I love it. "We lost all this money, and a bank run killed us, so we're suing the government!" Why not? Everyone else is lining up at the trough for trillions. Helicopter Ben will just print more.In a complaint filed with the U.S. District Court for the District of Columbia, the thrift's former parent accused the FDIC of having on January 23 made a "cryptic disallowance" of its claims, prompting the lawsuit.
It also accused the FDIC of agreeing to an unreasonably low price in arranging the a $1.9 billion sale of the banking business to JPMorgan on September 25, when regulators seized Washington Mutual and appointed the FDIC as receiver.
JPMorgan did not buy the parent holding company, which filed for Chapter 11 bankruptcy protection the following day.
In its complaint, Washington Mutual seeks to recover as much as $6.5 billion of capital contributions it said it made to its banking unit from December 2007 through the seizure.
Washington Mutual also seeks the return of $4 billion of trust preferred securities it said were wrongfully transferred to the banking unit, and said it may be entitled to as much as $3 billion of tax refunds. It also seeks damages of $177.1 million related to unpaid loans made to the banking unit.
Saturday, March 21, 2009
WaMu Sues The FDIC
Claiming the fire sale price it garnered when the FDIC sold WaMu to JP Morgan, the former bank's parent company is suing the FDIC for $13 billion.
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3 comments:
Here is the thing- the bank didn't fail. There was no "run" on the bank that caused the failure. The FDIC and OTS (Office of Thrift Supervision, I think) were concerned about its LIQUIDITY and not its SOLVENCY. They came in and swooped without warning, which in itself broke the rules of the FDIC and OTS which have to give warning before they do that.
If you don't own Washington Mutual stock it is easy to call it greed that motivates stock holders. If you do own Washington Mutual stock then you want to see the legal process work to recover assets stolen from you.
Why did the FDIC have to handle this entire thing incorrectly? or at all?
Now, instead of having done the right thing to begin with- They are going to bear the brunt of irresponsible use of their authority. It DID NOT have to come to this. Regardless of what anyone thinks of WAMU, the FDIC did NOT HAVE THE RIGHT TO JUST GIVE AWAY THEIR ASSETS in acting as trustee. Yes, they were supposed to protect depositors; but ALSO the assets as receiver. This IS a 1st-world country, right? Let's keep it that way.
Well it's hard to argue. The FDIC lost $10 billion on IndyMac bank, so the argument goes that fire sale-ing WaMu was another huge blunder.
WaMu may actually have a case here. But let's remember it was the Bushies who did this, and not Obama.
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