Washington Mutual Seized and Sold

In the past five years I have heard Washington Mutual was having problems. After the third or fourth year I stopped believing that Washington Mutual had any financial problems of their own. So, it came as a surprise last week when Washington Mutual was looking for buyers. They evidently didn't find any investor or buyers because it was reported that the FDIC, Federal Deposit Insurance Corp seized Washington Mutual Thursday. According to WaMu becomes biggest bank to fail in US history by Madlen Read the FDIC sold the banking assets to JP Morgan Chase and Co. The cost to JP Morgan Chase and Co was $1.9 billion. JP Morgan acquired Bear Stearns Cos. for $1.4 billion in March of this year plus $900 million in stock ahead of the deal to secure it.

Background information for Washington Mutual - Washington Mutual was founded in 1889 and is a Seattle based company. It is the largest bank to fail in the United States history. WaMu's assets totaled $307 billion. IndyMac had $32 billion in assets when it was seized in July.

Since JPMorgan Chase bought Washington Mutuals assets the FDIC's insurance fund will not be touched for this ordeal. JP Morgan Chase plans to write down WaMu's loan portfolio by $31 billion. That figure could change if the bail out plan comes through and JP Morgan Chase takes advantage of it. JP Morgan plans on selling $8 billion in common stock to raise capital.

Washington Mutual customers can be assured their money is safe this is just a merger of two banks. There will be no interruptions in service. Bank customers can depend on business as usual. For shareholders of WaMu the shareholders' equity was wiped out by the seizure of the government. If you had money invested in the bank shares then you will find that your shares are worthless.

JP Morgan Chase is now the second largest bank after Bank of America Corp. Washington Mutual went out of business due to the mortgage crisis.