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The Biggest Banking Heist in World History: Washington Mutual

Companies / Market Manipulation Oct 01, 2009 - 03:03 PM GMT

By: Mike_Stathis

Companies

Diamond Rated - Best Financial Markets Analysis ArticleThis September 25th 2009 marked the one-year anniversary of Washington Mutual’s seizure, by the Office of Thrift Supervision (supposedly) as a result of insolvency (supposedly).

Last year, on October 7th, I sent the SEC a (rushed) formal complaint highlighting my concerns regarding insider trading and other illegal activities associated with WaMu.


After patiently waiting for one year but with no news from the SEC regarding indictments for what I consider to be have been blatant insider trading; an illegal and inappropriate seizure by the OTS (really the FDIC); and a unified illegal takeout of the stock via naked short selling, all combined with this insider information, I am now releasing this report to the public.

I want you to see what happened. 

I want you to carefully follow the course of events. 

Then I want you to ask yourself why the SEC failed to make any charges.  Finally, I would like you to send this to the White House, the Attorney General and the Congressman and Senator of your choice. 

In this complaint, I discussed how the banking cartel took WaMu down illegally and (most likely) conspired via naked short sales, knowing that one of the members of this cartel would be able to buy up their assets at pennies on the dollar.  

As it turned out, the WaMu asset “giveaway” for less than $2 billion to JP Morgan represented the second banking heist JP Morgan negotiated from the FDIC in six months. Strangely, these also happened to be the top two banking heists ever.

I also discussed the role of former SEC Chairman Chris Cox in facilitating these actions, which might explain why the investigation never went far.

Finally, I discussed the role of Shelia Bair and the FDIC in seizing WaMu, despite official statements that the OTS (Office of Thrift Supervision) seized the bank. Perhaps this will eventually surface down the road just as previous claims I made of the Federal Reserve and Treasury Department forcing Bank of America to buy Merrill.

As you might recall, I was the first person in the world (as far as I know) to report on the forced bailout (disguised as a buyout) of Merrill Lynch by Bank of America. My article “Bailouts Disguised as Buyouts” was released within days of the September 2008 deal announcement, just a couple of weeks prior to the WaMu seizure. http://www.avaresearch.com/article_details-86.html

Thereafter, I did not see or hear anyone mention the possibilities I raised. Recently we have seen this was spot on. No one picked up on this until after Paulson and Lewis started with their he-said she-said speeches in 2009. 

Anyone familiar with my track record knows it is unmatched.
http://www.avaresearch.com/article_details-341.html

Thus, when I raise what I feel to be critical issues, they should be examined carefully, as my insights and vision through this economic collapse have been spot on.  In fact, I have recently offered a $10,000 reward for the person who can identify someone who can match my track record.
http://www.avaresearch.com/article_details-385.html

Prior to my attempts to get the truth out, I had discussed the details of the WaMu seizure with a reporter from a very prominent newswire service. He informed me that prior to the official announcement, a WaMu executive told him that the seizure was "politically motivated." This made perfect sense to me because I could find no evidence of insolvency.

Remember, several days prior to the seizure of WaMu, the OTS stated that after their in-depth review, the thrift had no need to raise further capital at least throughout 2008. In large part this was due to the $7 billion loan made by Texas Pacific Group in the spring.

That of course brings up another point to consider. You would have to assume that a big and well-established private equity firm like TPG would have done a huge amount of due diligence on WaMu before handing over $7 billion in the midst of the banking collapse. Remember, TPG made this investment only a couple of months after the collapse of Bear Stearns. It is highly unlikely that a firm as big as TPG would never make such a huge gamble without being prepared to invest more if needed. But what if TPG didn’t have a chance to come in and supply the sufficient funds required for solvency?  This is in fact the case.

Despite the seal of approval from the OTS, only a couple of weeks later, according to official reports, withdraws of only $16.7 billion (out of total deposits of over $200 billion) within a two-week span occurred. This was the official reason provided by the OTS for WaMu’s alleged insolvency. Are you kidding me?

