WASHINGTON MUTUAL: LARGEST BANK FAILURE IN U.S. HISTORY
September 26th, 2008It’s not even FDIC Friday yet in the U.S.
Via: Bloomberg:
JPMorgan Chase & Co., the third- biggest U.S. bank by assets, agreed to pay $1.9 billion for the deposits of Washington Mutual Inc. after the thrift was seized by regulators in the biggest bank failure in U.S. history.
The U.S. government closed Seattle-based Washington Mutual amid customer withdrawals of $16.7 billion since Sept. 15, the Office of Thrift Supervision said in a statement. WaMu had “insufficient liquidity” and was in an “unsound” condition, the OTS said.
WaMu’s fate played out as Congress tried to reach an accord that will ease the global credit crunch, which has already driven Lehman Brothers Holdings Inc. and IndyMac Bancorp out of business, and Bear Stearns Cos. and Merrill Lynch & Co. into hastily arranged rescues. WaMu in March rebuffed a takeover offer from JPMorgan that WaMu valued at $4 a share. In most bank seizures, little or nothing is left for shareholders.
“JPMorgan is getting a steal compared with what they were going to pay,” said Scott Adams, a pension and investment analyst at the American Federation of State, County and Municipal Employees in Oakland, California, which owns WaMu shares. “It’s very tragic.”
WaMu collapsed after its credit rating was slashed to junk and potential suitors passed on making a bid. Facing $19 billion of losses on soured mortgage loans, the lender put itself up for sale last week.
New York-based JPMorgan won’t acquire liabilities of the lender, including claims by shareholders and subordinated and senior debt holders, the Federal Deposit Insurance Corp. said.
JPMorgan Expands
JPMorgan said it is adding branches in California, Washington and Florida and will have 5,400 offices with about $900 billion in deposits, the most of any U.S. bank. The branches will carry the Chase brand and will be integrated by 2010, JPMorgan said. They will be open for business tomorrow as usual, the OTS said in its statement.
WaMu had about 2,300 branches and $182 billion of customer deposits at the end of June. Its $310 billion of assets dwarf those of Continental Illinois Corp., previously the largest failed bank, which had $40 billion ($83 billion in 2008 dollars) when it was taken over in 1984.
As reported at Minyanville:
NEW YORK (CNNMoney.com) — Washington Mutual (WM) chief executive officer Alan Fishman could walk away with more than $18 million in salary, bonuses and severance after less than three weeks on the job, according to the terms of his employment agreement.
http://www.minyanville.com/articles/Bernanke-Paulson-goldman-nixon-pelosi/index/a/19197/p/1