Investors Demand Hearing, Investigation and Reversal of Washington Mutual Seizure
Released on: October 27, 2008, 9:47 pm
Press Release Author: Michael Rozenfeld / wamurape.org
Industry: Financial
Press Release Summary: Washington Mutual Bank shareholders are uniting to challenge the actions of the FDIC and JPM prior to the seizure of Washington Mutual bank. Shareholders contend these actions were unjustified and ultimately unethical. Indeed, shareholders insist that Washington Mutual Bank never did fail, and by most accounts, had enough funds to cover the withdrawals by depositors. Reports now surfacing indicate the liquidity of the bank was much better than the public was led to believe. Washington Mutual executives knew that, and their claims that the bank was in good health days before the seizure, were ignored. We contend the FDIC was not right in doing so and have caused irreparable harm not only to the WAMU stockholders, but to the markets in general, and the banking community. This is the shot that has been heard around the world, and the world markets have reacted adversely. Shareholders of thousands of companies throughout the world have lost trillions of dollars since.
Press Release Body: Washington Mutual Bank shareholders are uniting to challenge the actions of the FDIC and JPM prior to the seizure of Washington Mutual bank. Shareholders contend these actions were unjustified and ultimately unethical. Indeed, shareholders insist that Washington Mutual Bank never did fail, and by most accounts, had enough funds to cover the withdrawals by depositors. Reports now surfacing indicate the liquidity of the bank was much better than the public was led to believe. Washington Mutual executives knew that, and their claims that the bank was in good health days before the seizure, were ignored. We contend the FDIC was not right in doing so and have caused irreparable harm not only to the WAMU stockholders, but to the markets in general, and the banking community. This is the shot that has been heard around the world, and the world markets have reacted adversely. 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 The reason this money was withdrawn from the bank is only guessed. The FDIC saw money moving out of larger accounts and assumed a run was in progress.WAMU had worked out a solid business plan with the OTC just 2 weeks before the FDIC seized the bank. WAMU had access to $50 billion in assets at the time of seizure. They had sufficient liquidity to handle their obligations. After not collecting insurance premiums from 1996-2006, and the failures in the previous weeks, FDIC reserves were low. Appointed officials at the FDIC were concerned the FDIC could not handle the failure of Washington Mutual if it was followed by other bank failures as well. The FDIC had the ability to borrow $30 billion from the Federal Reserve, but it did not. The move was about protecting the federal deposit insurance company and not about protecting the insured with the confidence the FDIC is supposed to show in a crisis.
The FDIC acted prematurely, anticipating failure, and behind closed doors. The Washington Mutual Executives had no knowledge of the plan--the FDIC gave them no prior indication. WAMU was in the midst of sale negotiations with several other banks, and had been given no deadline to find a buyer by the FDIC. Banks who were contemplating buying Washington Mutual had been notified by the FDIC that the FDIC was to auction off the bank, unbeknownst to WAMU, who was involved in trying to sell the bank. The FDIC action, behind WAMU's back, prevented a sale from being made. Behind closed doors, the FDIC was offering them a much sweeter deal. The FDIC arranged for JPMorgan to purchase the $300 billion dollar corporation for 1.9 billion dollars after notifying them privately, well in advance of the seizure.
The FDIC needs to be held accountable for its short sighted action which has caused havoc throughout world markets. The FDIC had a lot of options if WAMU faltered -- seizing the bank and selling it overnight in a clandestine deal with JPMorgan, for a miniscule fraction of its value, 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 their hasty and secretive action was that hundreds of billions of dollars were lost by the shareholders of Washington Mutual Bank. 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. At the moment the eyes of the country were on the markets, it was as if somebody climbed up to the top of a building in New York City and screamed BANKFAILURE!! Government regulators were the ones responsible for protecting us. But they circulated insider information about the bank to its competitors and put the blood in the water amongst the sharks.
Coincidentally, JPMorgan has been the institution who has profited handsomely from these failures. Coincidentally, the former head of the SEC works at JPMorgan, and this week was accused of private conversation causing difficulties that may have resulted in the first bank failure, Bear Stearns. JPMorgan has also been accused of interfering in Lehman Brothers access to $5 billion dollars which helped catapult their demise. They have 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 the government is currently investigating Washington Mutual, but we contend these other institutions need to be investigated.
One of our goals is that the assets or at least the asset value of Washington Mutual be returned to them just as they were in the lawsuit filed by First City Bancorporation in 1992. The FDIC was forced by the courts (1993) to return 145 million dollars to creditors and depositors, after they hastily seized that bank and its assets. The same situation happened here. WAMURAPE.ORG members feel the FDIC can be held accountable for their actions and there seems to be legal precedent for that. Holding the FDIC accountable is exactly what the members of WAMURAPE.ORG intend to do.
For further information about events surrounding the seizure or to join the effort for justice, Click on the link www.wamurape.org .
Members of the group are currently seeking exceptional legal representation--the members of 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 wrong.
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