Another one bites the dust: WaMu becomes biggest bank to fail in US history - Mercedes-Benz Forum

 
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post #1 of 7 (permalink) Old 09-26-2008, 09:56 AM Thread Starter
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Another one bites the dust: WaMu becomes biggest bank to fail in US history

JPMorgan Chase buying Washington Mutual's assets for $1.9 billion after FDIC seizes bank

NEW YORK (AP) -- As the debate over a $700 billion bank bailout rages on in Washington, one of the nation's largest banks -- Washington Mutual Inc. -- has collapsed under the weight of its enormous bad bets on the mortgage market.

The Federal Deposit Insurance Corp. seized WaMu on Thursday, and then sold the thrift's banking assets to JPMorgan Chase & Co. for $1.9 billion.

Seattle-based WaMu, which was founded in 1889, is the largest bank to fail by far in the country's history. Its $307 billion in assets eclipse the $40 billion of Continental Illinois National Bank, which failed in 1984, and the $32 billion of IndyMac, which the government seized in July.

One positive is that the sale of WaMu's assets to JPMorgan Chase prevents the thrift's collapse from depleting the FDIC's insurance fund. But that detail is likely to give only marginal solace to Americans facing tighter lending and watching their stock portfolios plunge in the wake of the nation's most momentous financial crisis since the Great Depression.

Because of WaMu's souring mortgages and other risky debt, JPMorgan plans to write down WaMu's loan portfolio by about $31 billion -- a figure that could change if the government goes through with its bailout plan and JPMorgan decides to take advantage of it.

"We're in favor of what the government is doing, but we're not relying on what the government is doing. We would've done it anyway," JPMorgan's Chief Executive Jamie Dimon said in a conference call Thursday night, referring to the acquisition. Dimon said he does not know if JPMorgan will take advantage of the bailout.

WaMu is JPMorgan Chase's second acquisition this year of a major financial institution hobbled by losing bets on mortgages. In March, JPMorgan bought the investment bank Bear Stearns Cos. for about $1.4 billion, plus another $900 million in stock ahead of the deal to secure it.

JPMorgan Chase is now the second-largest bank in the United States after Bank of America Corp., which recently bought Merrill Lynch in a flurry of events that included Lehman Brothers Holdings Inc. going bankrupt and American International Group Inc., the world's largest insurer, getting taken over by the government.

JPMorgan also said Thursday it plans to sell $8 billion in common stock to raise capital...

WaMu becomes biggest bank to fail in US history: Financial News - Yahoo! Finance

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post #2 of 7 (permalink) Old 09-26-2008, 09:58 AM Thread Starter
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FDIC seizure...

WaMu Seized by U.S., Assets Sold to JPMorgan in Record Failure

By Ari Levy and Elizabeth Hester

Sept. 26 (Bloomberg) -- Washington Mutual Inc. was seized by government regulators and its branches and assets sold to JPMorgan Chase & Co. in the biggest U.S. bank failure in history.

WaMu customers withdrew $16.7 billion since Sept. 16, leaving the Seattle-based bank ``unsound,'' the Office of Thrift Supervision said yesterday. Branches are open today and depositors have full access to their accounts, Sheila Bair, chairman of the Federal Deposit Insurance Corp., said.

The failure of WaMu, which has $188 billion in deposits, ratchets up pressure on lawmakers trying to piece together a rescue package for the nation's financial system. The government's inability yesterday to reach agreement on a bailout and the seizure of the biggest savings and loan sparked a sell- off of bank stocks, led by a 25 percent tumble in Wachovia Corp.

``All eyes are now on Wachovia,'' said Anton Schutz, president of Mendon Capital Advisors Corp. in Rochester, New York.

WaMu collapsed as its credit rating was slashed to junk and its stock price tumbled. Facing $19 billion of losses on soured mortgage loans, the lender put itself up for sale last week. WaMu fired CEO Kerry Killinger on Sept. 8 and replaced him with Alan Fishman, who was awarded a $7.5 million signing bonus and $1 million salary.

JPMorgan became the biggest U.S. bank by deposits with the deal, acquiring WaMu's branch network for $1.9 billion.

``This is a fabulous franchise,'' JPMorgan Chief Executive Officer Jamie Dimon, 52, said in an interview. ``We think we got this at a price that protects us, where if we were wrong, it still protects us.''

Lehman, Merrill

WaMu is the latest casualty of a financial crisis that drove Lehman Brothers Holdings Inc. and IndyMac Bancorp out of business and led to the hastily arranged rescues of Merrill Lynch & Co. and Bear Stearns Cos., which was also absorbed by JPMorgan. WaMu in March rejected a takeover offer from JPMorgan that the savings and loan valued at $4 a share.

In most bank seizures, little or nothing is left for shareholders. WaMu, down 95 percent in the past year, dropped to 16 cents on the New York Stock Exchange.

David Bonderman's TPG Inc., which led a $7 billion capital infusion for WaMu earlier this year, lost most of its initial $2 billion investment. TPG, based in Forth Worth, Texas, said in a statement yesterday it was ``dissatisfied with the loss'' and that the WaMu investment was a ``small part of assets.''

Bloomberg.com: Worldwide

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post #3 of 7 (permalink) Old 09-26-2008, 10:01 AM
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as usual Jay, day late dollar short...............

Pull your head out of your ass and look, or do have maine coon on ignore........


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post #4 of 7 (permalink) Old 09-26-2008, 10:10 AM
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Jay,
Didn't you say the economy is fundamentally strong? What happened? You dropped your Made-In-China crystal ball?

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post #5 of 7 (permalink) Old 09-26-2008, 10:13 AM
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Jay,
Didn't you say the economy is fundamentally strong? What happened? You dropped your Made-In-China crystal ball?

No that was McCain Jay said in many posts here there are no problems and you are a kookberger............
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post #6 of 7 (permalink) Old 09-26-2008, 10:18 AM Thread Starter
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Jay,
Didn't you say the economy is fundamentally strong? What happened? You dropped your Made-In-China crystal ball?
For the umpteenth time: "THE FINANCIAL SYSTEM IS NOT THE ECONOMY!"

Last time I looked the US economy was fundamentally sound, and growing at a 3.3% rate, in the last quarter!!

Don't believe everything you think

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For the umpteenth time: "THE FINANCIAL SYSTEM IS NOT THE ECONOMY!"

Last time I looked the US economy was fundamentally sound, and growing at a 3.3% rate, in the last quarter!!

Got any projection for the next quarter? Come on give us the JayHawk projection..........
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