JPMorgan takes over Wamu deposits

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In the biggest bank failure in history, JPMorgan Chase will acquire massive branch network and troubled assets from Washington Mutual for $1.9 billion. EMAIL | PRINT | SHARE | RSS By David Ellis and Jeanne Sahadi, CNNMoney.com staff writers Last Updated: September 26, 2008: 7:57 AM ET AMERICA'S MONEY CRISIS Treasurys jump on bailout, WaMu Stocks set to get bruised Bailout talks to resume Fed reaches $13B deal The bailout: What's at stake The Seattle-based thrift Washington Mutual became the biggest bank to fail on record Thursday, only to be acquired by JPMorgan Chase. Bush: Entire economy in danger More Videos Quick Vote What's your view about granting taxpayers stock in any company taking part in the proposed $700 billion bailout? It's needed to approve the plan The plan should be approved with no conditions No bailout in any form or View results NEW YORK (CNNMoney.com) -- JPMorgan Chase acquired the banking assets of Washington Mutual late Thursday after the troubled thrift was seized by federal regulators, marking the biggest bank failure in the nation's history and the latest stunning twist in the ongoing credit crisis. Under the deal, JPMorgan Chase will acquire all the banking operations of WaMu, including $307 billion in assets and $188 billion in deposits. To put the size of WaMu in context, its assets are equal to about two-thirds of the combined book value assets of all 747 failed thrifts that were sold off by the Resolution Trust Corp. - the former government body that handled the S&L crisis from 1989 through 1995. In exchange, JPMorgan Chase (JPM, Fortune 500) will pay approximately $1.9 billion to the Federal Deposit Insurance Corporation. Separately, JPMorgan announced plans to raise $8 billion in additional capital through the sale of stock as part of the deal. The acquisition is JPMorgan Chase's second major purchase this year following the mid-March acquisition of investment bank Bear Stearns, a deal that was also engineered by the government. "We think it is a great thing for our company," JPMorgan Chase Chairman and CEO Jamie Dimon said in a conference call with investors late Thursday night. As a result of the acquisition, the New York City-based JPMorgan Chase will now boast some 5,400 branches in 23 states. Federal regulators, who helped shepherd the deal, stressed that the transition for WaMu customers would be "seamless." "There will be no interruption in services and bank customers should expect business as usual come Friday morning," FDIC Chairman Sheila Bair said in a statement. WaMu becomes the 13th bank to fail so far this year and earns the title of the nation's biggest bank failure by assets on record, ahead of Continental Illinois, which had about $40 billion in assets when it failed in May of 1984. The FDIC, however, was also quick to point out Thursday evening that the WaMu-JPMorgan Chase deal would not have any impact to its insurance fund which covers customer deposits when banks fail. "WaMu's balance sheet and the payment paid by JPMorgan Chase allowed a transaction in which neither the uninsured depositors nor the insurance fund absorbed any losses," Bair said. The FDIC insures the assets held by 8,451 banking institutions with a total of $13.4 trillion.

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JP Morgan chases after Washington Mutual
... ball offer for Washington Mutual in an effort to save the troubled American bank amid concerns over its capital adequacy. JP Morgan ... is likely to take ... bank said retail deposit ...
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Speculation intensifies over WaMu-JPMorgan combo - Silicon Valley ...
Speculation intensifies over WaMu-JPMorgan combo ... branches, each with an average of $63 million in deposits. ... Many investors anticipate the bank will have to take ...
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JPMorgan Chase in Advanced Talks to Buy Wamu: Sources - Articles - On ...
JPMorgan Chase & Co. is in advanced discussions to buy Washington Mutual, sources said Friday. ... severe impact on the Deposit Insurance Fund. Wamu ... Management; Corbat Takes Over
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NOW WAMU HAS BREATHING ROOM
Washington Mutual's decision ... report that JPMorgan Chase was in active negotiations to take over the embattled bank. But sources close to WaMu ... risk for [WaMu] is a run on deposits ...
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WaMu Is Being Eyed by JP Morgan, Other Banks - Financials * US * News ...
JP Morgan Chase is interested in buying at least piece of Washington Mutual, but the two firms ... In its outlook, Washington Mutual said retail deposits as ... Should US Take Over Lehman?
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JPMorgan Chase takes over Washington Mutual
JPMorgan Chase takes over Washington Mutual Washington Mutual, the third-largest bank in Florida based on ... JPMorgan Chase will also acquire all of WaMu's deposits with the sale. For weeks, the Federal Reserve and the Treasury Department had been ...
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Source: Miami Herald
NewsDateTime: 2 hours ago

