Washington Mutual (WaMu) was the largest savings and loan company in the country. It was seized by the government in September 2008 and sold to JPMorgan Chase (JPM) for a piddling $1.9 billion dollars.

Now the company wants to investigate discussions between JPMorgan Chase, regulators,competitors and rating agencies it said led to the seizure of Washington Mutual according to a filing in bankruptcy court.

It alleges misconduct on the part of Morgan by "disclosing confidential information" in violation of the confidentially agreement to government regulators, rating agencies, media and investors in an effort to harm WAMU by driving down WAMU's credit rating and stock price.

Continue reading The true story behind the collapse of Washington Mutual

The true story behind the collapse of Washington Mutual originally appeared on BloggingStocks on Wed, 16 Dec 2009 14:30:00 EST. Please see our terms for use of feeds.

Particularly disturbing are the losses that JP Morgan Chase & Company (NYSE: JPM) acquired when it purchased WaMu. Mr. Dimon went on to say that if unemployment rises to 10%, losses on the WaMu portfolio could reach a whopping 24% of the $25.9 billion portfolio. This would amount to a loss of $6.21 billion.

Continue reading JP Morgan Chase faces very large credit card losses

JP Morgan Chase faces very large credit card losses originally appeared on BloggingStocks on Thu, 28 May 2009 15:00:00 EST. Please see our terms for use of feeds.

A lot of observers have been complaining that federal bailouts of failed financial institutions have been too generous.

Now the Washington Mutual's holding company is making exact opposite claim, suing the Federal Deposit Insurance Corporation. The company claims that the fire sale to JPMorgan Chase (NYSE: JPM) violated its rights, arguing that a more orderly liquidation would have provided greater value to the company's constituents.

Continue reading Washington Mutual sues FDIC over fire sale

Washington Mutual sues FDIC over fire sale originally appeared on BloggingStocks on Sun, 22 Mar 2009 11:10:00 EST. Please see our terms for use of feeds.

The New York Times took a look at the problems that led to the collapse of Washington Mutual: Fraudulent mortgage applications were approved with nothing in the way of oversight from the boss -- who was snorting methamphetamine every morning. Meanwhile, the CEO took home $88 million between 2001 and 2007 before the company collapsed under the weight of the billions of dollars in bad loans it had made.

According to the Times, "By 2005, the word was out that WaMu would accept applications with a mere statement of the borrower's income and assets -- often with no documentation required -- so long as credit scores were adequate, according to Ms. Zaback and other underwriters."

It's great that former employees and the media are stepping forward to tell this story now -- after shareholders have been wiped out along with homeowners -- but where were regulators and Wall Street analysts back when this stuff was happening?

Drugs, fraud and betrayal at Washington Mutual originally appeared on BloggingStocks on Mon, 29 Dec 2008 10:44:00 EST. Please see our terms for use of feeds.

Here is a roster of some of the fallen ones.

Jimmy Cayne Former CEO Bear Stearns - latest compensation $32.1 million. He led Bear Stearns for 15 years. He resigned last January. Bear Stearns was acquired by JPMorgan Chase (NYSE: JPM) for $10.00 a share. He and his wife purchased two luxury apartments at the Plaza.

Richard Fuld Former CEO Lehman Brothers - Latest compensation $34.4 million. Subpoenaed by federal investigators to determine if he misled investors at Lehman. Executives at Barclays Capital (NYSE: BCS) bought Lehman's US assets.

Kerry Killinger Former CEO WaMu - latest compensation $4.5 million. He became CEO in 1990 and built WaMU into one of the largest US mortgage writers. He offered sub prime mortgages which led to WaMU's rapid growth. He was ousted in September when WaMU was sold to JPMorgan.

Continue reading In 2008 they all fell down. Who are they?

In 2008 they all fell down. Who are they? originally appeared on BloggingStocks on Fri, 26 Dec 2008 14:00:00 EST. Please see our terms for use of feeds.

This post is part of our feature on Money Winners of 2008. See all 20.

This past year has been a pretty rough one for CEOs in general. The stock market has tanked since October of last year, dragging down strong companies' share prices to some extent and weak companies' even further. It has been even worse for most financial executives, who have been ousted as their stocks fall to roughly zero and their company goes bankrupt or is taken over by a stronger institution. While many of these CEOs have golden parachutes that open upon their dismissal, much of their compensation is in the form of the company's stock and when that value dwindles, they feel the pain as well. One of our other 2008 Money Winners, Alan Fishman, who walked away with more than $11 million for three weeks work at Washington Mutual, had 600K shares of WM that he saw evaporate.

