Continue reading Chasing Value: Goldman Sachs Fraud Charge Creates Opportunity

Chasing Value: Goldman Sachs Fraud Charge Creates Opportunity originally appeared on BloggingStocks on Fri, 16 Apr 2010 14:30:00 EST. Please see our terms for use of feeds.

Continue reading Washington Mutual gave a mortgage to O.J. Simpson

Washington Mutual gave a mortgage to O.J. Simpson originally appeared on BloggingStocks on Wed, 25 Nov 2009 16:30:00 EST. Please see our terms for use of feeds.

Continue reading Waste Management (WMI) will recycle trashed bank ticker

Waste Management (WMI) will recycle trashed bank ticker originally appeared on BloggingStocks on Fri, 31 Jul 2009 14:00:00 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.

Over the past few weeks, we've seen some of the extensive damage done to the mega private equity operators, such as the Blackstone Group LLP (NYSE: BX) and KKR.

Now, according to a report from Reuters, we've got the details on the performance of TPG. And, of course, it's ugly (interestingly enough, TPG's roots are in the distressed investing category).

Continue reading TPG gets crushed

TPG gets crushed originally appeared on BloggingStocks on Thu, 19 Mar 2009 17:00:00 EST. Please see our terms for use of feeds.

If you were among the millions of unemployed workers looking for a job in 2009, would you accept a 50% pay cut? That's the question that Shaun Chedister faced last year, according to CNNMoney. And his answer, after spending eight months looking for a new job, was yes. Unfortunately for Chedister, that pay cut meant giving up the lifestyle he had enjoyed before he got laid off.

Chedister had been making $125,000 at Washington Mutual but he was laid off from that job at the end of 2007. He spent eight months looking for a job to support his wife and four children. He ultimately accepted an offer from Ernst & Young as an executive administrator -- the catch? The job paid slightly more than half of what he was making before -- $66,000.

The problem was that Chedister's unemployment had run out and he still had bills to pay. Chedister is looking for a more affordable house and in December one of his cars was repossessed after he got behind on the payments. This hurts but once you lose a job you have two choices: keep looking or accept what's offered -- and that offer is likely to be less than what you made before.

Continue reading Would you accept a 50% pay cut to get a job?

Would you accept a 50% pay cut to get a job? originally appeared on BloggingStocks on Fri, 02 Jan 2009 11:00:00 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.

If you look at major private equity firms, they have huge amounts of capital ready for investment. So, when the credit crunch subsides, there should be a revival of buyout activity, right?

Not necessarily. Keep in mind that the amounts of capital available may be much lower. The reason: private equity firms usually have so-called capital calls. That means, over time they notify investors to pony up the required amounts of capital.

True, private equity firms are legally required to make the disbursements. But, if there is resistance, will private equity firms actually sue their investors?

Well, this is a big dilemma right now. Just look at TPG Capital. That is, according to The Wall Street Journal, the firm is paring back the capital requirements on its $20 billion fund. In all, it comes to about 10% of the total amount.

Something else: TPG will cut its management fees by 10%.

Of course, TPG has suffered some black eyes this year, such as its disastrous investment in Washington Mutual as well as big bets on bank debt.

Of course, the firm is not alone. Other tier-1 players are also sitting on some busted deals.

TPG's actions are certainly precedent setting - and are likely to be followed by its peers as we go into 2009. And, as a result, expect continued tepidness for deal-making.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Streetsmart Guide to Short Selling: Techniques the Pros Use to Profit in Any Market. He is also the founder of BizEquity, a valuation website.

TPG caves in to investors originally appeared on BloggingStocks on Tue, 23 Dec 2008 00:00:00 EST. Please see our terms for use of feeds.

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

Many of the names on our list of 2008 Money Winners are entertainers, athletes, or businessmen who are on the top of their game. Michael Phelps, Tina Fey, and subprime profiteer Bill Ackman are all examples of this kind of winner. JPMorgan Chase (NYSE: JPM) CEO Jamie Dimon has gotten credit as being one of the few executives to keep a large financial institution from feeling too much pain in our current financial meltdown. However, Alan Fishman, who gained notoriety as the last CEO of Washington Mutual, is not any of those kinds of winner.

Instead, he wears his crown as a result of being in the right place at the right time. He replaced longtime WaMu CEO Kerry Killinger during the first week of September of this year. WaMu was seized by federal regulators just three weeks later and the banking assets were sold off to JPMorgan. Thus ended the less-than-spectacular reign of Mr. Fishman.

Fishman was paid just under $20,000 a week before taxes, which is a nice salary if you can get it, but is not nearly enough to land you on our list. However, he also got a massive signing bonus of $7.5M, plus 612,500 shares of WM. Since that stock is worthless now, we will only count the cash. He also had a golden parachute attached to his back and, unless he was fired for cause or voluntarily resigned, he was due to get another $6.15 million. Things get fuzzy when you look at his target annual bonus, which was set at $3.65 million. Since the company disappeared under his watch, I would hope he got none of that bonus, but I can't find any concrete evidence for how that matter turned out. When you total it all out, Mr. Fishman pocketed somewhere between $11 million and $18 million for his three weeks on the job. Wow.

Continue reading Money winners of 2008: Alan Fishman, WaMu's final CEO

Money winners of 2008: Alan Fishman, WaMu's final CEO originally appeared on BloggingStocks on Sun, 14 Dec 2008 15:40:00 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.

