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Washington Mutual Shareholders Asking Questions About FDIC Print E-mail
by Tom McGregor    Wed, Mar 3, 2010, 10:37 AM

Bank Mutual.jpgThe Dallas Blog has just obtained documents about Washington Mutual's legal complaint against JPMorgan Chase's takeover of its bank during the financial crisis. Here's a copy-and-paste of a letter sent out to Washington Mutual shareholders:


Washington Mutual Bank (WAMU) shareholders are uniting to challenge

the actions of the FDIC (the Federal Deposit Insurance Corporation) and

JPM (JP Morgan) prior to the seizure of Washington Mutual bank.

Shareholders contend: 1) that these actions were unjustified 2) that they

were unethical 3) that Washington Mutual Bank was not failing. As

evidence of our claims, reports now surfacing indicate the liquidity of the

bank was much better than the public was led to believe; by most

accounts, the bank had enough funds to cover the withdrawals by

depositors. Washington Mutual executives knew these facts; however,

their claims made days before the seizure that the bank was in good

health were ignored. We the concerned shareholders of WAMU contend

that the FDIC was not right in doing so and has caused irreparable harm

to the WAMU stockholders, to the banking community and to the

markets in general. As a result of this action, shareholders of thousands

of companies throughout the world have lost trillions of dollars since.

The FDIC seized Washington Mutual Bank saying there had been a bank

run amounting to 16.7 billion dollars in 10 days. The reason this money

was withdrawn from the bank is unknown. The FDIC saw money moving

out of larger accounts and assumed a run was in progress. Just 2 weeks

before the FDIC seized the bank WAMU had worked out a solid business

plan with the OTC (Office of Thrift Supervision). At the time of seizure,

WAMU had access to $50 billion in assets: sufficient liquidity to handle all

their obligations. The situation, however, seemed different to the FDIC,

whose reserves were low as a result of not collecting insurance

premiums from 1996-2006 and the bank failures in the previous weeks.

Appointed officials at the FDIC were concerned that if the failure of

Washington Mutual was followed by other bank failures as well, the

agency would not be able to handle the situation. Despite this concern,

the FDIC had the ability to borrow $30 billion from the Federal Reserve;

however, for some reason it did not do so. The FDIC’s move was more

about protecting the federal deposit insurance company than about

protecting the insured.

In short, the FDIC acted prematurely, behind closed doors. The

Washington Mutual Executives had no prior knowledge of the FDIC’s

plan. In fact, at the time of the seizure WAMU was in the midst of sale

negotiations with several other banks, and had been given no deadline

by the FDIC to find a buyer. Despite WAMU’s good-faith efforts to find

buyers, banks which were contemplating buying Washington Mutual had

been notified by the FDIC that the FDIC was to auction off the bank,

again without WAMU’s knowledge. This FDIC action prevented a sale

from being made. Even worse for WAMU, behind closed doors, the FDIC

was offering prospective buyers a much sweeter deal than the ones

WAMU was negotiating. The FDIC arranged for JPMorgan to purchase the

$300 billion dollar corporation for the bargain price of 1.9.

The FDIC needs to be held accountable for its short sighted action which

has caused havoc throughout world markets. The FDIC had many

options in the event that WAMU faltered. The option chosen, seizing the

bank and selling it overnight for a miniscule fraction of its value in a

clandestine deal with JPMorgan, was the worst of any options they had.

Did the FDIC act appropriately? Most shareholders don’t think so and they

want the FDIC to answer for that.

The result of the FDIC’s hasty and secretive action was that the

shareholders of Washington Mutual Bank lost billions of dollars.

Shareholder portfolios were emptied overnight - because of collusion

between the FDIC and JPM in weeks leading up to the seizure. Now,

shareholders seek redress.

Never has the law been applied with such disregard for its intention.

Government regulators, supposedly the ones responsible for protecting

us, circulated insider information about the bank to its competitors and

precipitated a catastrophic collapse whose repercussions are still being

felt today.

Coincidentally, JPMorgan has been the institution which has profited

handsomely from these failures. Coincidentally, the former head of the

SEC (Securities and Exchange Commission) whose role is to oversee

stock trading, works at JPMorgan, and this week was accused of private

conversation causing difficulties that may have resulted in another recent

bank failure, that of Bear Stearns. JPMorgan has also been accused of

interfering in Lehman Brothers’ access to $5 billion dollars which helped

catapult their demise. And the company has been accused of denying

WAMU access to $5 billion dollars they had on deposit with JPMorgan.

Is this coincidence? We think not. We demand the FBI and the

legislature thoroughly investigate the relationships and actions of the

OTS , the FDIC, the SEC and JPMorgan management. We do understand

that the government is currently investigating Washington Mutual, but we

contend these other institutions need to be investigated as well.

One of our goals is that the assets or at least the asset value of

Washington Mutual be returned to the stockholders, just as they were in

the lawsuit filed by First City Bancorporation in 1992. In that suit, (1993)

the FDIC was forced by the courts to return 145 million dollars to

creditors and depositors, after the seizure of that bank and its assets.

The same situation happened here. Consequently, our members feel that

there seems to be legal precedent for holding the FDIC accountable for

their actions. Holding the FDIC accountable is exactly what the members

of this organization intend to do.

Members of the group are currently seeking exceptional legal

representation - the members of the United States Congress themselves!

We ask for special legislation. We ask for special dispensation. We ask for

Congressional support. We want our bank back - the FDIC should not

have given it away to start with. We beseech our government to right this


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Comments (11)add comment
written by hopeful for justice , March 04, 2010

Finally, some press coverage of this great scandal/swindle.

Shouldn't you be writing this for the NY Times or Wall Street Journal?

written by SIXX , March 04, 2010

Do you mind if I send this for publication. We like your information about China. Keep it up.

Colonel D.X. "SIXX" Prince

written by Kyle , March 04, 2010

Finally , there is someone speaking up for us. Since it seem to be silence for a long time. Thank you !

written by alex rolinski , March 04, 2010

as a holder of wamu stock i
encourage you to pursue your
effort in obtaining the assets that were seized by
FDIC when they it was taken
over. I find it difficult to
understand how the government
can allow this blatant
disregard of wamu's financial capability to stay afloat.

written by SUSHY2 , March 04, 2010


written by Stephen , March 04, 2010

As a former Washington Mutual customer, you can read my open letter to Chase Bank here:

written by Investor , March 04, 2010

we need more people to get the words out there to the public. FDIC is not above the laws. They need to be hold accountable for their actions. They are scammers.

written by Tom McGregor , March 04, 2010

SIXX: Thanks for requesting to post my articles on your illustrious website. You have my permission. Of course if any editor wants to contact me, as you'll note, I place my e-mail at the bottom of every article I write.

written by dr.pepp , March 04, 2010

Get the truth here...

written by George , March 05, 2010

You need to research all of the players especially OTC Director Dochow, Robert Bass, David Bonderman and their ties to the Obama team.

written by George , March 06, 2010

Too bad Anderson Cooper doesn't say anything about this. $298 billion stolen. Peanuts to Maduff.

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