JPMorgan Chase acquired the banking operations of Washington Mutual Bank in a transaction facilitated by the Federal Deposit Insurance Corporation. All depositors are fully protected and there will be no cost to the Deposit Insurance Fund.
"For all depositors and other customers of Washington Mutual Bank, this is simply a combination of two banks," said FDIC Chairman Sheila C. Bair. "For bank customers, it will be a seamless transition. There will be no interruption in services and bank customers should expect business as usual come Friday morning."
JPMorgan Chase acquired the assets, assumed the qualified financial contracts and made a payment of $1.9 billion. Claims by equity, subordinated and senior debt holders were not acquired.
"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.
Washington Mutual Bank also has a subsidiary, Washington Mutual FSB, Park City, Utah. They have combined assets of $307 billion and total deposits of $188 billion.
Thursday evening, Washington Mutual was closed by the Office of Thrift Supervision and the FDIC named receiver.

So, are all the OTS folks polishing up that resume?

Fed and SEC both have open positions.....

I bet the FDIC can employ a bunch for the next 18-24 months!

especially if there is no bailout

Shens and specs (or however the saying goes)...

Here's the link to an article on CNN: http://money.cnn.com/2008/09/25/news/companies/JPM_WaMu/index.htm?postversion=2008092519

And here's the text:

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.

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.
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. To top of page
First Published: September 25, 2008: 7:32 PM ET

Dang my stocks in WaMu!!! friggen losers! :P

The way they have been going lately, I can't see why anyone would hire them...

One of the articles from a few weeks ago when the CEO was replaced mentioned WaMu's BSA problems. It will be interesting to see how the change in regulators effects that issue. I know they are all supposed to be operating from the same FFIEC playbook, but the OCC has a reputation of being much tougher than the OTS.

Not after OTS's miserable report card earlier this year. We just had an excruciatingly painful exam by OTS.

Never been examined by the OTS, but have had OCC at 2 different banks. I find that the OCC is actually easy to work with if you are up front and honest with them. Of course, both banks are very well run, and their findings were minimal. Maybe if were were in deep stuff, it would have been more adversarial.

In happier news, the C&D was officially lifted from Union Bank of CAlifornia!

I heard on the radio this morning that WaMu lost about $17 billion in deposits because everyone panicked and closed their accounts.

We've reaped the benefits at my FI from WAMU. Deposits are soaring! But we also stayed out of the real estate market frenzy and now we're being praised for it.

Us too. Well, not entirely out of RE, but strictly A paper, 50% LTV etc.

I just read where GM drew the last of it's reserves. That should be interesting.

source or shens

GM Empties Credit Facility

Heard 2 very very large car dealers in Florida abruptly shut down, wonder if there's any relationship between that and the GM story.

The CEO of WAMU is walking with $20 Million after being on the job for only 17 days!!!!!

Bill Heard Chevrolet has dealerships in several states and has closed the last of them this week. Is that the story you are talking about?

Heard was blaming the concentration of products in the truck and SUV market and the inability to compete when gas went up.

I keep wondering if anyone is going to be able to tie bankruptcies and foreclosures to rising fuel prices and make the big oil companies pony up some of this $700 billion from their obscene profits.

What does big oil have to do with this?

What in gods name would make this acceptable to you?