JPMorgan Buys Failed WaMu Assets for $1.9 Billion

reply to post by seejanerun


Not at WaMu, at JP Morgan. Zyeah right, like they have the juice to do that. This thing does stink bad though.

Get ready to take a big wiff my fellow Americans.

reply to post by mybigunit


Yeah, and then JPmorgan bought them out, so it will have no effects on the customers. This little bit on reuters explains it perfectly.

www.reuters.com...

Like I said, thats one hell of a good deal for JPmorgan. JPmorgan just bought all that up for a great deal.

BTW, an update for the other poster.

www.bloomberg.com...

The U.S. government closed Seattle-based Washington Mutual amid customer withdrawals of $16.7 billion since Sept. 15, the Office of Thrift Supervision said in a statement. WaMu had ``insufficient liquidity'' and was in an ``unsound'' condition, the OTS said.

No bank runs?

Also another FYI, JPMorgan didn't buy everything, they just bought what they wanted. That makes it an even better deal for them. A much worse deal for whoever insured these bad mortgages since JPmorgan probably didn't buy any of that.

Originally posted by grimreaper797
Also another FYI, JPMorgan didn't buy everything, they just bought what they wanted. That makes it an even better deal for them. A much worse deal for whoever insured these bad mortgages since JPmorgan probably didn't buy any of that.

Ok so if they didnt buy everything from Wamu the doors will not be open tomorrow for wamu right?

reply to post by grimreaper797

in a perfect world what you are saying is very well true and JPMorgan would be on the win in this case.

But what your not seeings is yes these mortgages went bad because the people took out more than they could possible repay. but also the housing bubble burst and There is no way for JPMorgan to know exactly what the assets are really worth. there is no market for these assets right now. As far as we know even if JPMorgan Bought the assets at .25 on the dollar but lets say when the market for these assets opens up they are only willing to pay .10 on the dollar JPMorgan is on the lossing end again.

Until we know just exactly how much JPMorgan paid for these assets and until we know what the market is going to be for these assets we don't know what price JPMorgan will beable to rewrite the mortgages for. and its all speculation on your part my part or anyones part

Also with the bailout its going to be a reverse auction type deal. these banks are going to have to bit to the treasury to buy there asset and if Congress has oversight on it do you really think they will let the Treasury buy the for anything over .40 on the dollar?

ok So jpmoragn can pick and choose what they buy But WAMU is still in receivership to the FDIC waiting to be sold to someone else. WAMU is dead and being carved up. But My theory about shifting debt to cause the failures of banks is still a valid one unfortunately

Just think about it there is no logic really in what is happening right now. most of the banks that are going under we solid banks and then over night they were in trouble and closing up shop. even in the S&L crisis in the 80's there was warning before they closed.

[edit on 9/25/2008 by Mercenary2007]

Originally posted by Mercenary2007


Also with the bailout its going to be a reverse auction type deal. these banks are going to have to bit to the treasury to buy there asset and if Congress has oversight on it do you really think they will let the Treasury buy the for anything over .40 on the dollar?

Heh I doubt they will be paying .40 on the dollar. In fact I even think .20 on the dollar is really pushing it. Then again Washington is full of morons.

reply to post by mybigunit


Yes....they will, it says it right in most of the news articles. Wait, did you even read your article. It has pleanty of information on the deal right in there.

www.cnbc.com...

Customers should expect business as usual on Friday, the FDIC said.

Are we engaging in selective reading?

Also your source:

The acquisition does not cover Washington Mutual's equity, senior debt and subordinated debt holders

also

its banking assets were sold to JPMorgan Chase for $1.9 billion.

Your article really states all the information you need to understand the situation going on.

Originally posted by Mercenary2007
ok So jpmoragn can pick and choose what they buy But WAMU is still in receivership to the FDIC waiting to be sold to someone else. WAMU is dead and being carved up. But My theory about shifting debt to cause the failures of banks is still a valid one unfortunately

Just think about it there is no logic really in what is happening right now. most of the banks that are going under we solid banks and then over night they were in trouble and closing up shop. even in the S&L crisis in the 80's there was warning before they closed.

[edit on 9/25/2008 by Mercenary2007]

There is validity to your point for sure. When you look at all of the financial crisis over the past 100 years theres always a power grab the big taking out the small. I totally agree. Heres one thing though and that is Lehman had a part of the FED and it went under. This is my only flaw in your theory. Jp Morgan is a FED bank and so is Citi and yes they are still going strong B of A though Im not sure if they are a FED bank or not.

Wasn't it in Zeitgeist or some other cs-movie that basically said that J.P. Morgan was the one of the causes as well as one of the main beneficiaries of the crash back in the 30's?

Kind of makes you wonder....

And let us not forget all the exotic packaged financial products out there. Who insured WaMu's debt? It does appear that JPM got its pick of the best of the assets, much like it did with Bear Sterns. I've heard it proposed that JPM due to its massive derivative exposure (trillions I've heard) was actually the one bailed out during the Bear Sterns fiasco, and that this is more of the same. I'm not sure if I believe that, but I thought I'd mention it. It is possible for a Fed owner bank to go BK (ie Lehman), but from what I understand about the Fed reserve system JPM might as well be the Fed.

While typing this I heard on CNN that this is the largest bank failur in world history.

reply to post by grimreaper797


Sigh....no need to be smart I put the article when it first came on. There was a lot of stuff not even on the page when I posted it...since then they have added and no I havent read it since.

Thats all I wanted to know is if they were going to be open tomorrow. Thats all not to hard.

reply to post by Mercenary2007


No, because even if they bought the bad mortgages they may decide NOT to sell them.

You are assuming they are going to do what the governments bail out plan is doing. The governments plan is "we will buy now, and later sell them".

