How come JPMC is assuming Liabilities that it did not own
This was in reply to BKshadow on Ihub but is relevant here
Quote "Case 1:13-cv-01997-RMC Document 1 Filed 12/17/13 Page 4 of 24 11. While JPMC acquired the FDIC's title to all of the assets of WMB, "whether or not reflected on the books of' WMB (P&A § 3.1), JPMC did not assume all of the liabilities of WMB, but rather assumed only an expressly defined subset of them. The P&A Agreement provides that JPMC "expressly" assumed "at Book Value ... all of the liabilities of the Failed Bank [WMB] which are reflected on the Books and Records of the Failed Bank as of Bank Closing [September 25, 2008]." (Id. § 2.1.) Therefore, with certain explicit exceptions not relevant here, JPMC did not assume any liability of WMB that was not reflected on WMB' s general ledger, subsidiary ledgers, and supporting schedules as of September 25, 2008. "
Given the above, how come JPMC is assuming liabilities that it did not own and paying for them.
Quote Quote: "In a Jan. 9, 2009, SEC filing, Freddie Mac disclosed that "JPMorgan Chase will assume Washington Mutual"s recourse obligations to repurchase any of such mortgages that were sold to Freddie Mac with recourse. With respect to mortgages that Washington Mutual sold to Freddie Mac without recourse, JPMorgan Chase has agreed to make a one-time payment to Freddie Mac with respect to obligations of Washington Mutual to repurchase any of such mortgages that are inconsistent with certain representations and warranties made at the time of sale[xviii]." This filing, like several filings made by JPMorgan, demonstrate that the firm had recognized its obligations to repurchase WaMu-related mortgages sold to the GSEs[xix]. If, as JPMorgan now contends, these repurchase obligationswere the rightful liabilities of the FDIC, then one must ask how the firm could legally have settled them on behalf of the FDIC. In fact, section 12.2(f) of the Purchase Agreement specifically protects the FDIC from paying for liabilities it did not assume by requiring that it consent to any settlement that would result in an indemnification obligation. " www.ritholtz.com/blog
The following decision against JPMC is very important and sets a precedent, imo, with respect to liabilities Quote
Quote: Page 56 and 57
FHFA Vs JPMC 11 Civ. 6188 (DLC)
JPMorgan does not directly contest the Amended Complaint"s detailed allegations that it has assumed WaMu Bank"s liabilities with respect to the securitizations at issue here. Indeed, as the plaintiff points out, JPMorgan itself has publicly referenced its liability for "repurchase and/or indemnity 57 obligations arising in connection with sale and securitization of loans" by, among others, WaMu. The FDIC has likewise opined that "the liabilities and obligations" arising from WaMu"s sale of mortgage-backed securities "were assumed in their entirety by JPMC [(JPMorgan Chase)] under the P&A Agreement, thereby extinguishing any potential liability by FDIC Receiver." Thus, for the purpose of this motion, there is no dispute that JPMorgan is a proper defendent with respect to FHFA"s WaMu related claims. In insisting that FHFA was required to exhaust FIRREA"s Administrative procedures before filing suit, however the JPMorgan defendents have failed to explain how the agency"s claim against them "could be brought" through that procedure. Indeed, as FIRREA"s judicial review provision suggests, the administrative procedures were designed to permit a claimant to "seek a determination of rights with respect to, the assets of any depository institution for which the Corporation has been appointed receiver."20 But the assets -- and liabilities -- at issue here have passed, by operation of the PAA, to JPMorgan
The defendants' September 7 motions to dismiss are granted with respect to:
? Plaintiff's Virginia Securities Act claims against the Other Underwriter Defendants;
? Plaintiff's claims of owner-occupancy and LTV-ratio fraud relating to the securities for which JPMorgan served as lead underwriter;
? And plaintiff's claims of owner-occupancy fraud relating to the securities for which WaMu or Long Beach served as sponsor, depositor, or lead underwriter.
The motions to dismiss are denied in all other respects
[color=red]Outcome:[/color] The deal includes $4 billion to end the FHFA"s 2011 lawsuit accusing JPMorgan of selling Fannie Mae and Freddie Mac (FMCC) faulty mortgage bonds, the agency said yesterday.
