Banking News: JPMorgan (NYSE:JPM) and FDIC Settle with WaMu for $6 Billion
[Update] – As several commenters have pointed out, the proposal is pending legal approval from the court, which is uncertain.
The legal battle between JPMorgan (NYSE:JPM) and FDIC against the estate of WaMu had gotten down and dirty during the litigation, but that has come to an end now as they all kissed and made up, with the Washington Mutual estate getting $6 billion in the settlement agreed to.
How the $6 billion settlement breaks down is $4 billion in deposits will be returned to the estate, along with $2 billion in cash.
The $4 billion was determined by the claims by Washington Mutual that they had $4 billion in deposits when the FDIC tok over the company.
Other claims against the FDIC and JPMorgan in the lawsuit included the especially damning possibility that the two “conspired to lower WaMu’s sale price by leaking false information about WaMu’s finances to federal regulators and potential rival bidders.”
Most of the case was centered around the alleged releasing of “false information,” and even though the judge blocked a lot of important discovery, this didn’t hinder the settlement because the longer it was in the news the bigger hit JPMorgan and the FDIC were taking as a result.
This had the makings of a real fiasco for the FDIC and JPMorgan, and so it’s no surprise the settlement happened and a significant amount of money was returned to the WaMu estate to pay off many of its creditors.
Even without discovery being allowed in most cases, the overwhelming evidence was enough for the settlement to be the better decision than to allow the battle to be dragged through the media any longer.
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OOPS..!!!
This article neglected one very important detail….The event described did NOT happen.
What really happened Friday was a “PROPOSED” settlement was put forward…and it has yet to be reviewed or supported by all the parties.
Finally…any REAL settlement proposal must be approved by the court.
You guys got it wrong..Terrible reporting..or are you guys alson in the money bosses' pocket?
Where is the signed order from the judge saying this settlement is done? Oh, that's right. There isn't one.
This isn't a proposed settlement, it's a proposed sellout. But it won't get approved. The FDIC and WMB bondholders aren't ahead of Washington Mutual shareholders with regards to the $9 billion of cold hard cash that was part of the proposed sellout. And JPM isn't entitled to any of that cash. All of that belongs to Washington Mutual, as time will eventually tell.
Please please please… This is an industry publication. Why would it not take the side of the banking industry in coverage? Look at the name of the site, for goodness' sake.
Indeed, it was just a “proposed settlement,” agreed upon by 3 parties only: WMI, JPM, and the FDIC. The equity committee has not signed in on it, nor the presiding judge. 6 billion dollars is a far cry from the
300 billion that WAMU was reportedly worth prior to seizure. Since most agree that WAMU was never an insolvent bank I believe JPM and the FDIC should just return WAMU's assets and allow it continue on. If they can not do this then they should offer to pay fair value. The equity committee for WMI shareholders, through the help of the Solomon group are currently working on getting true valuation for WAMU's/WMI's assetts. It would be interesting to know this amount as it would be an important factor in negotiating further settlement offers. The fight is far from over.
There are a couple things wrong with this article. First, the “agreement” did not include the Equity Committee, and they never would have gone along with this. This “agreement” is only a proposal st this stage.
More importantly, the $6 billion you refer to is actually Washington Mutual's own money. JPM held onto that $4b until the last second before the judge made them return it. The other $2B in cash is not coming out of JPM's pocket, but for some unknown reason, Washington Mutual is splitting it's Net Operating Loss tax refund of $5.6B with JPM and the FDIC, with Washington Mutual only getting $2B! A crafty ploy to keep assets less than liabilities so as to kill off shareholders, while the bondholders get their money.
It's similar to suing someone who robbed you, and they give you your wallet back if you give them half of the cash! Is that a win??
Also, Washington Mutual is also dropping all of it's ongoing lawsuits against the FDCI and JPM! You mention the damning evidence, and you are correct on that count. Why on earth would they do that? Looks like a home run. Alot of politics and greed here to cover up wrong doings by Obama's favorite banker, Jamie Dimon, and to cover up either corruption or simple ineptness, or both by FDIC chairwoman Shiela Bair.
It's a proposal. It's not a signed adjudicated order. It's got a ways to go.
The author seems confused about the settlement proposal. There are cash deposits that JPM and the FDIC were misrepresenting as capital contributions, and refusing to return them to WMI, And there are some tax refunds that WMI received, and is paying out substantial percentages of those to the FDIC and JPM. There's a lot of indemnification in the deal. The parties are agreeing not to sue each other over many and various issues, or that the costs of such law suits brought by third parties will be carried by one party or the other.
