why do you constantly bring up the 8 dollar offering price
WaMu management at the time turned it down!!
things change the value changed...what they offered before shit really hit the fan...is irrelevant
its like someone offering me 1035 for a gold coin today and i say nah no thanks
than coming back 6 months later with it trading at say 700 saying okay give me 1035 now...
The reason I keep bringing it up is because nothing changed with WaMu from the time they were offered the $8 by JPM until the time they were seized by the FDIC, which coincidentally happened right before TARP was offered to failing institutions.
There is a very large picture here that I dont expect most to comprehend, especially the Bears of the world. It can be summed up with this (i bolded some of the important things):
On Sept. 25, 2008, the FDIC seized Washington Mutual Bank (WMB), placed it into receivership, and immediately sold all of its assets and some of its liabilities to JPM for $1.888 billion. JPM acquired WMB's deposit liabilities but not other liabilities. The FDIC reported that the seizure of WMB and sale to JPM was accomplished at zero cost to the FDIC. On Sept. 26, 2008, WMB's parent holding company, Washington Mutual Inc. (WMI), filed for Chapter 11 bankruptcy protection.
At the time of its seizure, WMB had $307 billion in assets, $188 billion in deposits, 2239 branches, 4,932 owned and branded ATMs, two credit card divisions, and 43,198 employees. WMI was the sole stockholder of WMB, and WMI lost $26 billion when its WMB stock became worthless due to the seizure.
In April 2008, JPM had tried to purchase WMB from WMI. JPM was given extensive access to WMB's books and signed a confidentiality agreement, as well as an agreement to not purchase WMB from any other seller. JPM's offer of $8 per common share was rejected by WMI as too low. Shortly thereafter, a group of investors raised $7 billion for a capital injection into WMB.
In early September 2008, WMI reported that WMB continued to maintain a strong liquidity position and had capitalization ratios that were above the regulatory requirements for well capitalized institutions. Prior to the seizure of WMB, federal regulators (OTS) never ordered WMB to raise additional capital or increase its liquidity, and an OTS fact sheet released on the day of WMB's seizure noted that WMB was well capitalized at the time of seizure. WMI had access to $50 billion in short-term liquidity from the Fed's secondary window but never utilized it.
WMI's Chapter 11 legal team believes that the FDIC committed two major errors in the seizure of WMB:
(1) some of the seized assets belonged to WMI, not WMB, and therefore the FDIC did not have legal right to seize these assets; and
(2) the FDIC sold the assets of WMB, which it did have legal right to seize, for less than fair market (liquidation) value. The FDIC has a duty to maximize the value of a receivership’s assets when it liquidates a receivership estate;
the FDI Act specifically commands the FDIC to maximize the value of such assets. WMI has received $0 compensation for the loss of WMB because the FDIC has retained the $1.888 billion paid by JPM.
WMI has backed up these beliefs with lawsuits against both FDIC and JPM. WMI has not challenged the legal right of the FDIC to seize WMB; it is clear that the FDIC did have this right. The major basis of WMI's claims is simple:
WMI did not receive fair value for its assets which were seized by the FDIC, and WMI is therefore entitled to compensation for the difference between the fair value and the actual amount received ($0). Altogether the compensation requested for these two types of FDIC errors is in the tens of billions of dollars. WMB's book value at the time of seizure is estimated to have been well over $20 billion, and a going-concern valuation yields a figure even greater than this.
