NLU basically accused me of being an old curmudgeon because of my outlook towards a delayed settlement. However as long as Catz is playing with Lego’s and tinfoil, I will throw out a complete WAG as to how this could settle. Before we can start to talk about any settlement, we have to get rid of all the bogus claims that are inflating the liability side of the ledger. I think this can happen in the next two months if both JPM and WMI want to push things. When we finally get to a point where we are just dealing with recognized legitimate claims, then we can move towards a settlement.
First, we must ask what does JPM want in a settlement. They want to keep what the have. They don’t want to pay out any actual cash. They want this entire episode to fade away with no more publicity and no criminal charges. They don’t actually want to take over the holding company because it owns a lot of stuff they don’t want and there would be some added liability in the form of shareholder and class action lawsuits. WMI on the other hand wants to maximize the total return to it’s shareholders. In order to maximize shareholder value, WMI must be willing to sit down with the devil and try to satisfy JPM and split the two adversaries.
I would propose something along these lines could be possible once the bogus claims are disposed of. First we need to receive the NOL tax refund. Once we get that in hand we ask THJMW to remove her limit on ownership for the preferred stocks. JPM and the hedge funds will begin buying the P’s hand over fist. JPM will agree to take over all the bonds and convert them to JPM bonds and pay only the back interest in cash. JPM will agree to take over all the preferreds and convert them to JPM preferreds. I doubt if they will pay back interest so this is a cashless transaction. JPM will take over all the unpaid claims and try to settle them for as little as possible. JPM will keep the 4 B deposit and receive some of the NOL tax refund. WMI agrees to withdraw all suits against JPM and WMI is left with maybe 3 or 4 Billion in cash and all the subs which are revalued to their true value of probably (WAG here) 2 Billion. WMI now has no debt, no bonds and no preferreds. They have net assets of probably around $3 per share and they have a suit against the FDIC for $20 Billion. They are out of bankruptcy and the shares should trade up based on the probability of winning the suit. They could also be a buy out candidate. I expect this could be a political battle but eventually the FDIC will agree to settle with the final settlement where the common stockholders receive $8 to $12 a share. It might be years down the road but eventually WMI gets paid.
Full disclosure here.. I have been lousy at having my predictions come true. But we are on 8-Ball so nobody expects me to be right. Cheesy Cheesy Cheesy Cheesy Cheesy Cheesy
