WaMu seized - YES!!!! YES!!!! YES!!!!
And I have no champagne, so I got a glass of wine.
J.P. Morgan to Take Over Faltering WaMu
In what is by far the largest bank failure in U.S. history, federal regulators seized Washington Mutual Inc. and struck a deal to sell the bulk of its operations to J.P. Morgan Chase & Co.
The closing represents the demise of what once was the largest U.S. thrift but came to symbolize many of the worst excesses of the mortgage boom. The Seattle-based thrift expanded at a break-neck pace, not only in mortgages but also in credit cards and retail-banking, opening a slew of new branches in places like New York City and Chicago.
While the exact structure of the transaction wasn’t immediately known, J.P. Morgan is expected to acquire Washington Mutual’s deposits and branches, as well as other operations. The deal isn’t expected to result in any hit to the Federal Deposit Insurance Corp.’s bank-insurance fund, according to a person familiar with the arrangement. But it’s likely that another arm of government would have to pick up the tab. Some analysts have worried that a WaMu failure could cost more than $20 billion.
Federal regulators have been heavily involved in orchestrating the transaction, which comes as WaMu grapples with its bad mortgage loans. Regulators were hoping to fend off a collapse of WaMu, which, with more than $300 billion in assets, would mark by far the largest banking failure in U.S. history.
Under the deal, New York-based J.P. Morgan, which has long coveted WaMu as a way to secure a footprint on the West Coast and Florida, will assume most of the thrift’s deposits and branches, as well as some other operations.
Unlike many of the 12 bank failures that the FDIC has overseen this year, the J.P. Morgan-WaMu transaction isn’t expected to impact the agency’s national deposit-insurance fund. It wasn’t immediately clear how the transaction would be structured to avoid the insurance fund taking a hit. J.P. Morgan was set Thursday to unveil more details of the transaction on a 9:15 p.m. conference call with investors. The FDIC scheduled a conference call for 9:30 p.m.
With mortgage losses mounting, and its stock price plunging, WaMu has been scrambling over the past month to find a solution; last week it put itself on the auction block. A number of banks—including Citigroup Inc., Wells Fargo & Co. and Spain’s Banco Santander SA—pored over WaMu’s books, but the bank didn’t receive any offers. This week, WaMu’s outside bankers approached a group of private-equity funds to gauge their interest in a deal, but that was viewed as a last-ditch effort.
Also this week, the FDIC took the step of reaching out to banks, asking them to express interest in taking over some or all of WaMu, according to people familiar with the matter. Those bids were due at 6 p.m. Wednesday.
J.P. Morgan’s takeover of WaMu’s deposits represents a huge blow for private-equity firm TPG, which injected $7 billion into the thrift this spring. The transaction is expected to wipe out WaMu stockholders and holders of the company’s senior debt, one person said. A key unknown: the fate of WaMu’s bad assets, which include mortgage loans that have soured as housing markets tanked.
This is the second time the government has gone to J.P. Morgan as a buyer of last resort. In March, the government agreed to backstop J.P. Morgan’s takeover of Bear Stearns.
This will likely prompt criticism from rivals about preferential treatment. Bank of America Corp., for instance, didn’t receive government assistance in its recently announced purchase of Merrill Lynch. Of course, in the case of WaMu, there were presumably other bidders who simply wouldn’t offer that much for the deposits and branches.
Before the deal, J.P. Morgan ranked as the fourth-largest bank as measured by branches, ranking below Bank of America, Wachovia Corp. and Wells Fargo. Its network of more than 3,100 branches stretches across 17 states with deep penetration in New York, Illinois, Texas, Michigan and Ohio.
Write to Robin Sidel at , David Enrich at and Dan Fitzpatrick at
I’ve waited for a long time to see WaMu die.
That’s not to say that Chase is a better bank, but Home Savings (merged with WaMu) started to foreclose on me in the 90s despite the fact that I had made EVERY payment ON TIME.
I almost killed myself when I was unable to get them to look into what happened to the mortgage payment made at the branch and they demanded over $8,000 which I did not have.
If it hadn’t been for my relative Dorothea who spent OVER 40 hours dealing with those criminals, I probably wouldn’t be here today. Eventually they figured out that they took the over $2,200 mortgage payment out of my account and made a mistake with my mortgage account number.
And then WaMu made the “business decision” last year to raise my credit card interest rate from about 11% to 26% despite my PERFECT payment history with WaMu and PERFECT credit rating.
And those of you who read financial news must have noticed that WaMu continually DENIED being in trouble until last week. It’s all lies.
They should let ALL the banks fail, take them over and continue to operate them until there are a number of common good banks. Let the businesses and investment banks do whatever they want, I couldn’t care less as long as we have banking alternatives.
I’m AGAINST limiting CEO salaries.
What a STUPID move. I don’t care if they make a trillion dollars a year. But when they run a company in the ground, just let it DIE. The investors are mostly institutions getting professional financial advice. Let them SUE the execs or eat their losses. There’s no reason to take care of them from cradle to grave.
Can’t wait to see how they’ll structure the Chase takeover, how much it’ll cost the tax payer and who ends up with my charge-offs.