JPMorgan Chase takes over WaMu for $2bn
US bank JPMorgan Chase has taken over struggling Washington Mutual for $US1.9 billion ($2.3 billion),it was announced. The US Federal Deposit Insurance Agency (FDIC) announced JPMorgan Chase acquired the deposits, assets and some liabilities of the ...
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Source: News.com.au
NewsDateTime: 8 hours ago

JPMorgan Chase Takes Over WaMu
JPMorgan Chase ( JPM Quote - Cramer on JPM - Stock Picks ) struck a deal Thursday night to buy all the deposits, assets and certain liabilities of Washington Mutual's ( WM Quote - Cramer on WM - Stock Picks ) banking operations after the Seattle ...
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Source: Street.Com
NewsDateTime: 9/25/2008

JPMorgan Chase buys WaMu assets after FDIC seizure
JPMorgan Chase buys WaMu assets after FDIC seizure ... This is the second time in six months that JPMorgan Chase has taken over a major financial ... The FDIC, which insures bank deposits, said it would not have to dip ...
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Source: Orlando Sentinel
NewsDateTime: 9/25/2008

Treasury’s Financial-Bailout Proposal to Congress
The latter takes us straight down the Japan path. The government is left holding ... The only real solution to the problem of over indebtedness is to reduce the value ... and managers from Countrywide, Moody’s, Standard and Poors, Indy Mac, WaMu ...
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Source: Wall Street Journal
NewsDateTime: 9/20/2008


A road to collapse WaMu had been one of the most hard-hit banks during the financial crisis after it bet big, like many of its competitors, on the strength of the housing market -- only to see its fortunes sour as housing prices fell. Following several ratings agency downgrades this week and a freefall in the company's stock, many analysts were speculating that the endgame for the embattled savings and loan was imminent. Those fears sent WaMu (WM, Fortune 500) shares 25% lower in Thursday trading. Shares of the company fell another 73% in after-hours following the announcement. In a press conference held late Thursday, Bair said WaMu was under "severe" liquidity pressure. As a result, its fate needed to be addressed this week, even as Congress and the White House attempted to hash out a bank bailout plan. Bair added that the company was on the FDIC's latest so-called "problem bank" list for the third quarter, which has yet to be published. All told, Bair said four banks made bids for WaMu but JPMorgan Chase ultimately won out when the auction was held Wednesday. Several other large institutions, including Wells Fargo (WFC, Fortune 500), Citigroup (C, Fortune 500) and HSBC (HBC), were poring over the company's books, according to news reports last week. JPMorgan Chase won because they were "the highest bid and the lowest cost resolution," Bair said. "It was our cheapest option," she said. Part of the $307 billion in assets that JPMorgan Chase will absorb are WaMu's toxic subprime and option-ARM mortgages. JPMorgan Chase said it would recognize projected losses on the loan portfolio upfront by marking down the value of the loans by a whopping $31 billion. Quite possibly the biggest losers in Thursday's deal are WaMu's stock and debt holders, who were effectively wiped out. Among that group was the private equity giant TPG, which was part of a consortium of investors that acquired a stake in WaMu for $7 billion in April. JPMorgan Chase reportedly had made a previous bid for WaMu around that time for about $8 a share which was snubbed by WaMu, according to news reports at the time. Tough times for banks The fall of WaMu is the latest turn in a dizzying two weeks that have seen the bankruptcy of Lehman Brothers, the acquisition of Merrill Lynch by Bank of America (BAC, Fortune 500) and the near collapse of insurance giant AIG (AIG, Fortune 500). The widening credit crisis has prompted President Bush to seek from Congress extraordinary authority to spend as much a $700 billion to bail out the nation's financial system by purchasing toxic assets from banks. President Bush, in a televised address on Wednesday night, said the nation is in the middle of a "serious financial crisis" that threatens the economy. "The market is not functioning properly," Bush said. "There is a widespread loss of confidence. America could slip into a financial panic." Regulators acknowledged they were encouraged to get a deal done but JPMorgan Chase's Dimon stressed to investors that a potential bailout by the government was not a factor.

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Published on: 9/26/2008 12:12:57 AM

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