"In January 2010, recognizing that JPMorgan"s disclosures were inadequate for investors" ability to analyze its risks, the SEC sent a letter to Michael Cavanagh directing the bank to provide greater detail[xxiv] of their repurchase obligations. Again, rather than providing investors with the class-leading transparency JPMorgan often claims, the bank responded to the letter, in redacted form[xxv], requesting confidential treatment of certain portions of their response." http://www.ritholtz.com/blog/2013/03/jpm-wamu/
ZItat Scott Fox dazu :
"In January 2010, recognizing that JPMorgan"s disclosures were inadequate for investors" ability to analyze its risks, the SEC sent a letter to Michael Cavanagh directing the bank to provide greater detail[xxiv] of their repurchase obligations. Again, rather than providing investors with the class-leading transparency JPMorgan often claims, the bank responded to the letter, in redacted form[xxv], requesting confidential treatment of certain portions of their response."
Maybe they know people are watching a little closer this time.
Zitatende -------------------------------------------------- MfG.L:)
Re: Form 10-Q for WMI HOLDINGS CORP. -2014/08/08
Section 102. Item 1.01 Entry into a Material Definitive Agreement
Question: If an agreement that was not material at the time the registrant entered into it becomes material at a later date, must the registrant file an Item 1.01 Form 8-K at the time the agreement becomes material?
Answer: No. If an agreement becomes material to the registrant but was not material to the registrant when it entered into, or amended, the agreement, the registrant need not file a Form 8-K under Item 1.01. In any event, the registrant must file the agreement as an exhibit to the periodic report relating to the reporting period in which the agreement became material if, at any time during that period, the agreement was material to the registrant. In this regard, the registrant would apply the requirements of Item 601 of Regulation S-K to determine if the agreement must be filed with the periodic report. [April 2, 2008]
212.03 An Item 3.02 Form 8-K filing requirement is triggered upon an unregistered sale of warrants to purchase equity securities (or an unregistered sale of options outside a stock option plan), if the volume threshold under Item 3.02 is exceeded, or upon an unregistered sale of convertible notes (convertible into equity securities), if the volume threshold under Item 3.02 of the underlying equity security issuable upon conversion is exceeded. Pursuant to Item 701(e) of Regulation S-K, the registrant must disclose the terms of, as applicable, the exercise of the warrants or the options or the conversion of the convertible notes in the Item 3.02 Form 8-K. If the Item 3.02 Form 8-K that discloses the initial sale of the warrants, the options, or the convertible notes also discloses the maximum amount of the underlying securities that may be issued through, as applicable, the exercise of the warrants or the options or the conversion of the convertible notes, then a subsequent Item 3.02 Form 8-K filing requirement is not triggered upon the exercise of the warrants or the options or the conversion of the notes. [April 2, 2008]
Email string from the FDIC claims Department
Read from the bottom up.
For that kind of information you will have to file a FOIA (Freedom of Information request). You can find out how to do that at www.fdic.gov and scroll to the bottom of the page.
From: XXXX Sent: Tuesday, September 02, 2014 1:58 PM To: Dividends Subject: Re: Washington Mutual
Linda, Do you know how I can find out if the FDIC has assets to be liquidated? We are coming up on the six year anniversary of the failure. Do you know if they have liquidated assets in the past and if they would show in the balance sheet summary? Thank you, XXXX
On Tue, Sep 2, 2014 at 8:39 AM, Dividends wrote:
The answer is we don"t have any assets in liquidation at this time. It doesn"t mean we don"t have any assets at all, just not liquidating any at the moment.
From: XXXX Sent: Tuesday, September 02, 2014 10:52 AM
To: Dividends Subject: Re: Washington Mutual
Do you know why the balance sheet has $0s under Assets in Liquidation and Due from FDIC Corp and Receivables? I looked at several other failed banks and most have amounts there? Thank You, XXXX
On Tue, Sep 2, 2014 at 4:52 AM, Dividends wrote: XXXX,
Sorry for the bad link. If you go to www.fdic.gov you can search for " failed bank list". Scroll down until you see Washington Mutual. Click on it and you will see a menu of the times you can look at.
From: XXXX Sent: Tuesday, September 02, 2014 9:41 AM To: Dividends Subject: Re: Washington Mutual
Linda, Can you please check the link you sent over? It is not valid. Thanks, XXXX
On Tue, Sep 2, 2014 at 2:25 AM, Dividends wrote:
The Washington Mutual (WAMU) receivership is not scheduled for termination any time soon. You can visit the web site for the receivership at www.fdicfhttp://www.fdic.gov/bank/individual/...htmlailedinstititons. You can search for the Washington Mutual receivership and locate a financial statement for the receivership.
From: XXXXX Sent: Monday, September 01, 2014 7:58 PM To: Dividends Subject: Washington Mutual
Do you expect to pay any dividends from Washington Mutual once the termination of P&A agreement is effective? Do you have a place we can view the liabilities and assets of WAMUs estate?
