Washington Mutual demanda a la FDIC por 17 billones US$ + daños

As some of you probably know already, English is not my native language. I am always slow in picking up vocabularies from slangs, urban legends, etc. For instance, I still don’t know what WAG stands for. But, I figured out it must mean something related to 8-Ball. Unfortunately, I don’t know where 8-Ball comes from either. However, I nonetheless figured out that it must mean something like wild imaginations or pure speculations, wild guesses, etc. Since the message board has recently been driven into an imaginary world of exaggerated self significance, conspiracies and over-blown fears, why not smoke my own WAG, or throw out my own 8-Ball? Except, my smoke blows (my magic ball travels) in a direction of less fear, and no dooms and glooms.

As I said, I was happy but wondered why the "leaks" so early when I learned the news on 5/20. My immediate concern was the leaks like this can often complicate the on-going negotiations. After 5/24 hearing, I came to the view that the leak was a deliberate move by the debtors, possibly with the consent of EC and SNHs. Think about it, if Rosen makes a surprise announcement of "Equity taking control of NewCo" in the court, shareholders will go wild. The market for WMI equities will become very chaotic. It will be irresponsible to do so (like what happened on 3/12/10). It's prudent to leak the news on a Friday so people have the weekend to digest the news.

But, there is a need to temper the enthusiasm and share prices too.

At 5/24 hearing, when Rosen reported to the court, he had to be very measured in his statements laying out the outlines of the new plan. People complained that Rosen was vague and lack of details. But I think what he did is understandable. One obvious reason is the deal has not been finalized. He simply didn't have all the details, and could not give out more details while the talks are on-going. He also shouldn't lay out too much details when (1) there are parties that are not on board yet. The deal can be derailed at any time. It will be to his detrimental if he raises the expectations a little too high and the SP shoots up through the roof as a result, but later the deal is derailed and SP collapses. There is a need to temper expectations (Of course, I'm assuming there is more good news hidden in the details). (2) If share prices goes too high (again, assuming the plan has more positives to Equity), it will put Rosen into a position of disadvantage at negotiation table. Parties can easily "blackmail" him for more concessions by threatening to wake away from the plan. Any subsequent downfall of SP will be called out as his fault because he is the "messenger". From the debtors' perspective, there is a need to keep SP in check so that the DIP can negotiate from the position of strength to bring all parties on board, including those who are not yet. (If my WAG’s right, then Rosen has done a good job of managing expectations so far).

In above WAG, I made a big assumption that there is more good news hidden in the details. I have good reasons to believe that but tired of elaborating on and on. To summarize, the debtors and SNHs are not giving Equity the control of NewCo out of altruism. Contrary to complains about EC’s “inaction”, EC’s actions speak loud than words. There is no accident between the emergence of a new plan, and the agreements by EC of repeated postponements of SNH depositions, as well as multiple entries of researches on FJR, law of good faith settlement, and law of disallowance in recent Susman billing statements. Coupled with a new factor of changing ownership of NewCo, there is good likelihood of more concessions to Equity. Of course, it’s also possible the draft plan is the best deal the EC can get, as some argued. In either case, there is a need to temper expectations by limiting the amount of information available right now.

As I said, it’s WAG/8-Ball. Please don’t trade on it.

Washington Mutual Soars 350% On Bankruptcy Exit Plan
Posted on June 1, 2011 in Bank Failure, Banking News, Biggest Banking Failures, featured, Washington Mutual · 0 Comment

The failure of Washington Mutual Bank on September 28, 2008 was the largest banking failure in U.S. history.

After nervous depositors starting withdrawing billions of dollars, regulators feared that a run on the Bank would cause a nationwide panic and decided to close the bank. The FDIC, acting as receiver, sold Washington Mutual to JP Morgan.

Washington Mutual, Inc., the holding company for Washington Mutual Bank, filed for bankruptcy the day after the FDIC seized Washington Mutual Bank. Since the purchase agreement for Washington Mutual Bank between the FDIC and JP Morgan excluded all claims by equity holders and unsecured creditors, these parties were forced to pursue all claims against bankrupt Washington Mutual, Inc.

Shareholders, in accordance with Federal law, have the lowest claims priority in a bankruptcy and usually get wiped out. In late 2010, a bankruptcy court appointed examiner told shareholders that there was little hope of any recovery. The stock of Washington Mutual, Inc., which traded above $43 per share in early 2007, collapsed and in early May 2011, was trading for 4 cents per share.