James "Jamie" Dimon, CEO and chairman of JPMorgan Chase (NYSE: JPM), has not had this kind of trouble over the past year, which places him squarely in the minority among his peers and makes him a money winner. Strictly speaking, Mr. Dimon raked in a salary for this year of "just" $1 million. His bonus allows for an additional $14.5 million, and the way things have been going for JPM, I'd wager a hefty portion of my savings that he gets the full amount. Plus on top of that, he has exercised options worth about $40.1 million this year, bringing the grand total compensation to $55.6 million.

Continue reading Money winners of 2008: JPMorgan CEO Jamie Dimon

Money winners of 2008: JPMorgan CEO Jamie Dimon originally appeared on BloggingStocks on Sun, 14 Dec 2008 17:40:00 EST. Please see our terms for use of feeds.

Big sucking sound as WaMu white collars get the axe in Seattle originally appeared on BloggingStocks on Wed, 03 Dec 2008 14:40:00 EST. Please see our terms for use of feeds.

Sign says Washington Mutual is a has-been originally appeared on BloggingStocks on Tue, 21 Oct 2008 17:15:00 EST. Please see our terms for use of feeds.

Continue reading The beggars of Wall Street

The beggars of Wall Street originally appeared on BloggingStocks on Mon, 06 Oct 2008 10:58:00 EST. Please see our terms for use of feeds.

In short order, the shareholders of Washington Mutual (NYSE: WM) have lost billions. A tier-1 private equity investor, TPG, has lost $1.3 billion on the company. And, unfortunately, thousands of WaMu employees have lost their jobs.

However, there are some winners. For example, there are the short sellers. JP Morgan (NYSE: JPM) is also likely to do well since the firm bought WaMu's assets for a mere $1.9 billion.

But there appears to be yet another interesting beneficiary: Alan Fishman. He is WaMu's CEO, who took the top job 18 days ago.

As should be no surprise, he signed a juicy contract: a $7.5 million signing bonus and a lump-sum payment for severance that comes to $6.15 million. In other words, if he leaves the company, he'll walk away with $13.65 million.

That's a pretty good deal in light of the fact that WaMu is the biggest bank collapse ever.

Moreover, I suppose it is yet further evidence of why Americans have low regard for the financial system. And despite huge bailouts, it's probably a good bet that little will change.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He is also the founder of BizEquity, a valuation website.

WaMu's CEO: Bagging $13.65 million in 18 days? originally appeared on BloggingStocks on Sat, 27 Sep 2008 09:40:00 EST. Please see our terms for use of feeds.

On September 24, 2008 the highly respected firm of Standard & Poors issued its analyst report on Washington Mutual (NYSE: WM). Millions of investors rely on Standard & Poors and other analysts for their unique insight into listed stocks. They devour these reports and make investment decisions based on them. It's the American way of investing, fostered by the financial media and the securities industry.

Analysts with no clothes: The WaMu failure originally appeared on BloggingStocks on Fri, 26 Sep 2008 11:21:00 EST. Please see our terms for use of feeds.

In what I feared might become a regular feature here, the Federal Deposit Insurance Corporation (FDIC) arranged for the takeover of the 13th failed bank of 2008 Thursday. As I posted, the FDIC likes to close banks on Friday after hours so it can reopen as branches of the acquiring bank on the following Monday morning. But since this is history's biggest bank failure, the FDIC couldn't wait for the weekend. The bank in question is the $310 billion (assets) Washington Mutual (NYSE: WM).

This is history's biggest bank failure -- it's almost eight times bigger than the previous record holder, Continental Illinois. In this case, JPMorgan Chase (NYSE: JPM) was the rescuer, buying WaMu from the FDIC. This follows JPMorgan's purchase of Bear Stearns back in March in which the Federal Reserve provided a $29 billion loan. But this deal will cost JPMorgan far less -- a mere $1.9 billion, and it will write down WaMu's loan portfolio by 10% in the process. To further bolster its position, JPMorgan will raise $8 billion in capital.

What does JPMorgan get for all this? Branches for one thing -- 5,400 in 23 states -- and it will shutter 10% of the combined branches. What JPMorgan does not get is much of the junk that WaMu carried and by that I refer to "senior unsecured debt, subordinated debt, and preferred stock of WaMu's banks, any assets or liabilities of the holding company, Washington Mutual Inc.; or [WaMu's] lawsuits."

Continue reading Bank Failure Count: WaMu, history's biggest, is 2008's 13th bank failure

Bank Failure Count: WaMu, history's biggest, is 2008's 13th bank failure originally appeared on BloggingStocks on Fri, 26 Sep 2008 08:30:00 EST. Please see our terms for use of feeds.

WaMu forced into acquisition by J.P. Morgan originally appeared on BloggingStocks on Thu, 25 Sep 2008 21:51:00 EST. Please see our terms for use of feeds.

Continue reading Why should federal taxpayers help Washington Mutual at all?

