The true story behind the collapse of Washington Mutual
Connie Madon
Washington Mutual (WaMu) was the largest savings and loan company in the country. It was seized by the government in September 2008 and sold to JPMorgan Chase (JPM) for a piddling $1.9 billion dollars.
Now the company wants to investigate discussions between JPMorgan Chase, regulators,competitors and rating agencies it said led to the seizure of Washington Mutual according to a filing in bankruptcy court.
It alleges misconduct on the part of Morgan by "disclosing confidential information" in violation of the confidentially agreement to government regulators, rating agencies, media and investors in an effort to harm WAMU by driving down WAMU's credit rating and stock price.
It cites an internal JP Morgan email it said shows that a week before WAMU was seized the bank's executives were contacted by the Federal Deposit Insurance Corp regarding the interest in WAMU.
In a separate suit,the American National Insurance Co. is suing JP Morgan for its losses. American National said that Morgan used former Morgan employees who went to work for WAMU as part of a plan to acquire WAMU.
If you remember the movie "All the President's Men," the message from "deep throat" was "follow the money." What is not in either suit is whether JP Morgan had any "naked short sales" of WAMU or any "short sales" of WAMU. With Morgan's firepower, it would have been easy to take the stock down. Regulators must be forced to answer this question. Naked short sales were responsible, in part, for the downfall of financial companies. If you look at Lehman Brothers, there were 38 million naked short sales of that stock and no one has bothered to find out who the naked short sellers were. If the truth were known, we could unravel much of the "behind the scenes" goings on during the financial meltdown.
Should regulators be forced to name the naked short sellers during the financial meltdown?
www.bloggingstocks.com/2009/12/16/the-true-story-behind-the-collapse-of-washington-mutual/