Washington Mutual Bank (NYSE:WM), the country’s largest savings and loan, was seized late Thursday night by federal regulators who immediately sold nearly all of its operations to JPMorgan (NYSE:JPM) for $1.9 billion.
Regardless of this latest development, Washington Mutual depositors are fully protected, and won’t lose access to any of their money - even if it wasn’t fully insured, the Federal Deposit Insurance Corp., said.
FDIC Chairman Sheila C. Bair said:
For all depositors and other customers of Washington Mutual Bank, this is simply a combination of two banks. 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.
According to Federal regulators, WaMu customers in the last 10 days withdrew nearly $17 billion from the bank, leaving the
Regulators typically take over failed banks on Friday afternoons. It gives them more time to sort out things over the weekend. The FDIC, notes Reuters - said it did the deal on Thursday due to media leaks and to calm WaMu’s customers.
With assets of $307 billion and deposits of nearly $200 billion, far more than any bank that has ever gone under WaMu is the largest bank to fail in
Ironically, it was WaMu’s 119th birthday on Thursday.
JPMorgan said the transaction would now allow the company to have 5,410 branches in 23
With its new acquisition, the New York-based commercial bank J.P. Morgan will rival Bank of America (NYSE:BAC) as the nation’s largest commercial bank. Jamie Dimon’s company currently ranks second with $440 billion in deposits and $2.04 trillion in assets as of June ‘08. Clearly, the two companies are emerging as big winners in the current crisis.
Unfortunately, J.P. Morgan’s takeover of WaMu’s deposits is expected to wipe out WaMu stockholders and holders of the company’s senior debt. The transaction also represents a massive loss for private-equity firm Texas Pacific Group, which led a $7 billion investment into the thrift in April of this year. The transaction wipes out a $1.35 billion investment by David Bonderman’s private equity firm.