If in fact WaMu somehow became insolvent in such a short time frame after the public announcement of the official assessments by the OTC, someone from the OTS should face criminal charges due to incompetence for misleading shareholders.

So I wrote up a brief summary of my findings in a complaint to the SEC which included what I believed to be clear signs of massive insider trading. When I looked at the chart, it was obvious insider trading had occurred in a massive scale.  But I knew there was much more to this. I knew it was even larger than the Bear Stearns heist.

After all, the initial naked short ban list in July 2008 left out the three financial firms in most danger of collapse at the time – Washington Mutual (WM), Wachovia (WB), and E-Trade Financial (ETFC).

Excluding Fannie and Freddie, the remaining firms on this list had a short interest ratio of between 1 to 3%, which is standard for most securities. In even under bullish market conditions, most stocks typically have from 1 to 3% short interest for a variety of reasons. 

In contrast, WM, WB and ETFC had short interest ratios ranging from 15 to 25% and had early signs of financial problems. Short interest ratios this high indicate a strong bearish sentiment, as this range represents a large number of shorts relative to the float.  

Furthermore, these firms were in no where near the financial trouble (at that stage) as were WM, WB and ETFC, in part due to the fact that they had not yet been shorted. Please check back to verify this because I know it to be true for a fact.

I’ll go ahead and make another assertion which I am willing to stake my reputation on; SEC Chairman Christopher Cox basically signed off on this list after having it handed to him by then Treasury Secretary Paulson. 

Soon after the bank seizure, I was on the phone contacting the OTS and FDIC to get some answers regarding the seizure of WaMa, the ombudsman kept deflecting my questions and passing the buck to others. I insisted a disclosure be made of third-party audited financial statements be issued to at least shareholders proving insolvency. Most notably, officials at the OTS were most interested in finding out who I was and whether I had a website. This seemed very strange to me. Meanwhile, the FDIC ombudsman continued to provide answers that were distractions – a tactic typically used by politicians and other deceitful manipulators. After realizing his tactics were not working, he hung up on me.

Once I told them who I was and my intentions to expose their role in this huge cover-up, the FDIC (as I later found out) made a call to federal agents to pay me a visit. And that they did. Soon after, I found myself in an interrogation room. Let me be clear, the FDIC ombudsman is lying crooked SOB and is guilty of providing baseless/false information to federal agents. This man should be locked up in jail.

It appears as if the FDIC misused its federal authority to put some heat on me by informing the FDA terrorist division that I was a person of interest to question regarding the white powder mailings sent to JP Morgan and the Federal Reserve. Yes that’s right, I said the FDIC misused its federal authority.  You see, despite the claims made by Shelia Bair and others, the FDIC is not really an independent insurer.  They are really a branch of the U.S. Treasury, which might explain why Shelia Bair used to work at the Department of Treasury.

A few months later when I attempted to spill the beans, I emailed the SEC complaint to three reporters; reporters from the NY Times and Washington Post who I thought could be trusted to deliver the truth because they had exposed some mortgage fraud by WaMu. Boy was I wrong.

One reporter wrote it off as a “half-baked conspiracy.” He even made mention of the lack of credibility regarding the tip I received from journalist who was told the seizure was politically motivated, without bothering or caring to verify it.

I told him I had the name and contact number of the reporter, but for some strange reason, he wasn’t interested. As you might imagine, this reaction, which I deemed to be unprofessional, unappreciative and disrespectful, was dealt with appropriately. I basically put him in his place as you might imagine.

When a reporter is telling a Wall Street insider his market insights are rubbish, especially without even bothering to investigate them, it implies one of two things.

He is either a complete idiot………… or

He wants to stay away from something potentially disastrous to his career. 

My guess is that it was a combination of both. 

(Perhaps I’ll disclose his name if you email me, but only if you promise to email him and tell him what a jackass he is)

It was then I realized that journalists would only be willing to go after obvious fraud that everyone knew about; like mortgage fraud. They aren’t willing to uncover massive fraud that would have drastic ramifications for the biggest banks in America.