Thank you, XXXX -------------------------------------------------- Zitatende MfG.L:)
One of the considerations to WMI --- Mortgage Loans
From DS supplement, page 71/301 c.
As set forth in more detail in the Global Settlement Agreement, JPMC will cause its affiliates to continue providing loan servicing with respect to certain mortgage loans owned by the Debtors or their affiliates and the remittal of checks and payments received in connection therewith. -------------------------------------------------- Zitatende MfG.L:)
3 Qs on LT
Just reading thru LT agreement.
1. Where is from LT is expecting assets page 15?
2. What are diffent classes of LTIs page8?
3. Why did LT needed tax info of class 19 and class 22?, no clauses mentioned page19 -----------------------------
WMI Liquidating Trust Agreement - Executed Version
For 1. 4.14 Reports. (a) The Liquidating Trustee shall deliver reports to members of the Trust Advisory Board not later than thirty (30) days following the end of each fiscal quarter. Such reports shall specify in reasonable detail (i) the status of any Causes of Action, Claims and litigation involving the Liquidating Trust or the Liquidating Trust Assets, including, without limitation, Avoidance Actions, including any settlements entered into by the Liquidating Trust, (ii) the costs and expenses of the Liquidating Trust that are incurred (including, but not limited to, any Taxes imposed on the Liquidating Trust or actual reasonable out-of-pocket fees and expenses incurred by Trust Professionals in connection with the administration and liquidation of the Liquidating Trust Assets and preservation of books and records as provided in Section 4.10 hereof) during the preceding fiscal quarter and the remaining amount (if any) of the Administrative Funding and the Litigation Funding, (iii) the amounts listed in clause (ii) incurred since the Effective Date, (iv) the amount of Cash andother assets received by the Liquidating Trust during the prior fiscal quarter, (v) the Liquidating Trustee"s estimate as of the end of the most recent fiscal quarter of the uncollected Tax Refunds and all other Liquidating Trust Assets, (vi) the aggregate amount of Cash and other assets received by the Liquidating Trust since the Effective Date, (vii) the calculation of the estimated amount of the Cash and other assets to be distributed on the next Distribution Date, including any Cash on hand that is not to be distributed pursuant to Section 4.3(a) above, (viii) the aggregate amount of distributions from the Liquidating Trust to the Liquidating Trust Beneficiaries since the Effective Date, and (ix) such other information as the Trust Advisory Board or the Litigation Subcommittee may reasonably request from time to time. The Liquidating Trustee shall also timely prepare, file and distribute such additional statements, reports and submissions (A) as may be necessary to cause the Liquidating Trust and the Liquidating Trustee to be in compliance with applicable law or (B) as may be otherwise reasonably requested from time to time by the Trust Advisory Board
For 2. (c) Registration. If the Liquidating Trustee, with the consent of the Trust Advisory Board and upon advice of counsel, determines that any class of Liquidating Trust Interests may be subject to registration pursuant to section 12 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the Liquidating Trustee shall pursue relief from such registration by obtaining either an exemptive order, a noaction letter or an interpretive letter from the Securities and Exchange Commission or its staff or, absent its ability to achieve that objective or in lieu thereof, shall register such class pursuant to section 12 of such statute (it being understood and agreed that the Liquidating Trustee with the consent of the Trust Advisory Board shall be authorized, among other things, to register such class and to seek relief from one or more of the requirements then applicable subsequent to such registration and to de-register such class). To the extent that any Administrative Funding is available, any expenses that are associated with such application for relief and/or registration shall first be deducted from the Administrative Funding.