Why should federal taxpayers help Washington Mutual at all? originally appeared on BloggingStocks on Tue, 23 Sep 2008 13:00:00 EST. Please see our terms for use of feeds.

Continue reading Cramer on BloggingStocks: The beauty of the plan

Cramer on BloggingStocks: The beauty of the plan originally appeared on BloggingStocks on Tue, 23 Sep 2008 08:58:00 EST. Please see our terms for use of feeds.

Almost two months have passed since I posted Serious Money: Tempting fate with 10 financials - the results of buying into the following pool of financial stocks at a time when the "hate 'em" factor was at a peak, or so I thought. Now things are even worse, much worse, and a new market bottom was reached only last week.

Trying to predict where this market will go is not possible, but there are many ways to play it. I chose to buy into a pool of financial stocks, believing the survivors would post gains that would overshadow the losers.

When I last updated this story, the pool of stocks was up 26%. Things have gotten worse, but the group is still up 13.89% plus the dividends. This is better than any of the indices, although it is much more speculative.

There was plenty of big news since the last report. While Lehman Brothers Holdings (OTC: LEHMQ) went bankrupt, MBIA Inc (NYSE: MBI) made up for it by more than doubling. Meanwhile, Merrill Lynch (NYSE: MER) is in survival mode supported by a Bank of America (NYSE: BAC) buyout offer. Seven stocks are up, two are down and one is gone (returns from July 29 prices):

Continue reading Chasing Value: Financial devastation? Still up but less

Chasing Value: Financial devastation? Still up but less originally appeared on BloggingStocks on Mon, 22 Sep 2008 12:40:00 EST. Please see our terms for use of feeds.

Citigroup (NYSE: C) is considering buying Washington Mutual (NYSE: WM), the nation's largest savings and loan. It sounds like Sandy Weill is back in charge and trying to create the kind of financial conglomerate he built in the 1990s and earlier this decade.

According to The Wall Street Journal, "Citigroup and several other banks are reviewing the Seattle thrift holding company's books, which are packed with shaky mortgages."

Just a few months ago, Citi CEO Vikram Pandit was talking about cutting the big bank's expenses by 20% and selling off "non-core" assets. Now he is thinking about buying the most troubled large financial company in America.

Pandit would be better off staying with his first plan. There is a reason WaMu's stock got down to under $2. If mortgage defaults move up and housing prices move down, the mortgage company's financial situation could get much worse.

Pandit is proving to be a "flavor-of-the-month" CEO. Investors never know what he plans to do tomorrow, let alone what he wants to do with Citi over the next year.

Douglas A. McIntyre is an editor at 247wallst.com

As Citigroup looks at buying Washington Mutual, 1+1=0 originally appeared on BloggingStocks on Fri, 19 Sep 2008 08:45:00 EST. Please see our terms for use of feeds.

Hank Paulson said that "the American people can be very, very confident about their accounts in our banking system," according to AP. This means you should be very, very skeptical about the truth of that statement. And that's because there is a good chance that Washington Mutual (NYSE: WM) will fail and take the Federal Deposit Insurance Company (FDIC's) reserve fund down with it.

How so? WaMu's failure could cost $20 billion or more, and the FDIC's fund has $45.2 billion in it, according to AP. If that WaMu cost is right, no problem. Unless, as Wilbur Ross predicted, there are 1,000 bank failures before this is all over. If so the FDIC would need to raise more money to pay off all the deposits in the failed banks. But there's plenty of money available, right? Just this morning, the Treasury sold securities -- dubbed a Supplementary Financing Program -- to pay for its little $85 billion loan to buy American International Group (NYSE: AIG).

And with WaMu getting its credit rating downgraded to junk, who will want to do business with it? Will another firm want to step in and buy it before it files for bankruptcy? That would be nice because if it costs much more than $20 billion for the FDIC to rescue it, we are going to see inflation spiking as our government prints more and more money to bail out all these failed financial institutions. And that won't make Americans feel confident about their banking system at all.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He owns AIG securities and has no financial interest in the other securities mentioned.

Could WaMu failure wipe out FDIC reserve fund? originally appeared on BloggingStocks on Wed, 17 Sep 2008 12:55:00 EST. Please see our terms for use of feeds.

Continue reading Chasing Value: Goldman Sachs upgrades; WaMu says "we'll be fine"

Chasing Value: Goldman Sachs upgrades; WaMu says "we'll be fine" originally appeared on BloggingStocks on Fri, 12 Sep 2008 13:43:00 EST. Please see our terms for use of feeds.

• Mike said; Ya, Wamu... Great stock. Ha Ha Ha Ha Ha Ha Ha Ha Ha Ha

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I own shares of WM.

Chasing Value: Not -- WaMu one week later - ouch! originally appeared on BloggingStocks on Thu, 11 Sep 2008 13:16:00 EST. Please see our terms for use of feeds.