JPMorgan Wamu Deal
- Thread starter cszulc
- Start date
You have to remember that this is actually how the FDIC works... When a bank is declared insolvent, the FDIC facilitates a purchase of depositors' funds to another bank or a group of banks. This is pretty standard.
The purchase of assets that are not depositors' funds (real estate, furniture, computers, etc.) are a separate transaction between JPMorgan and WaMu, and those funds will be used to pay down WaMu's existing obligations to creditors during the bankruptcy process.
Stockholder's are wiped out, as they should be, because when you buy stock you're investing in the future revenue stream of a company, which of course, there won't be any.
The purchase of assets that are not depositors' funds (real estate, furniture, computers, etc.) are a separate transaction between JPMorgan and WaMu, and those funds will be used to pay down WaMu's existing obligations to creditors during the bankruptcy process.
Stockholder's are wiped out, as they should be, because when you buy stock you're investing in the future revenue stream of a company, which of course, there won't be any.
Early notes from the call. Taken on the fly, any errors are strictly my own.
"...this builds a great franchise for us..."
"...only negative...how to deal with some of these bad assets..."
"...accretive immediately...fifty cents..."
"...[becoming] largest financial depository in America..."
"...also offering $8B in common stock...tomorrow..."
"...buy WaMus banks...not buying the holding company...."
"...not buying the subordinated debt or preferred..."
"...$1.9B paid to the FDIC..."
This is an extremely sweet deal for JPM.
Extremely sweet.
"...this builds a great franchise for us..."
"...only negative...how to deal with some of these bad assets..."
"...accretive immediately...fifty cents..."
"...[becoming] largest financial depository in America..."
"...also offering $8B in common stock...tomorrow..."
"...buy WaMus banks...not buying the holding company...."
"...not buying the subordinated debt or preferred..."
"...$1.9B paid to the FDIC..."
This is an extremely sweet deal for JPM.
Extremely sweet.
So ultimately FDIC gains added cash to their fund but the holding company WM is left bankrupt I assume? ABSOLUTELY BULLSHIT.
Link to press release: http://files.shareholder.com/downlo...0b-e57333a51802/JPM_WManalystpressrelease.pdf
Confirms that JPM is paying $1.9 billion to the FDIC. My question is the WM holding company getting any payment or consdieration for deposits and assets to distribute to debtholders? That is outrageous. JPM is touting on their call that it will add 50 cents per share in earnings in 2009, which is $1.72 billion!
Link to press release: http://files.shareholder.com/downlo...0b-e57333a51802/JPM_WManalystpressrelease.pdf
Confirms that JPM is paying $1.9 billion to the FDIC. My question is the WM holding company getting any payment or consdieration for deposits and assets to distribute to debtholders? That is outrageous. JPM is touting on their call that it will add 50 cents per share in earnings in 2009, which is $1.72 billion!
FDIC press release confirming that claims by equity, subordinated, and senior debt holders were not acquired:
http://www.fdic.gov/news/news/press/2008/pr08085.html
WHAT THE HELL??
http://www.fdic.gov/news/news/press/2008/pr08085.html
WHAT THE HELL??
WM gets no payments from JPM or FDIC. Sorry guys...
JPM has a 23 page .pdf file that explains how sweet the deal is to JPM.
Page 19 of the .pdf shows the $$ profit impact for JPM.
The deal will add $1.9B in 2009, $2.2B in 2010 and$2.6B in 2011 for JPM.
JPM triples their invest of $1.9B in 3 years.
It would seem a whole lot of people are about to learn what the "subordinated" in "subordinated debt" really means. Ditto for "unsecured". If anybody has a list of the major WaMu holders of the sub- and unsecured stuff, I would appreciate seeing it.
So far, it appears there is no direct taxpayer hit on this deal.
In typical style of professional analysts, the second question was whether or not JPM's analysis took into account redecorting WaMu offices to JPM standards.
So far, it appears there is no direct taxpayer hit on this deal.
In typical style of professional analysts, the second question was whether or not JPM's analysis took into account redecorting WaMu offices to JPM standards.