Shareholders were furious to be excluded from any recovery and accused hedge fund creditors of trading on inside information during the bankruptcy process, although the charges were never proved.

In a surprising development in late May, the hedge funds agreed to give shareholders a stake in Washington Mutual after it emerges from bankruptcy in return for dropping the investigation into insider trading charges. In addition, the hedge funds agreed to give Washington Mutual $100 million in financing for acquisitions after it emerges from bankruptcy. Shareholders will also have the benefit of a $30 million trust set up to seek recovery from other parties involved in the collapse of Washington Mutual.

The biggest asset of Washington Mutual, Inc., once it is reorganized through bankruptcy, is the value of an estimated $20 billion dollar net operating loss carryforward benefit which can be used to offset taxes on future earnings.

Shareholders, who once expected to receive nothing from their bankruptcy claims, are now looking at an ownership stake in a reorganized company that has a valuable tax asset and prepackaged financing to conduct acquisitions to utilize the tax benefit. The stock of Washington Mutual (WAMUQ.PK) has soared 350% over the past few weeks on huge volume, rising from 4 cents to 18 cents.

WASHINGTON MUTUAL - COURTESY YAHOO FINANCE
Is Washington Mutual stock a buy at this point? Here’s two points to consider:

1.It is definitely a better buy now than it was in early 2007.
2.Washington Mutual, ironically, will emerge from bankruptcy in much better financial health than many banks that are currently operating.

Fijate si eres tonto porque no tengo otro calificativo para llamarte que te crees el mas listo y no sabes reconocer un meneo del arbol cuando ocurre.

Ahora que estan otra vez donde empezamos que otra estupidez te queda por decir? Y Maxi me vas a perdonar pero estas perdiendo muchos puntos siguiendole el baile infantil a este soplagaitas.

Parece que te jode que algunos acertemos en nuestras predicciones y vamos que aquí ya nadie puede decir esta boca es mia. Os felicito a los 2 hoy os habeis lucido en el unico momento que habeis podido ... a ver que decis ahora que vamos para arriba.

Besugo no te voy a responder sobre lo de mi mujer porque tu mismo demuestras lo que eres...

BOBO A ver que dices cuando se presente el POR y llegue el derrumbe, no te las des de listo que justo vendias hoy y han empezado a caer PALETO que solo vacilas cuando suben las acciones y cuando caen te escondes como una vieja.

Como se nota que no tienes un bebe :) :) :)

Deja de faltar al respeto y aprende modales que te hacen falta. Le he dao las explicaciones a Maxi porque estoy seguro que el entiende lo que son las mujeres con el dinero...de ti hummmmmm no puedo decir lo mismo.

no way TPS converts to commons and shares company along with P and K preferreds 50/50 with common equity.

Even if NEWCO was worth 10b, I cannot see them being put on same level as commons.

There has got to be a better deal for preferreds, but we will just have to wait and see how it shakes out.

there is more going on here than we know.

It does not make sense that Susman and EC would drop the IT claims just to get the reorganized company and still have waterfall issue that results in NEWCO taking on part of Hs as debt/preferreds. It also does not make sense to agree to a litigation trust that cannot go after JPM and FDIC and leave the GSA intact.

Instead, moving forward with IT in court, the Judge would surely be forced to implement FJR and rule for disallowance of claims in an amount that would have paid noteholders/creditors in full resulting in equity getting NEWCO free and clear. Then, Susman and EC would be able to use the IT to attack the GSA due to the unclean hands and likely involvement of JPM.

So, for Susman and EC to just get NEWCO without much additional consideration and not have a prime opportunity to try to dismantle GSA just does not make sense. I believe that JPM and FDIC must have come to the negotiation table which will result in money for the estate that will flow directly to preferreds which may include JPM taking on TPS and JPM/FDIC relinquishing tax refunds and maybe some other assets such as BOLI/COLI, etc. This could mean a partial cash payout to P and K, with the remainder being converted to new equity.

I think another leak could be coming that the GSA is being updated to including equity (without much further explanation). I think the first leak was intentional as others have suspected to allow a controlled rise in equity prices. This second leak may be necessary for the same reason.

es verdad besugo, hacele caso a maximunae... mejor no hables con los hugo chavez, habla con los franco...
mi dios