For 3. 5.4 Tax Withholdings by Liquidating Trustee. The Liquidating Trustee may withhold and pay to the appropriate Tax Authority all amounts required to be withheld pursuant to the IRC or any provision of any foreign, state or local tax law with respect to any payment or distribution to the holders of Liquidating Trust Interests. All such amounts withheld and paid to the appropriate Tax Authority (or placed in escrow pending resolution of the need to withhold) shall be treated as amounts distributed to such holders of Liquidating Trust Interests for all purposes of the Trust Agreement. The Liquidating Trustee shall be authorized to collect such tax information from the holders of Liquidating Trust Interests (including, without limitation, social security numbers or other tax identification numbers) as in its sole discretion the Liquidating Trustee deems necessary to effectuate the Plan, the Confirmation Order, and the Trust Agreement. In order to receive distributions under the Plan, all holders of Liquidating Trust Interests (including, without limitation, holders of Allowed Senior Notes Claims, Allowed Senior Subordinated Notes Claims, Allowed CCB-1 Guarantees Claims, Allowed CCB-2 Guarantees Claims, Allowed General Unsecured Claims,
Allowed Late- Filed Claims, Allowed PIERS Claims, Allowed WMB Senior Notes Claims,
Allowed Preferred Equity Interests, Allowed Common Equity Interests, holders of Dime Warrants, and Accepting Non-Filing WMB Senior Note Holders, who in each case, deliver a release in accordance with the provisions of Section 41.6 of the Plan) shall be required to identify themselves to the Liquidating Trustee and provide tax information and the specifics of their holdings, to the extent the Liquidating Trustee deems appropriate in the manner and in accordance with the procedures from time to time established by the Liquidating Trustee for these purposes. T
So somebody is supplying assets on a quarterly basis, who could be it?. :-) ----------------------------------------------
1. The Trust (or is it WMIH) has a cash reserve it is holding to pay claims which are awaiting resolution. If claims get resolved in favor of WMIH then that money that would've went to claim holders instead goes to holders of trust interests. The trust could also get money from litigation with parties (but I think this has turned to a dead-end road). 2. Classes of LTIs correspond to the bankruptcy creditor/equity classes. Senior bond holders with LTIs are getting their LTIs paid off before equity holder LTIs, etc, etc 3. I don't know. But I'm guessing the trust subtracts federal taxes from any distributions. The trust has received nothing from the FDIC WMB receivership to date. The receivership has paid no dividends to date.
wie hoch war er nun wirklich, der Wert der "übernommenen" Wamu Bank ....
ältere Artikel erinneren manchmal daran:
Wamu mortgages worth 239 billion at time of seizure
JPMorgan Chase to Buy Washington Mutual
By Christopher Palmeri September 26, 2008
In a deal brokered by the federal government, JPMorgan Chase will pay $1.9 billion for deposits and branches. WaMu depositors will be protected
Washington Mutual's long, drawn-out struggle to find a buyer came to an end late Thursday, Sept. 25, when it was announced that the nation's largest savings and loan would be bought by an even larger rival, JPMorgan Chase (JPM). WaMu customers are not expected to see any disruption in service. The deal, brokered by federal regulators, resolves the largest bank failure in U.S. history. WaMu (WM) had $310 billion in assets.
Regulators have been trying desperately to prevent the kind of run on the bank that occurred when the Federal Deposit Insurance Corp. seized IndyMac bank in July. "They had to act," former banking exec William Seidman told CNBC. Seidman led America through a previous financial crisis as head of the government's Resolution Trust Corp. in the early 1990s. The FDIC will briefly take over WaMu's deposits and branches before handing them over to JPMorgan. In exchange, the FDIC will receive $1.9 billion. JPMorgan did not acquire claims by equity, subordinated and senior debt holders, the FDIC said.
The deal is a big win for Jamie Dimon, JPMorgan's CEO. The big bank lacks a strong presence on the West Coast. WaMu's 2,200 branches include top-three market-share positions in California and Washington State. Once combined with WaMu, JPMorgan will have No. 1 positions in New York, Chicago, Dallas, Houston, and Phoenix.
For his $1.9 billion, Dimon gets WaMu's deposits along with $176 billion of home loans, on which JPMorgan is expected to lose some $31 billion. These include home equity and options-ARM loans where losses exceed 20%. Dimon emphasized the branch network JPMorgan will pick up. "This builds a big franchise for us. The only negative in the thing was how to handle these bad assets. We think this deal is extremely compelling," he said.
Credit Quality Problems
WaMu had been trying to sell itself for several weeks. A half-dozen potential buyers kicked the tires. The big stumbling block was just what would happen with the bank's huge real estate loan portfolio, totaling some $239 billion. "They have a valuable franchise," Stuart Plesser, a banking analyst at Standard & Poor's, said. "This is a terrible credit-quality bank. Its problem had more to do with credit than deposits."
In a fact sheet it issued on the deal, the FDIC said all depositors will be fully protected. In a statement released late Thursday, WaMu's regulator, the federal Office of Thrift Supervision, said "business will proceed uninterrupted and bank branches will open on Friday morning as usual." OTS Director John Reich said "the housing market downturn had a significant impact on the performance of WaMu's mortgage portfolio and led to three straight quarters of losses totaling $6.1 billion." The OTS said "an outflow of deposits" began on Sept. 15 that totaled $16.7 billion. That left WaMu with "insufficient liquidity" and in "unsafe and unsound condition," the agency said.
The big losers are WaMu shareholders, who are wiped out. On Thursday afternoon, before the deal was announced, WaMu's stock price closed down 57¢, or 25%, to 1.69. Then, in after-hours trading, the shares lost another 73%, to 0.45. That's down from 36.47 last October.