I’m a bit anxious to publish the emails from this, as well as the others I’ve collected over the past three years from the media when I tried to warn people of this mess. I’m not talking about generic doom and gloom extremist predictions that you may have come across from the media snake oil salesmen.  I’m talking about specific predictions which have materialized.

Several weeks later I received a call from a couple of SEC attorneys who had been assigned to investigate WaMu fraud. They wanted to know more about the details of my allegations. What I suspect is that they really wanted to know how much direct proof I had so they would know whether or not to pursue the case; to cover their behinds. Otherwise, for whatever reason they weren’t going to pursue it.  I was quite certain about that.

After explaining things, I requested to see the short interest data for WaMu in the months prior to the collapse.

Sensing these SEC officials lacked the expertise (or motivation) required to prove my case, I wanted to prove that JPMorgan committed securities fraud and benefited from this by its taxpayer-funded purchase of WaMu (which would also imply taxpayer fraud). But the attorneys refused to hand it over. Go figure.

Why would the SEC impede the efforts of the only person in the world to have spotted these fraudulent activities?  Why would they refuse the assistance of a Wall Street insider, and arguably the leading expert in this mess to boot?  

At the very least, in my professional opinion, there is no dispute of insider trading with WaMu. It was one of the most blatant cases of insider trading I have seen during my professional career.

By now, it should be clear to everyone that certain SEC executives are just as guilty of criminal activities as the credit rating agencies and banking executives. And yet, none of them have faced any criminal charges.  

For anyone who doubts anything I say, I have evidence to back it up; including the statements made by the reporter, as well as the business card of the principal federal agent. The only thing I lack is the short data for WaMu to prove massive fraud. If I had access to short interest data from 2007 to 2008, I am willing to stake my reputation that I could prove the banking cartel acted illegally to cause the destruction of several banks. 

As for the insider trading, the SEC can easily confirm this by checking data. Yet, since submission of my formal complaint in October 7, 2008, there have been no announcements of any kind related to insider trading with WaMu. I And I don’t ever expect there to be because I understand how the SEC works. I was confident they wouldn’t act when I wrote the report. I even discussed how useless they are in America’s Financial Apocalypse.

As you read the complaint, you will see how I ended it with a brief lecture on the failures of this agency. Note that a couple of months later, Madoff’s Ponzi scheme was exposed; but not by the SEC of course.

The SEC wants to stay away from anything related to WaMu securities fraud since they are partly responsible. Instead, they will distract investors by going after much smaller mortgage fraud cases.

You won’t hear any of the “experts” or pundits discuss the real issues like those I have I have described; the issues that need to be addressed, because they don’t want to upset the media. All they care about is staying within the proper boundaries as set forth by producers so they will be invited to return back on the show so they can market themselves.
 http://www.avaresearch.com/article_details-338.html

All they care about is marketing themselves so they can make millions when they release their next useless book or try to get you to invest with them. They are pure sell-outs and they’re fooling you. They deceive and even lie to the people in exchange for money via increased business.
http://www.avaresearch.com/article_details-289.html
http://www.avaresearch.com/article_details-290.html

And since the media is controlled by a few individuals, you can imagine how closely aligned they are with the executives of the banking cartel - Goldman Sachs, Citigroup, Bank of America, and JP Morgan, as well as the Federal Reserve and Washington.

Most of these “experts” have no clue what’s going on or what to expect so they become marketing machines because all they care about is making money. They make money selling you an empty bill of goods.

As we all know, even most “experts” have been clueless about the economy and stock market as their track records indicate. But they don’t need to be right because most viewers have very short memories. These marketing experts make money either way while you lose. It’s all one huge marketing gimmick designed to make them rich at your expense.
 http://www.avaresearch.com/article_details-247.html

Once again, it’s all about protecting the financial and political agendas of the media’s sponsors. After all, these journalists certainly don’t want to lose their jobs. And their hand-picked “experts” only care to market themselves so they can make money. So they’ll stay away from the real issues because they want to get invited back on TV again. And now the results are showing, as America’s media machine gets chopped up further each day.

