Washington Mutual Bonds
Here at Washington Mutual Online Banking, we really haven’t covered the bond issue, which appeared and became a controversy after the FDIC’s seizure and sale of Washington Mutual to JP Morgan Chase. Bond holders – those who held bond shares in WaMu’s corporation – were seemingly left out to dry after the closure of Washington Mutual by the FDIC.
“JP Morgan Chase acquired the assets, assumed the qualified financial contracts and made payment of $1.9 billion. Claims by equity, subordinated and senior debt holders were not acquired.” This statement by the FDIC upon the seizure and sale of WaMu made it fairly clear that bond holders, as “equity holders,” would not be repaid.
During the proceeding Washington Mutual bonds debates and lawsuits, however, some concessions had to be made. Many questioned the legality of the seizure and sale of Washington Mutual and none more loudly than the WaMu bonds holders who were expected to count their investment as a total loss. Meanwhile, the hollow corporation left behind as Washington Mutual was (or at least felt that they were) still liable to the holders of Washington Mutual bonds.
Earlier this year, in March, money still disputed two years after the seizure was brought to the fore again, totaling about $4 billion. This money is claimed by JP Morgan Chase, by the FDIC, and by the leftover Washington Mutual corporation. WaMu asked the bankruptcy judge to leave the money in their hands so that they could pay off their primary creditors, who are those with bonds with Washington Mutual.
Added to those original bond holders are new ones, mostly lawyers, who are working on this bond issue case and whose WaMu bonds are another very high corporate debt total.