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Washington Mutual sues FDIC for over $13 billion

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posted on Mar, 21 2009 @ 03:16 PM

Washington Mutual sues FDIC for over $13 billion

NEW YORK (Reuters) - Washington Mutual Inc, the failed U.S. savings and loan, has sued the Federal Deposit Insurance Corp for well over $13 billion in connection with the loss of its banking operations, which was acquired by JPMorgan Chase & Co.

In a complaint filed with the U.S. District Court for the District of Columbia, the thrift's former parent accused the FDIC of having on January 23 made a "cryptic disallowance" of its claims, prompting the lawsuit.

(visit the link for the full news article)

Related News Links:

posted on Mar, 21 2009 @ 03:16 PM
Did the FDIC conduct the sale corruptly? Was the FDIC handing JPMorgan a steal ?

It seems a little suspicious when the FDIC was asked for a comment....

FDIC spokesman David Barr said the regulator does not comment on lawsuits.

I would have to wait until the evidence is presented in the case, but one would believe that a failed and sold entity would have to have something for them to take this to court...

Anyone have some insight to clarify this litigation?
(visit the link for the full news article)

edit: sp

[edit on 3/21/2009 by JacKatMtn]

posted on Mar, 21 2009 @ 04:55 PM
This will be the defining case in all lawsuits that derive of of the financial crisis.

A "sub-prime" bank ROYALLY JACKED by the Big Boys.

And they punched back!

Story to be continued.......................

posted on Mar, 21 2009 @ 05:13 PM
Yeah that is interesting. They had $307 Billion dollars in cash and assets and the FDIC forced a sale for only $1.9 billion dollars. I remember how this all went down the executives had no clue whatsoever they were being taken over. They were on a plane when they got the news they were being seized which tells me they thought the company was in decent shape. Maybe this is a prime example of forced consolidation to the big boys like JP Morgan. Nice find.

posted on Mar, 21 2009 @ 05:28 PM
The WAMU takeover is very suspicious. They even had enough cash to survive for the moment, but the FDIC took them over and sold everything to JP Morgan for pennies on the dollar. I am glad this is being brought to light, especially for the shareholders who lost everything in a night.

posted on Mar, 21 2009 @ 05:46 PM

So wait jut a minute here...

If they lost somewhere around $300 Billion in value due to Federal seizing...

Ok follow me on this... the Federal Reserve forced a sale of a $300 Billion dollar (in stock) company for $1.9 Billion... now the Federal reserve has another $298 Billion they can print without fearing inflation...

Wow... is this maybe part of the ultimate plan to get us out of this crap?

Not saying I agree with the method... and it would take more of these, but... seems interesting enough to ask the question...

posted on Mar, 21 2009 @ 06:20 PM
Interesting to say the least.....

When the whole BAILOUT discussion was presented last fall/winter, prior to the initial 700B, an explanation that they were TOO BIG TO FAIL popped up.....


Common sense says, If we have entities that are TOO BIG TO FAIL, we might need to come up with legislation that would prevent entities to become TOO BIG TO FAIL so as to prevent this taxpayer burden in the future.....

Am I so wrong in this train of thought????


We have the Gov't, picking and choosing whose head is on the chopping block, AND who is allowed to be bailed out.....

AND not just bailed out.....

ALLOWED to acquire those who were unfortunately not worthy of the BAILOUT......

Thus making the companies...



I smell something....

I am sure I am not the only one....

Please correct me if I am wrong,

I don't want to be right

on this one......

[edit on 3/21/2009 by JacKatMtn]

posted on Mar, 21 2009 @ 06:52 PM
The FDIC is so corrupt like the vast majority IN WASHINGTON or in positions of political power around the is a prerequisite to be lacking a moral compass (infected by power and greed ...which has a habit or rationalizing away morals) rise to the cream of the crop in the GAME called Politics....

WA MU made piss poor loans but cetain fractions of congress (who were likely hypnotized i.e bribed by certain financial lobbyists) put the pressure on these groups to lend to "less credit worthy" consumers and you only need to push a person in a financial institution so far before they say OKAY i will lower my lending standards...for $$ and fear of not "playing along" or fear of tanking there company's stock valuations by not keeping up with their competitors (and thus losing their jobs) looks like they were not the favored son's when the shat started to hit the fan they lost them anyway.

posted on Mar, 21 2009 @ 07:07 PM
reply to post by HunkaHunka

Yes, you have just outlined their plan.
Centralization of banking power.
This has been on the wall from the beginning.