The weekend is often the time when boards and the government decide the fates of companies and CEOs. It gives everyone involved at least two days, perhaps more, to weigh options and make decisions without the fury of stock market trading. A board of directors can start work on Friday at 4 PM and weigh options until 8 PM Sunday, when Asia opens, or 8 AM Monday if overseas trading is not an issue.

No one with any sense would believe that the board of Citigroup (NYSE: C), the FDIC, the Fed, and the Treasury are not working through this weekend, again. Most of the government people are so exhausted that those who leave with the current administration will be happy to have the rest.

A lot of options have been thrown around. But, the fate of Citi comes down to two things. At this point, the bank is believed to be in such bad shape that putting in a new CEO, even Jack Welch, would make no difference. Chapter 11 would wipe out too many firms that have non-insured deposits at Citi, too many companies that have loans with a bank that could be called, and too many common, preferred, and bond holders in the financial firm would lose everything.

That leaves the government taking over Citi the way it did AIG (NYSE: AIG) or forcing a sale as it did with WaMu or Wachovia (NYSE: WB).

Monday morning cold be quite a drama.

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

What happens when Citigroup opens Monday originally appeared on BloggingStocks on Sun, 23 Nov 2008 09:40:00 EST. Please see our terms for use of feeds.

This week, some of the top veterans in private equity -- TPG's David Bonderman, Carlyle's David Rubenstein, and KKR's George Roberts -- got together at a conference in Hong Kong. And, all in all, it was fairly depressing (hey, I guess that's what happens when you lose billions and billions of dollars).

Take Bonderman. He thinks the downturn will be protracted, calling it an L-shaped recession (the more common description is a V-shaped recession, which means there is a strong snapback). In fact, he thinks U.S. unemployment will hit 10% or so.

Then again, keep in mind that Bonderman lost about $1.3 billion on his six month investment in Washington Mutual.

Despite all this, Bonderman still has an appetite for investments. For example, he's focusing on the debt securities from hedge funds. Because of massive redemptions, the prices are at distressed levels.

Rubenstein also gave a grim presentation (he thinks the downturn can last several years). But, he is still bullish on some opportunities, especially in Asia. For example, he thinks China offers some compelling valuations and that the country may become more open to outside investments.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Streetsmart Guide to Short Selling: Techniques the Pros Use to Profit in Any Market. He is also the founder of BizEquity, a valuation website.

Private equity's top guns remain glum ... but still finding deals originally appeared on BloggingStocks on Sun, 16 Nov 2008 16:40:00 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.

As soon as Washington Mutual (NYSE: WM) evaporated, the natural question was: "Who's next?" And after its stock plunged 38% during the day, it now looks like the next one to go will be Wachovia (NYSE: WB). This time the buyer could be Citigroup (NYSE: C),

With $120 billion in adjustable rate mortgages (ARMs) it got through its Golden West Financial acquisition, Wachovia is particularly vulnerable to the capital-eroding impact of a drop in their value. But if Citi bought Wachovia, it would get a stronger presence on the East Coast and its well-regarded retail banking management.

Citi is not the only firm to talk merger with Wachovia -- prior to its decision to turn itself into a bank holding company (BHC) on Sunday, Morgan Stanley (NYSE: MS) was in merger discussions with Wachovia. I just wonder how any deal could be struck with Wachovia that would not involve those nasty ARMs. And if those ARMs are involved in a deal, how can the acquirer avoid those nasty digestion problems that have sent Wachovia shares into a dive.

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

Will Citi buy Wachovia? originally appeared on BloggingStocks on Fri, 26 Sep 2008 17:49:00 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 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.

The San Francisco Chronicle reports that not only is Wells Fargo & Co. (NYSE: WFC) surviving the chaos on Wall Street, but it just may be thriving. About the only reason that Wells Fargo has been in the news recently is as a potential buyer of Washington Mutual (NYSE: WM). In fact, as markets tumbled early in the week, Wells Fargo shares reached a new 52-week high of $44.69.

Industry observers say that Wells Fargo's stability is a consequence of its limited exposure to failing mortgages, particularly of the subprime variety. It hasn't escaped unscathed, however. It said it would take charges in the third quarter related to investments in Fannie Mae (NYSE: FNM), Freddie Mac (NYSE: FRE), and Lehman Brothers, but much less than those taken by rivals Wachovia (NYSE: WB) and Washington Mutual.

Wells Fargo has been selectively acquiring assets, mostly in the western U.S., during the economic woes, and is expected to continue to do so. Chairman and former CEO, Richard Kovacevich, is rumored to me looking for one more deal before he retires later this year, according to Reuters. But both Wells Fargo and Washington Mutual have declined to comment on a possible deal. "There's going to be a lot of mergers and acquisitions for either good reasons or because people don't have choices," said Kovacevich, pointing out that Wells Fargo is not the only lender looking to buy.

Wells Fargo shares closed Friday at $39.80 and are up 31.8% year to date. Analysts surveyed by First Call recommend holding Wells Fargo.

Wells Fargo not only surviving downturn, but thriving originally appeared on BloggingStocks on Sun, 21 Sep 2008 16:10:00 EST. Please see our terms for use of feeds.