The biggest WaMu shareholder is investor David Bonderman, who led a $7.2 billion private equity consortium that bought WaMu preferred stock in April. Bonderman had made a much more lucrative investment during the last savings and loan bust in the 1990s. Back then, he advised investor Robert Bass on his purchase of California's American Savings & Loan after the government agreed to take the bank's bad loans. American was later sold to WaMu at a sharp premium.
Customers Celebrate Takeover
Although WaMu is disappearing?presumably taking with it the distinctive "Whoo hoo!" slogan?some customers said they were relieved. "Chase should do a better job of it," says Julie Monroe, who has a WaMu mortgage. "I can fairly say that they have just gone downhill over the last couple of years," says William Kuntz, a longtime WaMu customer. "Good riddance."
Seattle-based WaMu had been drifting for weeks, and many depositors feared for its future. The bank had been anticipating $19 billion in loan losses over the next two and a half years; analysts said the losses could go as high as $28 billion. It was not immediately clear how those bad loans will be dealt with in the acquisition.
Although the bank's stock had been sliding amid record losses for more than a year, worries came to a head on Sept. 8, when longtime WaMu CEO Kerry Killinger was replaced by banking veteran Alan Fishman. WaMu stock continued to slide even after Fishman's appointment, as worries about the broadening financial crisis escalated. In September, Standard & Poor's cut WaMu's credit rating to below investment grade, or "junk."
No Laughing Matter
Under Killinger, WaMu pursued a strategy of being one of the largest mortgage lenders in the country. The firm expanded where federally chartered banks had once feared to tread, into subprime loans for borrowers with bad credit. WaMu offered exotic pay-option loans that allowed borrowers to roll many of their interest payments onto their principal instead of paying them. Before the merger news, Ladenburg Thalmann (LTS) banking analyst Richard Bove estimated the cost to taxpayers of a WaMu failure could have hit $24 billion.
In June, Killinger spoke before the Seattle Rotary Club. According to an account of his speech in The Seattle Times, Killinger acknowledged that the business of packaging loans for everything from home mortgages to credit-card debt had gone too far. "I think you guys could have gone out and securitized your coats and pants and shirts?somebody might have bought it," Killinger joked.
For WaMu shareholders and employees, though, the resulting meltdown was no laughing matter.
"the bank's huge real estate loan portfolio, totaling some $239 billion..."
Is this not the loan value measured in late September, 2008 during the "Real Estate Bubble Meltdown, and therefore highly undervalued by at least a third of previous market value... and many local markets have since reflated close to, if not more than 2007 market levels?
Total deposits: $188.3 billion
Brokered deposits: $34.04 billion
Total borrowings: $82.9 billion primarily comprising Federal Home Loan Bank
advances of $58.4 billion and $7.8 billion of subordinated debt
Loans held: $118.9 billion in single-family loans held for investment - this includes
$52.9 billion in payment option ARMs and $16.05 billion in subprime mortgage
Home Equity Lines of Credit (HELOCs): $53.4 billion
Credit Card Receivables: $10.6 billion
Total loan servicing: $689.7 billion total loans serviced, including $442.7 billion in
loans serviced for others and $26.3 billion of subprime mortgage loans
Non-performing assets: $11.6 billion, including $3.23 billion payment option ARMs
and $3.0 billion subprime mortgage loans
WMI is the top-tier savings and loan holding company and owns two banking
subsidiaries, WMB and Washington Mutual Bank, fsb (WMBfsb), as well as nonbank
Re: Unspecified damages on behalf of the failed banks.
If you've been asking yourself: Why are swaps in existence, and why were the contributing banks so eagar to look the other way when LIBOR and ISDAfix rigging was discovered? First you have to understand what a swap is....then you'll see how easy it was for the contributing banks (the banks that determined LIBOR and ISDAFix) to reap so much profit from manipulating the benchmarks. The following link is the easiest and most comprehensive that I've seen :
1) Since the inception of swaps, it is clear that the contributing banks could easily manipulate the LIBOR and ISDAfix benchmarks without non-contributing banks or retail investors ever being able to do detect, much less, to rectify any wrongdoing even if they knew it was going on.
2) Too much profit for the contributing banks/brokers blinded them, thus their intrinsic regulatory processes were sacrificed for the greater greed for more profits, without having to do any real work other than manipulating the two benchmarks.
without having to do any real work other than manipulating the two benchmarks.
Back to the original FDIC filing that states;
"In the suit filed Friday, the FDIC claimed the fixed rates caused the failed banks to pay higher prices for Libor-based financial products and to get lower interest payments from the defendants and others.