Summary and Conclusions:

  1. Washington Mutual was NOT insolvent
  2. Blatant insider trading occurred prior to the seizure announcement, most likely involving the banking cartel and their hedge fund affiliates
  3. Washington Mutual share price was taken down for several months prior to the seizure by illegal naked short sales, which SEC Chairman Christopher Cox failed to prevent. His July 2008 short sales ban list contained only 19 financial firms and only two of those (Fannie and Freddie) were in danger of being shorted at the time. 
  4. The Office of Thrift Supervision was not responsible for seizing WaMu. Although that is the official report, the fact is that Shelia Bair, head of the FDIC was responsible for forcing the OTS to seize WaMu.
  5. To this day, the OTS, FDIC, OCC, nor any other agency responsible for wiping out WaMu shareholders has provided any evidence of any kind that WaMu was insolvent.
  6. WaMu was handed off by the FDIC and Federal Reserve in an illegally devised brokered deal to JP Morgan, whereby there was no auction for WaMu assets as the FDIC claims. It was decided prior to the seizure where WaMu’s assets would go.
  7. Those responsible for the biggest banking heist in history should be in prison, including but not limited to the heads of the FDIC, OTC, OCC, SEC, JPM. Furthermore Killinger should be in prison for the mortgage fraud WaMu engaged in.
  8. WaMu shareholders should be able to recover 100% of their lost investment due to the illegal seizure and WaMu fraud.  JP Morgan and the FDIC should be sued. 

These claims I have made should be taken to be factual until they are proven otherwise.

Now have a look at the SEC complaint http://www.avaresearch.com/files/20090930175434.pdf

2

By Mike Stathis
www.avaresearch.com

Copyright © 2009. All Rights Reserved. Mike Stathis.

Mike Stathis is the Managing Principal of Apex Venture Advisors , a business and investment intelligence firm serving the needs of venture firms, corporations and hedge funds on a variety of projects. Mike's work in the private markets includes valuation analysis, deal structuring, and business strategy. In the public markets he has assisted hedge funds with investment strategy, valuation analysis, market forecasting, risk management, and distressed securities analysis. Prior to Apex Advisors, Mike worked at UBS and Bear Stearns, focusing on asset management and merchant banking.

The accuracy of his predictions and insights detailed in the 2006 release of America's Financial Apocalypse and Cashing in on the Real Estate Bubble have positioned him as one of America's most insightful and creative financial minds. These books serve as proof that he remains well ahead of the curve, as he continues to position his clients with a unique competitive advantage. His first book, The Startup Company Bible for Entrepreneurs has become required reading for high-tech entrepreneurs, and is used in several business schools as a required text for completion of the MBA program.

Restrictions Against Reproduction: No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without the prior written permission of the copyright owner and the Publisher. These articles and commentaries cannot be reposted or used in any publications for which there is any revenue generated directly or indirectly. These articles cannot be used to enhance the viewer appeal of any website, including any ad revenue on the website, other than those sites for which specific written permission has been granted. Any such violations are unlawful and violators will be prosecuted in accordance with these laws.

Requests to the Publisher for permission or further information should be sent to info@apexva.com

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Disclaimer: All investment commentaries and recommendations herein have been presented for educational purposes, are generic and not meant to serve as individual investment advice, and should not be taken as such. Readers should consult their registered financial representative to determine the suitability of all investment strategies discussed. Without a consideration of each investor's financial profile. The investment strategies herein do not apply to 401(k), IRA or any other tax-deferred retirement accounts due to the limitations of these investment vehicles.


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Comments

J
01 Oct 09, 17:19
Washington Mutual moles

Mike,

How much do you know about David Schneider and Steve Rotella, the supposed WaMu moles? I'm sure you have some juicy stuff! You should mention that as well!

http://messages.finance.yahoo.com/Stocks_%28A_to_Z%29/Stocks_W/threadview?m=tm&bn=86316&tid=132701&mid=132701&tof=17&frt=2


J
01 Oct 09, 17:22
Naked short selling

Also, have you seen this letter?

http://www.sec.gov/comments/s7-20-08/s72008-553.pdf

Killinger requested Cox for a ban of WaMu naked short selling a couple days before the official list was made. It shows the faxed date as July 17 but the RECEIVED date as July 22. They weren't just left off the list; they were denied.