All the details of the settlement proposal are not out yet. And it just might be there are a large number of objections and complaints yet in store from various parties once the details are more fully explained. But the lawyers for Washington Mutual have only stated that they are pretty sure the Bank Bond Holders are going to be upset. And those are obligations of WMB that were severed by the FDICs actions. And not obligations of WMI or the holding company.
Many details to follow.
It's a proposal. It's not a signed adjudicated order. It's got a ways to go.
The author seems confused about the settlement proposal. There are cash deposits that JPM and the FDIC were misrepresenting as capital contributions, and refusing to return them to WMI, And there are some tax refunds that WMI received, and is paying out substantial percentages of those to the FDIC and JPM. There's a lot of indemnification in the deal. The parties are agreeing not to sue each other over many and various issues, or that the costs of such law suits brought by third parties will be carried by one party or the other.
All the details of the settlement proposal are not out yet. And it just might be there are a large number of objections and complaints yet in store from various parties once the details are more fully explained. But the lawyers for Washington Mutual have only stated that they are pretty sure the Bank Bond Holders are going to be upset. And those are obligations of WMB that were severed by the FDICs actions. And not obligations of WMI or the holding company.
Many details to follow.
OOPS..!!!
This article neglected one very important detail….The event described did NOT happen.
What really happened Friday was a “PROPOSED” settlement was put forward…and it has yet to be reviewed or supported by all the parties.
Finally…any REAL settlement proposal must be approved by the court.
You guys got it wrong..Terrible reporting..or are you guys alson in the money bosses' pocket?
Where is the signed order from the judge saying this settlement is done? Oh, that's right. There isn't one.
This isn't a proposed settlement, it's a proposed sellout. But it won't get approved. The FDIC and WMB bondholders aren't ahead of Washington Mutual shareholders with regards to the $9 billion of cold hard cash that was part of the proposed sellout. And JPM isn't entitled to any of that cash. All of that belongs to Washington Mutual, as time will eventually tell.
Please please please… This is an industry publication. Why would it not take the side of the banking industry in coverage? Look at the name of the site, for goodness' sake.
Indeed, it was just a “proposed settlement,” agreed upon by 3 parties only: WMI, JPM, and the FDIC. The equity committee has not signed in on it, nor the presiding judge. 6 billion dollars is a far cry from the
300 billion that WAMU was reportedly worth prior to seizure. Since most agree that WAMU was never an insolvent bank I believe JPM and the FDIC should just return WAMU's assets and allow it continue on. If they can not do this then they should offer to pay fair value. The equity committee for WMI shareholders, through the help of the Solomon group are currently working on getting true valuation for WAMU's/WMI's assetts. It would be interesting to know this amount as it would be an important factor in negotiating further settlement offers. The fight is far from over.
There are a couple things wrong with this article. First, the “agreement” did not include the Equity Committee, and they never would have gone along with this. This “agreement” is only a proposal st this stage.
More importantly, the $6 billion you refer to is actually Washington Mutual's own money. JPM held onto that $4b until the last second before the judge made them return it. The other $2B in cash is not coming out of JPM's pocket, but for some unknown reason, Washington Mutual is splitting it's Net Operating Loss tax refund of $5.6B with JPM and the FDIC, with Washington Mutual only getting $2B! A crafty ploy to keep assets less than liabilities so as to kill off shareholders, while the bondholders get their money.
It's similar to suing someone who robbed you, and they give you your wallet back if you give them half of the cash! Is that a win??
Also, Washington Mutual is also dropping all of it's ongoing lawsuits against the FDCI and JPM! You mention the damning evidence, and you are correct on that count. Why on earth would they do that? Looks like a home run. Alot of politics and greed here to cover up wrong doings by Obama's favorite banker, Jamie Dimon, and to cover up either corruption or simple ineptness, or both by FDIC chairwoman Shiela Bair.
It's a proposal. It's not a signed adjudicated order. It's got a ways to go.
The author seems confused about the settlement proposal. There are cash deposits that JPM and the FDIC were misrepresenting as capital contributions, and refusing to return them to WMI, And there are some tax refunds that WMI received, and is paying out substantial percentages of those to the FDIC and JPM. There's a lot of indemnification in the deal. The parties are agreeing not to sue each other over many and various issues, or that the costs of such law suits brought by third parties will be carried by one party or the other.
All the details of the settlement proposal are not out yet. And it just might be there are a large number of objections and complaints yet in store from various parties once the details are more fully explained. But the lawyers for Washington Mutual have only stated that they are pretty sure the Bank Bond Holders are going to be upset. And those are obligations of WMB that were severed by the FDICs actions. And not obligations of WMI or the holding company.
Many details to follow.