If the government had the power that JPmorgan has, they could buy the bad mortgage then just refinance at rock bottom prices that the mortgage owner can afford.

The government isn't allowed to do that though, to my understanding. JPmorgan can though.

JPmorgan didn't buy those bad lending assets though, they bought the bank assets. Thats beside the point though. My explaination was to show that there is no reason that the new bank purchaser can't refinance with the mortgage owner if they bought it for fire sale prices.

Originally posted by TXRabbit
Wasn't it in Zeitgeist or some other cs-movie that basically said that J.P. Morgan was the one of the causes as well as one of the main beneficiaries of the crash back in the 30's?

Kind of makes you wonder....

Well it was JP Morgan who started rumors to start the panic of 1907 which led to the creation of the FED. The FED since then has really done the opposite of its intention since then. They CAUSE these problems though credit extensions and retractions leaving not enough money in the supply to pay all the debt with interest. Complicated and I dont feel like explaining it no offense.

Originally posted by jefwane
And let us not forget all the exotic packaged financial products out there. Who insured WaMu's debt? It does appear that JPM got its pick of the best of the assets, much like it did with Bear Sterns. I've heard it proposed that JPM due to its massive derivative exposure (trillions I've heard) was actually the one bailed out during the Bear Sterns fiasco, and that this is more of the same. I'm not sure if I believe that, but I thought I'd mention it. It is possible for a Fed owner bank to go BK (ie Lehman), but from what I understand about the Fed reserve system JPM might as well be the Fed.

While typing this I heard on CNN that this is the largest bank failur in world history.

Wow I didnt realize Wamu was that big. Interesting stuff. Like I said just a post or two ago this is about power consolidation. It happens in all of these crisis. Eventually just like every other major industry you will get a few choices Coke and Pepsi, Dems or Repubs, American or Delta, B of A or Chase, Samson and Delilah

Furthermore, we know how much JPmorgan purchased the assets for. You are assuming their is a connection between JPmorgan buying the assets then selling them at a later date and JPmorgan buying the assets then refinancing.

If you bought something for 20,000. They buy your debt for 5,000 and then the market says "that is only worth 2,500", yes JPmorgan would be up creek if their goal was to sell your debt. That is the risk issue with the governments bailout plan.

That has no connection to the idea that JPmorgan buys the debt for 5,000 then refinances with you to a cost that is both profitable for them and payable for you.

Like you said, people took out more than they could pay for. Say that 20,000 was more than you could pay for. 5,000 probably isn't though, so JPmorgan would be able to refinance with you and turn your bad mortgage with WaMu to a profitable one at JPmorgan.

Thats the wonder of firesales. Not every purchase is made with the intent to resell it on the market. Thats pretty risky. Usually they buy assets up at fire sale prices because they can do a number of things with the assets to turn them profitable for their company, without having to sell it on the market.

reply to post by grimreaper797


But what if they have similar assets on their own books? They all have assetts on their LVL 3 (mark to make believe) portion of their books that have not be marked down at all. If it were a single or handful of institutions that were "hiding the sausage" you'd have a point about firesales, but THEY ALL are carrying huge amounts of illiquid assetts (MBS, CDOs, CDS...etc) in a part of their book that they can put whatever value they feel like on. Such a firesale IMHO gives "price discovery" to the illiquid assetts that they often have marked down only to the .80-.90 on the $1.00 level. So now that we know what the good stuff is worth shouldn't all the other institutions mark similar assetts to Level 1 or Level 2?

reply to post by mybigunit


actually they are member banks of the fed reserve banks. there are only 12 fed reserve banks they are

• Boston
  
• New York City
  
• Philadelphia
  
• Cleveland
  
• Richmond
  
• Atlanta
  
• Chicago
  
• St Louis
  
• Minneapolis
  
• Kansas City
  
• Dallas
  
• San Francisco
  

Each federal reserve bank has member banks IE. JPMorgan, Citi etc.

Cause the failure of all the banks but these 12 federal reserve banks and you have control of the banks.


[edit on 9/25/2008 by Mercenary2007]

reply to post by jefwane


As stated in this thread, the reason it is an illiquid asset is because the borrower cannot pay it off.

Look at it like this. You owe 20,000 to WaMu. Depending on their profit margin, lets say they need to make 5,000 dollars. Now, you can't afford to make the kind of payments required for them to both gain back the 20,000 and make 5,000. Your mortgage becomes a real bad asset.

They start to tank so they sell these assets for 25 cents on the dollar to JPmorgan. JPmorgan now is in 5,000 dollars with you. If they wanted to make that same 5,000 WaMu aimed to make (a ridiculous proft margin, in reality it would be much less.) They would have to make you pay 10,000 dollars over time. They don't need the 20,000 dollars that you initially borrowed. The new "value" of your mortgage is 5,000 dollars.

Ever heard the phrase "Something is only worth as much as somebody is willing to pay for it."? This is that phrase in the market. JPmorgan bought your mortgage for 5,000 dollars, so that is what it is worth now. Both you and JPmorgan just made a hell of a deal, at the expensive of WaMu and its stockholders, etc.

You can now refinance and you might be able to afford to pay that 10,000 dollars overtime. Much higher profit margin for JPmorgan, much lower mortgage costs for you. Unfortunately, WaMu and everyone associated with it foot the bill.

So what if the market later values that asset at 2,500 dollars. You still made a great deal by not having to foreclose and keeping your home, and JPmorgan made a decent profit off of something the market didn't want.

reply to post by Mercenary2007


Right and JP Morgan owns stock in the New York Branch so by default that makes them part of the fed right? I mean they have election powers. I mean Jamie Dimon is Chairman of the Board of the New York FED right? This is my point I understand how the FED system works maybe I didnt make myself clear enough.