Chas
02 Oct 09, 06:31
Response to article

Mike Stathis, you sir are the only reporter that get's 'it'. I sincerely hope you continue your investigative work and write additional articles or even a book that truthfully spells out the events. I’d suggest that you also take a look at JPMc’s involvement in the downfall of Bears and Lehmans.

For example: I think it was the fact that these banks were pushing all the “bad mortgages” as packaged assets and Lehmans and JPM were making money each day transferring up to 69B in nightly loans. Add to that the fact that the Gov needed a savior and I think they selected JPM (maybe it was the good-ole boy network or maybe the Gov thought JPM was the strongest one left), at any rate, the Gov picked JPM to be the savior but JPM had a major issue – Lehmans. JPM and Lehmans were joined at the hip with bad loans/assets – The Gov (FED) knew this and decided to let Lehmans fail (to wipe the bad loans off the books and the let the bond holders/shareholders take the hit and sale the assets at liquidation value) – this prevented JPM from realizing an immediate 69B loss (certainly everyone would agree that Lehmans was in no position to pay the 69B it owed JPM and that 69B was floated daily).

But Barclays didn’t play along in the deal and JPM got screwed (not in a major way – but JPM didn’t get what it wanted 100%), so JPM was still vulnerable – it needed good assets “on the cheap” to counteract the “bad assets” – this is where WAMU (ripe for ‘hostile’ takeover because it wasn’t afforded any protection by Paulson and WAMU had already pissed off JPM when it refused the April offer) – thus WAMU was systematically devalued and gifted to JPM. That’s my rough version but I think that’s how it went down.

Also, I’m certain that the SEC has evidence that JPMc (along with hedge funds) conspired to bring down Bears in a ‘safe manner’ but using Naked Short Selling.


Martin Bombac
02 Oct 09, 15:22
The Biggest Banking Heist in World History:

Dear Mr. Stathis,

I am so so thankful for this article. This is probably the first time somebody is willing to publish the truth and say it as it is. I commend you for your courage and determination to point out where the truth is. Other shareholders (probably hundreds) and I have been trying to get media (any media, big and small, TV, news papers or on-line) to get involved in this but with no success.

As you mentioned they have no interest, for lack of homework (even though we hand them all needed information) or they are just too scared to deal with the "big boys". So in the end it's just share holders following each other on message boards, posting news and updating legal documents as they happen.

I just want to let you know that (as you probably know) there are hundreds (maybe thousands) of us that are following the whole WAMU story and are trying to expose the truth... Unfortunately (In my opinion) not much could be done through message boards alone. I am going to share your article on Yahoo! and Investorshub message boards (where I believe the most share holders are) to get some responses. Please be aware that you have huge support in us... (I believe you have many followers to help with information and support) we can help also with sharing new information,

concerns and advise... Again

THANK YOU VERY MUCH MR. STATHIS

Sincerely,

Martin Bombac


Fourp8w
07 Oct 09, 04:36
Have to do something

Dear Mr Mike Stathis,

I do admire your courage. Everybody can see that none of the Medias dare to stand out to say something.

Is it the truth that WAMU was seized reasonably & legally ? I doubt; and so do the medias. The most important thing

now is not only the case regarding WAMU, it is that if USA is still trusted by the rest of the world.

Let us have a look of the forex market. The dollar is dipping everyday. Why ? Only because of the bailout ?

I don't think so. Let us put Citi Group as an example:

The Government has invested billions of dollars to save this bank. Will all the invested money be wiped off ?

Of course not. The Government has the right to sell all the

common shares; even can make profit! But why are people

thinking in a different way ? It's because they are scared

& don't believe the US Government! That's really a catastrophe.

Besides, where are the senators ? Are they all on vacation ? Please have someone to call them back to work.



12 Oct 09, 10:49
Do a movie documentary

Do a movie documentary on it and people will go and watch. Questions will then be raised. Hopefully, new rules and regulations will be passed and the unpunished gets their days in court. History always has a way of repeating itself if nothing is done. Always!


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