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Gib, Are you suggesting the prospect that a settlement might result in JPM simply "giving" WMI sufficient shares to match the settlement agreement?
For instance, (for sake of ease of math) if the settlement agreement was $50B, then with JPM selling at $50 per share, JPM would simply award WMI 1B shares of JPM stock?
Well, I think that's what you're saying.
If that happened, JPM's outstanding shares would go from 3.93B to 4.93B and WMI would own over 25% of JPM. That would seem to me to be a troubling prospect for JD -- that an outside entity with it's own board of directors and entire corporate structure would represent such a large voting block of JPM.
Considering the negativity of that prospect (Well, if I were JD, I'd consider it ugly in the extreme), I don't understand how such a scenario would benefit JD or JPM.
Further, if WMI were then able to subsequently prevail over FDIC for even more money, JD and JPM would not benefit from that.
Personally, (and I'm willing to entertain all scenarios), I think it would be far better for JD and JPM if WMI were merged into JPM (via stock swap) as a subsidiary (and retain Wiel and Quinn), and still go after FDIC. If that happened and WMI then prevailed against FDIC, that'd a win not only for WMI, but for JPM as well. And that win (if it happened) could offset some of the settlement $$$ JPM had to fork out.
My vote still goes for a stock swap that makes WMI as an independent trading vehicle go away.
Once that's done, everybody can decide for themselves individually if they wish to retain their JPM shares or sell them and call it a day.
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Speculation Sunday I like it Gib Zwinkern Obviously JPM and WMI would have to come up with a number thats satisfactory. JPM paying 50B by themselves isn't.
Weil would obviously put a number on the FDIC's culpability say the 13B plus damages (approx 20B). JPM could get say 5B from the FDIC (settlement to WMI), have the FDIC cover the 12B (14B - 1.9) in debt and future class actions. Costing the FDIC approx 20 - 25B. JPM converts the preferreds and restructures debt and swaps WMI's stock at a 3:1 ratio (at a $45 SP).
Regardless of JPM's influence over the FDIC and Bair. The OTS seized WAMU at the direction of the Government and the FDIC instantly became the responsible party. They are held responsible for the domino affect which occured. A 25B loss to cover the largest bank heist in history is still a win. JPM wins by getting WAMU cheaper than $8 a share because of all the negative goodwill, tax refunds, NOL's, cash (4.4B plus 10B from WMBfsb) earnings of 2B a QTR, 2239 branches (although FDIC kept some), IP property and so on. Once JPM receives cash from the FDIC their SP which takes a hit initially upon settlement rebounds.
Only problem with this scenario is if Mr Bonderman can put the bad blood aside and become part of JD's team?
All hypothetical and JMO.
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WMI has JPM/FDIC cornered with potentilly criminal activity. There is no way in the world if I was holding WMI cards that I would sell myself to that corrupt outfit. I would demand cash/stock to pay for their part.
If JPM's part is 25 billion, I would demand 50 billion if they wanted to pay in stock to offset any dillution that WILL occur. In other words anything they want to settle with, other than cash has to be twice that amount.
You have to understand if WMI gets 24.00 cash, that means somebody is willing to pay 48.00 per share with a stock transaction; such as GS or WFC. It would be insane for WMI to sell completely to JPM for 24.00 per share; lock stock and barrel.
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