ANDERSON ISLAND, Wash., May 26 /PRNewswire/ -- The following is being issued on behalf of WaMuStory.com, Concerned Shareholders of Washington Mutual Inc. -- Washington Mutual Inc. shareholders are increasingly alarmed by the actions of federal regulators in recent months. They feel the regulators are setting dangerous precedents that will adversely affect the banking sector in the foreseeable future. They feel these actions do not just affect individual shareholders, but the financial sector in general.
The FDIC's fire-sale of Washington Mutual Inc.'s (BULLETIN BOARD: WAMUQ) (Pink Sheets: WAHUQ, WAMPQ, WAMKQ) assets to JPMorgan changed the game for potential buyers of banks. The new rule seems to be: "Get regulators to place the bank into receivership in order to buy the assets at a fire-sale price."
It appears that bidders for BankUnited Financial Corp. planned to do just that. They recently asked regulators to place the bank into receivership and now the regulators have complied. Regulators have set a dangerous precedent in this action.
Bidders for BankUnited Financial Corp waited on the side lines, hoping for the new form of behind the scenes bailout being offered by the FDIC--assets on the cheap. This has the potential to leave bondholders and shareholders out in the cold, just as was done with Washington Mutual Bank.
Prior to the FDIC's takeover of Washington Mutual, banks would attempt to sell themselves to prospective buyers at or near face value, attempting to get the most for their assets, their shareholders and creditors. Now, having seen the sweet deal JPMorgan Chase received when it bought Washington Mutual's assets for a fraction of their worth, bidders apparently prefer not to deal directly with banks anymore.
This new approach is a much better deal for acquiring banks and private equity investors, and a losing proposition for shareholders. It has been noted widely, that banks need to increase investments from shareholders in order to raise money, but that is not going to happen as long as banks can be whisked away from shareholders, leaving them out in the cold.
A new Wall Street motto has been coined: "Remember The WAMU." The sale of WAMU bank, for pennies on the dollar, stunned investors, and has kept them from returning to stocks in the financial sector, especially as new laws are currently underway to increase the authority of the FDIC to seize holding companies as well.
Changing the rules of the game doesn't appear to have been the FDIC's intention when it sold Washington Mutual for a pittance, but bidders are getting wise and are taking advantage of the way the "new" game is played. This does not bode well for banks, their shareholders or their creditors. Nor does it bode well for the taxpayers who get to pick up the tab once again. The money that is so badly needed by banks, to shore up their losses, is not going to come in the form of stock investments any time soon. That will leave the FDIC to pick up the pieces over and over and over.
WaMuStory.com
CONTACT: Joyce Presnall of WaMuStory.com, +1-360-790-1149,
jpresnall@wamuequity.org
