move was more about protecting the federal deposit insurance company than about protecting the insured.

In short, the FDIC acted prematurely, behind closed doors. The Washington Mutual Executives had no prior knowledge of the FDIC’s plan. In fact, at the time of the seizure WAMU was in the midst of sale negotiations with several other banks, and had been given no deadline by the FDIC to find a buyer. Despite WAMU’s good-faith efforts to find buyers, banks which were contemplating buying Washington Mutual had been notified by the FDIC that the FDIC was to auction off the bank, again without WAMU’s knowledge. This FDIC action prevented a sale from being made. Even worse for WAMU, behind closed doors, the FDIC was offering prospective buyers a much sweeter deal than the ones WAMU was negotiating. The FDIC arranged for JPMorgan to purchase the $300 billion dollar corporation for the bargain price of $1.9 Billion. JP Morgan, which earlier had attempted to buy the corporation at $8 a share (and was rejected) was delighted to take advantage of this sweetheart deal, which evidence shows that they had planned for several months prior.

The FDIC needs to be held accountable for its short sighted action which has caused havoc throughout world markets. The FDIC had many options in the event that WAMU faltered. The option chosen, seizing the bank and selling it overnight for a miniscule fraction of its value in a clandestine deal with JPMorgan, was the worst of any options they had. Did the FDIC act appropriately? Most shareholders don’t think so and they want the FDIC & JP Morgan to answer for that. 

 

                Contact Info: Michael.Rozenfeld@WamuTruth.com