Goldman Sachs' Alumni and JP Morgan Potentially Conspire to Bring Down Washington Mutual

(2008-11-10) Michael Rozenfeld

Houston TX- It has been discovered after an in-depth investigation that there is reason to suspect a number of Goldman Sachs' alumni in potentially instigating the seizure of Washington Mutual bank along with Sheila Bair and JP Morgan.

Houston TX- It has been discovered after an in-depth investigation that there is reason to suspect a number of Goldman Sachs' alumni in potentially instigating the seizure of Washington Mutual bank along with Sheila Bair and JP Morgan.

As reported by Rami Grunbaum of the Seattle Times, two months prior to the start of this event, Treasury Secretary Henry Paulson warned then-CEO Kerry Killinger that he ought to sell the Seattle-based thrift before it deteriorated further. This apparently confused officials of the bank as they had recently raised $7.2 billion in capital from investors led by private-equity fund TPG, and they thought that they had raised enough money to weather the worsening mortgage crisis. To these shocked bank executives, Paulson gave the following piece of "advice", 'You should have sold to JPMorgan Chase in the spring, and you should do so now. Things could get a lot more difficult for you.' Later on, as the stock came under further attack from naked shorts, Killinger pleaded to have the stock placed on a no short list, but was rebuffed by Secretary Paulson.

Let's now fast forward to a few days before the seizure of WAMU. It was claimed by Sheila Bair that a media leak forced the FDIC's hand in this event. It has not been clear who leaked this information until now. As reported by the Associated Press on September 23rd, Roy Smith, a professor of finance at NYU, was quoted as saying the following, "The government doesn't want to take them over; no question about that. The thrift's future is largely left to the bidders in the auction that is being organized for it."

But wait. How did Roy Smith, a humble professor, know about a "secret" government organized auction days before the general public and stockholders knew about it? For this answer, this reporter can only come to one conclusion. According to Professor Smith's website, he is a former president of Goldman Sachs International Corp. This is the same Goldman Sachs Secretary Paulson was CEO and employee of for many years.

However, this appearance of collusion is not the first that occurred in this sordid affair. Reuters reported on October 22, that inappropriate contact between the SEC's enforcement director and JPMorgan's general counsel occurred while the investment bank was mulling a bid for Bear Stearns, which may have affected its collapse. It is suspected that the same inappropriate contact may have occurred between the SEC and JPM with regards to Washington Mutual.

The bankruptcy hearings in this case have also been very unusual. JPMorgan has been withholding funds from Washington Mutual in the amount of 4.4 billion dollars that were located in a Washington Mutual Holding Company account at their bank. In fact, the Washington Mutual Holding Company has had to ask the bankruptcy court to intervene to allow them access to their funds. JPMorgan has also been accused of freezing 17 billion dollars in funds of Lehman brothers that resulted in its immediate collapse. Finally, in the most outrageous claim of all, JPMorgan and the FDIC have filed a claim with the bankruptcy court that JPMorgan should receive the billions of dollars in tax benefits due to past losses that are the rightful property of the Washington Mutual Holding Company. Since when is it the business of the FDIC, whose job is to protect American taxpayer's deposits, to get involved and file briefs in public bankruptcy cases in favor of an uninvolved party? This only strengthens the argument of the amount of collusion that is occurring between JPMorgan and the federal government.

On the face of it, the "failure" of Washington Mutual seems to only affect shareholders, but in reality, about 268 Billion Dollars was lost by large institutions that held about 62 percent of WAMU stock at that time. Amazingly, institutions now hold 78 percent of WAMU stock. When all these businesses and individuals write off their 268 Billion dollars in losses on their Federal Tax Returns, who is going to pick up the tab then? Of course, the answer is the American taxpayer. With such a high price to pay, certainly the people of this country deserve a comprehensive and unbiased investigation of everything leading up to this seizure, including possible market manipulation. There are a lot more villains out there than the Washington Mutual executives, and we deserve to know just who they are, and whether their actions in this were legal or not.

The Washington Mutual seizure was a shot heard around the world. This event caused untold worldwide distrust of the US Banking system. It eroded people's faith in the markets resulting in record losses for every worldwide stock. Many people took a big "hit" in their retirement plans, which will take countless years to repair. Taxpayers will wind up picking up the bill in the form of the tax write-offs businesses and individuals will undoubtedly have to take. It's time for US citizens to get answers, but all they have gotten from the FDIC and the government to date is "no comment." Taxpayers deserve an explanation and transparency. For this reason and many others, Washington Mutual shareholders demand a full and immediate investigation of ALL parties immediately.

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This article is the first in a series of investigative articles regarding the unprecedented seizure of Washington Mutual Bank. Please submit any additional investigative tips to Mike@wamucoup.com. Also, we are currently working on the formation of an equity committee. If you are a large stockholder in the company, please contact us.