The FDIC alleges the banks committed fraud and violated U.S. antitrust laws in fixing the U.S. dollar Libor benchmark. It seeks unspecified damages on behalf of the failed banks, including punitive damages and triple damages for price-fixing. Most of the closed banks were relatively small, although one cited by the agency, Washington Mutual, was the nation"s largest thrift when it was taken over by FDIC in September 2008 In the suit filed Friday, the FDIC claimed the fixed rates caused the failed banks to pay higher prices for Libor-based financial products and to get lower interest payments from the defendants and others. The FDIC alleges the banks committed fraud and violated U.S. antitrust laws in fixing the U.S. dollar Libor benchmark. It seeks unspecified damages on behalf of the failed banks, including punitive damages and triple damages for price-fixing. Most of the closed banks were relatively small, although one cited by the agency, Washington Mutual, was the nation"s largest thrift when it was taken over by FDIC in September 2008" Who is litigating the LIBOR case for the FDIC, or said another way. What attorney firm represents the FDIC in the LIBOR case? The FDIC hires outside counsel.
Ron, Are you referring to Dickstein & Shapiro?
Dickstein & Shapiro are also representing Freddie Mac in a LIBOR suit that was filed exactly one year prior to the FDIC LIBOR complaint, and in fact if you read the full 65 page suit filed in that case, it is very similar. In fact, most of the arguments in that suit are similar to the FDIC LIBOR suit.
I don't know the status of the Freddie Mac LIBOR suit, but it might be consolidated in a Multi-District Litigation (MDL) LIBOR case that was initially in favor of the Defendant banks ruled upon by Judge Naomi Buchwald of the Southern District of NY in 2013. The current status of that MDL is an appeal to the US Supreme Court, because the individual parties that were consoldiated in that suit were not allowed to immediately appeal to the 2nd Circuit due to the fact that some of the planitiffs' cases that were consolidated in that MDL were not fully ruled upon.
It's very confusing, but as of April 30, 2014, the OTC plantiffs appealed to the US Supreme Court for the right of individual plaintiff parties to directly appeal to the 2nd Circuit Court if those parties are involved in an MDL where not all the plaintiffs' suits were ruled upon by the lower district court.
BTW....the name of that suit is:
Ellen Gelboim and Linda Zacher et al.v. Credit Suisse Group AG et al., case number 13-1174 Excerpts:
"Law360, New York (April 30, 2014, 6:27 PM ET) -- Institutional investors who brought antitrust claims against several major banks accused of rigging the London Interbank Offered Rate urged the U.S. Supreme Court on Friday to review a circuit split over whether parties whose suits are dismissed from in consolidated litigation can appeal immediately. A group of cities, pension funds and others known as the over-the-counter plaintiffs in the multidistrict litigation over Libor-rigging said the justices should review the Second Circuit's refusal to hear appeals from the plaintiffs whose antitrust suits were entirely dismissed from the litigation.
The so-called OTC plaintiffs lodged an amicus brief [Amicus briefs are legal documents filed in appellate court cases by non-litigants with a strong interest in the subject matter. The briefs advise the court of relevant, additional information or arguments that the court might wish to consider. Briefs can also focus the court"s attention on the implications of a potential holding on an industry, group, or jurisdiction not represented by the parties. The court has discretion to grant or deny permission of parties to file briefs as amici curiae. A well-written amicus brief can have a significant impact on judicial decision-making. Cases are occasionally decided on grounds suggested by an amicus, decisions may rely on information or factual analysis provided only by an amicus, and holdings may be narrower or broader than parties have urged because of a persuasive amicus brief.] backing a bid for certiorari another group of Libor plaintiffs filed in March. Those bondholder plaintiffs argued the Second Circuit was wrong to deny their appeal simply because a final order had not yet been entered in the lower court"s MDL case."
.... "The amicus plaintiffs are represented by Drew D. Hansen, Marc M. Seltzer, Barry C. Barnett, Arun Subramanian, William Christopher Carmody and Seth Ard of Susman Godfrey LLP and by Joseph W. Cotchett and Nanci E. Nishimura of Cotchett Pitre & McCarthy LLP."
IMO...My assumption is that the "amicus plantiffs" might be referring to the FDIC LIBOR case because it was filed on March 14, 2014 and the fact that Susman Godfrey, specifically Seth Ard is involved. One of the lead counsels to that suit is Susman Godfrey....and one of the lawyers listed is Seth Ard (WAMU Equity Committee attorney during the BK proceedings). IMO....I have a feeling that Seth Ard is well versed as to the contributing factor that LIBOR rigging had on WAMU's demise.