Considering the FDIC has said they will become insolvent this year, this is troubling news.
The FDIC will go under to cover the tracks of what they've done.
WAMU just made a huge move in this mess.

You're only REALLY "too big to fail" if you play ball with the big boys. Apparently WAMU didn't. Or didn't do it well enough. So they tore them down and sold them to JP.
This is a crap-storm and I hope that it is adverted before ALL of the banks become centralized to a point that one person owns all the banks still in business. (coughRothschildcough)

PS - But in the end the scenario doesn't work. Offsetting money stolen by money printed doesn't get you anywhere in the long-run unless there is a profit made.
Centralization or not, we're still in the hole, if you follow.

[edit on 21-3-2009 by Jay-in-AR]

[edit on 21-3-2009 by Jay-in-AR]

posted on Mar, 21 2009 @ 07:34 PM
JP Morgan.

Let's of the anchor banks for the 13 familes of the Federal Reserve Bank.

This should be good concidering they own all the Judges also.

posted on Mar, 21 2009 @ 08:36 PM
Definitely suspicious.. $1.9billion was a steal, nothing short of it. Of course, JP also had to take on it's debts, and write down a lot of assets... but still, WaMu was in better shape than Citi was and IS. Why didn't the fed put a Back Stop insurance program in place for WaMu, instead of destroying it outright?

JP and BAC came out of this whole ordeal three heads above the rest, cannot argue that.

posted on Mar, 21 2009 @ 08:53 PM
The Washington Mutual takeover was definitely deliberate, remember Reinhardt who predicted it's collapse because he said whenever this Legatus organisation (catholic) holds a meeting, the biggest banking institution in that area fails and they were meeting in Seattle and so he predicted WaMu would go down and sure enough they did.

posted on Mar, 21 2009 @ 09:18 PM
I honestly don’t see on what grounds they have to stand on. There seems to be no basis in fact.

After they were sold to JPMorgan Chase they should have known the toxic assests would end up either in bankruptcy or lost as toxic debt.

The FDIC only covers the insured’s not to insure the Bank and CEO's,however if they had 250,000 in an account FDIC would cover only that amount.

The Shareholders seen this coming and got out in time, rather the smart ones.

I think FDIC arranged the buyout by JPMorgan. They should be greatful. They could have been allowed to fail like Lehman Brothers.What do they want one last Golden Parachute? Are they mad they didn’t get a bailout bonus like AIG?

You cant trust a banker anymore. It's simply gravity. What goes up must come down.

I also disagree that this is a typical business cycle!

[edit on 21-3-2009 by wonderworld]

posted on Mar, 21 2009 @ 09:48 PM

Originally posted by wonderworld
After they were sold to JPMorgan Chase they should have known the toxic assests would end up either in bankruptcy or lost as toxic debt.


If I remember correctly, they called them


Which, so far, means nothing less than what our elected, seem willing to throw on the shoulders of the taxpaying citizens...

Last I heard, after the influx of yours and my tax dollars, the numbers are mind-boggling, the bailed out......


Carry the


Give me a break.....

I may be overreacting, but this has to be THE BIGGEST RAPING of the US Taxpayer..........

Funny thing,

Most of those do not know it is happening...

It is not about the AIG bonus....

It is not about our President slipping with the Spec Olympics on a late night talk show....

Those old enough know about the SHELL GAME.......

We are being played...

posted on Mar, 21 2009 @ 10:02 PM
If they are no longer a company then who gets the money if they win? I don't think it will be the shareholders.

posted on Mar, 21 2009 @ 10:04 PM
I don't know. I mean, I agree with what you are all saying, though if WAMU wins somehow, who's money is it that they get?
See the real story I think kinda goes like this;

Its kind of the same way how people jump from fad to fad, or liking a band until they become too mainstream, except with businesses. When you have lots of assets and lots of money and lots of people in your pocket, you could then easily build up a business, or buy a business, assets, money, and then take it down. Make your friends rich, build up another institution, and thus continue the process. Doesn't matter how long u take to build it up, months, days, years, decades... the payoff is evidentally huge.

Plus if somehow there's any ties between WaMU and other pawns in this game, then this lawsuit isn't great news. If they are innocent victims, well then I just hope we the people can get some justice from the culprits.

posted on Mar, 21 2009 @ 10:05 PM
reply to post by HunkaHunka

Wow! Haven't read all the posts but are there any links that show this? I understood they had no assets... baaa.. baaa.. sorry.

