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I'm a little confused over the FDIC seizing subsidiaries of WASHINGTON MUTUAL BANK ...

WASHINGTON MUTUAL INC, had a lot of direct/indirect subsidiaries that weren't incidental to the business of banking.

the FDIC seized the assets of WAMU, subsidiaries of WMI are organized under the laws of the state, not laws of the united states.  So by what authority does the FDIC seize non-banking subsidiaries and those that are not licensed operating subsidiaries of a national bank?   While the FDIC might be able to seize the assets of subsidiary corporations, by what authority does it have to seize the corporation that is a direct/indirect subsidiary of a holding company?

this just seems wrong to me
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If it is a wholly owned subsidiary of the bank then it is an asset of the bank.  When the FDIC makes their Friday afternoon raids they are entitled to all assets regardless of their corporate structure. 

Let’s say WAMU sets up a subsidiary called The Great WAMU Vault Company, Inc. as a California corporation and transferred all of their vaults to the subsidiary.  Would this mean that when the FDIC walks through the door with a seizure order they can’t touch the vault?

My guess would be that when a bank signs a deal with the FDIC they pledge all assets of the bank holding company.

I am not an expert in this field, but that’s my take on the question.

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WAMU sets up a subsidiary called The Great WAMU Vault Company, Inc. as a California corporation and transferred all of their vaults to the subsidiary

 

I agree ... but the distinction that I see is an "operating subsidiary"  that is incidental to the business of banking  and a company that services credit cards or services mortgage loans owned by the bank.   Aren't bank subsidiaries regulated by law to only be "operating" subsidiaries of the national bank? 

 

if the subsidiary was an asset  of the bank holding company, I think the holding company would retain the subsidiary, but I think  bank holding companies make a big mistake by making subsidiaries wholly owned by the bank

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Could it have been the result of the S&L crisis where S&L’s were hiding assets?  Or today with off balance sheet assets?

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William A. Roper, Jr.
Crickett:

I believe that Way To Go's analysis is basically correct. 

To this I would only add that under Federal bankruptcy laws in a general corporate setting, I believe that a Federal Bankruptcy Judge can also set aside transactions entered into by the bankrupt entity during a one year interval prior to receivership and can set aside transactions older than that when fraud is shown.  So if a bank and/or bank holding company was to be engaging in questionable transactions with a subsidiary or affiliate, some or all of the questionable transactions might therefore be unwound upon a showing that this is in the best interests of the estate.

It is UNCLEAR to me whether these provisions apply to bank or bank holding company bankruptcies.  And it is also unclear to me what powers the FDIC has, absent a suit, to alter or set aside prior transactions except in a bankruptcy setting.

I think that the bottom line here is that the laws respecting bank seizures and bankruptcy of financial institutions are sufficiently complex that I have very little interest in exploring these or developing any expertise in this area.  Even IF one ascertained that the law wasn't being followed, litigating with the taxpayer supported FDIC seems like a pretty sure prescription to exhaust your energy and resources.  I am sure that the WAMU shareholders can take care of themselves without the assistance of pro se foreclosure defendants!
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I believe that a Federal Bankruptcy Judge can also set aside transactions entered into by the bankrupt entity during a one year interval prior to receivership and can set aside transactions older than that when fraud is shown. 


do you mean the judge can vacate the receivership?

that's something I didn't understand either.  WMI and WMI INVESTMENT filed bankruptcy to stay the acquisition of its assets by the FDIC, but nonetheless, JPMORGAN CHASE BANK has been foreclosing on those assets and taken control of all the subsidiaries.

why didn't the feds just give WAMU $25 billion dollars?  In addition, when
JPMORGAN CHASE BANK, WELLS FARGO, CITI  and BANK OF AMERICA got all those billions of dollars,  that should have terminated acquisition of WAMU.   Instead, the feds thought it was OKAY for the stock holders of WAMU to lose all their shares and investments. 

the last accounts I had, the purchase hasn't been finalized, so what gives JPMC the right to foreclose?      





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