For those interested in reading the whole article from Law360:
"Supreme Court Urged To End Circuit Split With Libor MDL By Melissa Lipman Law360, New York (April 30, 2014, 6:27 PM ET)
-- Institutional investors who brought antitrust claims against several major banks accused of rigging the London Interbank Offered Rate urged the U.S. Supreme Court on Friday to review a circuit split over whether parties whose suits are dismissed from in consolidated litigation can appeal immediately. A group of cities, pension funds and others known as the over-the-counter plaintiffs in the multidistrict litigation over Libor-rigging said the justices should review the Second Circuit's refusal to hear appeals from the plaintiffs whose antitrust suits were entirely dismissed from the litigation. The so-called OTC plaintiffs lodged an amicus brief backing a bid for certiorari another group of Libor plaintiffs filed in March. Those bondholder plaintiffs argued the Second Circuit was wrong to deny their appeal simply because a final order had not yet been entered in the lower court"s MDL case. "This case will enable this court to resolve the conflict in the courts of appeals regarding whether a party in an action consolidated for pretrial purposes with other actions may pursue an immediate appeal after a district court dismisses its action in full," the OTC plaintiffs wrote. The dispute stems from a March 2013 decision by U.S. District Judge Naomi Reice Buchwald to dismiss the majority of the claims in the consolidated litigation, including the antitrust claims brought by the bondholders and the OTC plaintiffs. Lead bondholder plaintiffs Ellen Gelboim and Linda Zacher filed their suit on behalf of purchasers of bonds with Libor-linked interest rates in February 2012, alleging a single Sherman Act violation claim. Their suit was later consolidated into a sprawling MDL against the banks in New York federal court. After Judge Buchwald's ruling, the plaintiffs appealed to the Second Circuit, but were told that the court lacked jurisdiction because a final order had not yet been issued in the lower court"s MDL. In Friday's amicus brief, the OTC plaintiffs ? which include the mayor and City Council of Baltimore and the regents of the University of California, among others ? emphasized that Judge Buchwald had dismissed the litigation in its entirety and refused to allow the plaintiffs to take another shot at their antitrust claims. "If petitioners" action were not consolidated for pretrial purposes with other actions, petitioners clearly would have the right to an immediate appeal," the brief said. "However, petitioners" action was consolidated for pretrial purposes under the authority of the multidistrict litigation statute ... and in some circuits (including the Second Circuit) consolidation has been held to impair one"s appellate rights." That consolidation would likewise create problems in the Federal, Ninth and Tenth circuits, but wouldn't have blocked an immediate appeal in the D.C., First, Third, Fifth, Sixth, Seventh, Eighth and Eleventh circuits, according to the amicus brief. "The split exists because some courts of appeals, including the Second Circuit, have ignored this court"s direction that 'consolidation is permitted as a matter of convenience and economy in administration, but does not merge the suits into a single cause, or change the rights of the parties, or make those who are parties in one suit parties in another,'" the OTC plaintiffs wrote. The OTC plaintiffs further argued that the process of getting a case certified for appeal was "irrelevant" because the MDL process does not merge separate claims into a single lawsuit. "The circuits that deny immediate appeals in situations such as petitioners" base their holdings on policy rather than statute or rule," the OTC plaintiffs argued. "And even as to policy, they fail to acknowledge that the concerns behind the policy against piecemeal review are absent in these situations, while the danger of delayed final adjudication ? possibly by several years?is very real." An attorney for the defendants was not immediately available for comment Wednesday. The defendants ? which include Bank of America Corp., Credit Suisse Group AG and other major banks involved in setting the influential benchmark rate ? have not yet responded to the cert petition. The amicus plaintiffs are represented by Drew D. Hansen, Marc M. Seltzer, Barry C. Barnett, Arun Subramanian, William Christopher Carmody and Seth Ard of Susman Godfrey LLP and by Joseph W. Cotchett and Nanci E. Nishimura of Cotchett Pitre & McCarthy LLP. Plaintiffs are represented by Thomas C. Goldstein and Tejinder Singh of Goldstein & Russell PC, Karen Lisa Morris of Morris and Morris LLC. and David H. Weinstein of Weinstein Kitchenoff & Asher LLC. The bank defendants are represented by Hogan Lovells, Davis Polk & Wardwell LLP, Sullivan & Cromwell LLP, Covington & Burling LLP, Cahill Gordon & Reindel LLP, Paul Weiss Rifkind Wharton & Garrison LLP, Locke Lord LLP, Sidley Austin LLP, Gibson Dunn, and Hughes Hubbard & Reed LLP, among others. The suit is Ellen Gelboim and Linda Zacher et al.v. Credit Suisse Group AG et al., case number 13-1174, in the U.S. Supreme Court. --Additional reporting by Allissa Wickham. Editing by Chris Yates. "
Maybe it's time for a re-read. Now with the Employee Claimants 'Golden Parachutes' issue back in BK court. Are the Employees responsible for WaMu's demise?
