The judge can make JPM pay fair value for the assets and can even force the deal to be unwound.
Her authority is such because a BK can judge can unwind any and all deals that force a company into bankruptcy, especially one in which the company gets less than fair value for what was taken. In this case WMI got nothing in return for their assets. The FDIC and then WMB creditors will get the 1.8 billion JPM paid.
You should do at least a little research before wasting all of this time posting about carving up carcasses.
"There are two kinds of fraudulent transfer. The archetypal example is the intentional fraudulent transfer. This is a transfer of property made by a debtor with intent to defraud, hinder, or delay his or her creditors. The second is a constructive fraudulent transfer. Generally, this occurs when a debtor transfers property without receiving "reasonably equivalent value" in exchange for the transfer if the debtor is insolvent at the time of the transfer or becomes insolvent or is left with unreasonably small capital to continue in business as a result of the transfer. Unlike the intentional fraudulent transfer, no intention to defraud is necessary."
http://en.wikipedia.org/wiki/Fraudulent_...
The FDIC has no authority over holding companies and as such, the full spectrum of bankruptcy powers applies in this case.
Many of us believe that by the time this is over this case will be made an example of to showcase the need of the new financial reform bill which is currently kicking around in Congress to afford the FDIC or a new authority the power to seize bank holding companies as well as the banks.
If you take some time to search this board or to do google searches, you'll find Sheila Bair has already said on numerous occasions that the FDIC NEEDS the power to unwind holding companies for this very purpose.
You need to do some DD before you post or you'll never figure this all out.
"Bair also said regulators should have more authority to close a bank holding company if an insured deposit-taking bank that it owns gets into trouble. Bair was speaking to the Institute of International Finance, which was meeting in Istanbul alongside a separate gathering of finance ministers and central bankers from the Group of Seven nations.
All bank holding companies should be subject to such intervention, even those not deemed systemically significant, she said. Regulators must also weigh how to handle the failure of a major non-bank financial firm, such as an insurance company or a hedge fund, she said.
Bair has been urging Congress to create a U.S. authority to unwind firms whose collapse would disrupt the economy. She has also urged lawmakers to give her agency powers to disassemble bank holding companies, similar to the role the FDIC now plays with failed banks."
http://www.bloomberg.com/apps/news?pid=2...
"My (limited) understanding is that all this wonderful judge can do is get JPM's greedy paws off our 4B that they are trying to steal (I guess stealing is like eating potato chips), and maybe also keep them away from our tax refunds. But forcing them to pay up for what they stole over a year ago... is that within the scope, or power of this court ?"