I guess I didn't pay attention to this one.

posted on Mar, 21 2009 @ 10:18 PM
reply to post by JacKatMtn

You are totally correct. I meant toxic assets, however they have no value so kind of the same thing. It’s Toxic Waste, when it reaches these levels!

Citi groups shares got down to under a buck, at the same time BOA had problems with Countrywide and Merill Lynch, yet they both claim they don’t need a bailout. Something smells fishy to me.

Bank of America is not too big to fail. Countrywide will bring them down, mark my word on that. It’s all part of the bigger plan.

One poster was right by saying" is the US too big to fail"! No.

Sorry for the typ-o I'm entertaining and had some scotch and Kool-Aid ICK!!

[edit on 21-3-2009 by wonderworld]

posted on Mar, 22 2009 @ 12:03 AM
Wait, so Washington Mutual created a holding company, dumped a ton of money into it before the parent company tanked, then tries to sue the FDIC over those seized funds?

It is illegal to dump funds into an incorperated subsidiary of a parent company before seizure isnt it? It is at least very, very unethical and frankly, completely transparent.

Or did I miss the point of this article?

posted on Mar, 22 2009 @ 12:24 AM
Your assets are only worth what someone is willing to pay for them.

Price is the intersection of supply and demand.

Just because Washington Mutual had those assets on its books at $300 some odd billion does not mean that is what they were worth when the company was sold.

A large chunk of those "assets" were, as someone else pointed out, toxic loans.

As of June 30, 2008, Washington Mutual Bank had total assets of US$ 307 billion, with 2,239 retail branch offices operating in 15 states, with 4,932 ATM's, and 43,198 employees. It held liabilities in the form of deposits of $188.3 billion, and owed $82.9 billion to the Federal Home Loan Bank, and had subordinated debt of $7.8 billion. It held as assets of $118.9 billion in single-family loans, of which $52.9 billion were "option adjustable rate mortgages" (Option ARMs), with $16 billion in subprime mortgage loans, and $53.4 billion of Home Equity lines of Credit (HELOCs) and credit cards receivables of $10.6 billion. It was servicing for itself and other banks loans totaling $689.7 billion, of which $442.7 were for other banks. It had non-performing assets of $11.6 billion, including $3.23 billion in payment option ARMs and $3.0 billion in subprime mortgage loans.[12]

I find this statement particularly prophetic; (from the same Wikipedia article linked to above)

"Wal-Mart of Banking"

Chairman and CEO Kerry Killinger had pledged in 2003 “We hope to do to this industry what Wal-Mart did to theirs, Starbucks did to theirs, Costco did to theirs and Lowe's-Home Depot did to their industry. And I think if we’ve done our job, five years from now you’re not going to call us a bank.”
(emphasis mine)

Well, as it turned out, they were absolutely right.

There are some interesting links if you want to see the WaMu investors side of the argument.

They make for an interesting read. It seems they feel that the FDIC feared if WaMu collapsed that they would not be able to cover the claims if other banks later collapsed. In essence their complaint seems to be based on the idea that the FDIC reacted out of fear and did not follow the actual guidelines for seizure.

To receive this benefit, member banks must follow certain liquidity and reserve requirements. Banks are classified in five groups according to their risk-based capital ratio:

* Well capitalized: 10% or higher
* Adequately capitalized: 8% or higher
* Undercapitalized: less than 8%
* Significantly undercapitalized: less than 6%
* Critically undercapitalized: less than 2%

When a bank becomes undercapitalized the FDIC issues a warning to the bank. When the number drops below 6% the FDIC can change management and force the bank to take other corrective action. When the bank becomes critically undercapitalized the FDIC declares the bank insolvent and can take over management of the bank.

If they are right, and WaMu was sufficiently liquid, they could win. I think that this argument over liquidity is part of the counter argument the FDIX is making that their claims of liquidity were not very substantial.

Hard to say who is right here without seeing the actual hard facts about what liquid cash WaMu actually had in hand at the time it was seized. WaMu encouraged the practice of fudging income and assets on loan applications when making the shady loans that helped bring it down, so their word alone is just not sufficient. Clearly they are not opposed to fudging the numbers to make the bottom line say what they want it to say to make a profit.

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