Thanks to Deek for posting this article link which was published Sept. 08, 2014 regarding ISDAfix earlier this morning in the Off Topics section of this forum:
The CFTC can only bring civil charges. When it suspects criminal prosecution is warranted, it sends the case to the Justice Department, which doesn"t have to accept the referral.
By rigging the measure, the banks stood to profit on separate derivatives trades known as swaptions they had with clients who were seeking to hedge against moves in interest rates. Banks sought to change the value of the interest-rate swaps because the ISDAfix rate sets prices for swaptions, which are used by firms such as the Alaska Electrical Pension Fund, a person familiar with the matter said last year. That may run afoul of the Dodd-Frank Act, a U.S. law passed in 2010 that bars traders from intentionally interfering with the "orderly execution" of transactions that determine settlement prices. Skyscrapers, Annuities ISDAfix rates were created in 1998 by ISDA and the predecessors of Thomson Reuters and ICAP to allow for swap trades to be settled before the termination of their contract. It"s also used to price trades in the $49 trillion swaptions market, as well as borrowing costs on bonds that finance skyscrapers to interest on annuities and structured notes. In the first lawsuit brought in the case, the Alaskan pension fund claimed the banks colluded to set ISDAfix at artificial levels that allowed them to manipulate payments to investors in the derivatives. The banks" actions affected trillions of dollars of financial instruments tied to the benchmark, the pension fund said. The banks communicated using electronic chat rooms and other means of private communication, typically submitting identical rate quotes beginning at least in 2009, the Alaska fund said. "Astronomical" Odds "This could not have happened without some form of advanced coordination," the Alaska fund said in its complaint, filed in a federal court in Manhattan. "Even if reporting banks always responded similarly to market conditions, the odds against contributors unilaterally submitting the exact same quotes down to the thousandth of a basis point are astronomical. Yet, this happened almost every single day between at least 2009 and December 2012." The near-identical bank submissions to ISDAfix ended in late 2012, the fund said. The original CFTC subpoenas to ICAP and the banks were issued in November of that year, a person familiar with the matter said last year. The pension fund is seeking to represent all investors that took part in interest rate derivative transactions tied to ISDAfix from January 2006 to January 2014. It"s seeking unspecified damages, which may be tripled under U.S. antitrust law. The fund also named as defendants Deutsche Bank AG (DBK), BNP Paribas SA (BNP), HSBC Holdings Plc (HSBA), Royal Bank of Scotland Group Plc, Credit Suisse Group AG (CSGN), UBS (UBSN), Goldman Sachs Group Inc. (GS), Nomura Holdings Inc. (8604), Wells Fargo & Co. (WFC) and JPMorgan Chase & Co. (JPM) and ICAP." Conclusions...IMO:
1) Alaskan Pension Fund is going to get more plantiffs to join this battle regarding ISDAfix against the defendants....IMO....the FDIC or WMILT will add ISDAfix along with the LIBOR cases to potential third party litigation in the future.
Thanks Dmd for putting this together. I was myself looking for the difference between the two but couldn't separate it out. From the given example below, at least we can understand what it amounts to
"The following example of a simple interest rate swap demonstrates how the manipulation of LIBOR and ISDAfix can together affect the value of a swap.
Assume that there is a $500 million swap that matures in 20 years, where a bank (Party A) makes a floating payment based on the LIBOR rate (3-month USD LIBOR paid quarterly) and receives a fixed rate of 5.9% (which was determined using ISDAfix) paid quarterly by a pension fund (Party B). Party A,would receive the same fixed quarterly payments from Party B for the life of the swap. This fixed payment is $7,273,97210. Assume further that on day 90, the end of the first quarter, the current 3-month USD LIBOR rate is 6.2%. This would mean that Party A would pay Party B $7,643,83511 and would receive $7,273,972. In net terms, the bank owes the pension fund $369,863. If, however, the bank had manipulated the fixed rate and increased the relevant ISDAfix rate by five basis points (0.05 percent) to 5.95% at the beginning of the swap, the bank would have received an ill-gotten gain each quarter in the amount of $61,645 or $246,580 annually for a total manipulated gain of $4,931,600 for the life of the swap."
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