JPMorgan Chase acquires banking operations of Washington Mutual

Monday, 29 September 2008, 04:01 Hrs
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Washington: JPMorgan Chase has acquired the banking operations of Washington Mutual Bank (WaMu), the largest thrift corporation in the US rocked by the market crisis, in a transaction facilitated by the Federal Deposit Insurance Corporation (FDIC).

"JPMorgan Chase acquired the assets, assumed the qualified financial contracts and made a payment of $1.9 billion, and claims by equity, subordinated and senior debt holders were not acquired," a statement released late Thursday by the FDIC said.

Federal regulators said WaMu has suffered an exodus of $16.7 billion in deposits since Sep 15, leaving the Seattle-based thrift corporation "with insufficient liquidity to meet its obligations".

As a result, WaMu was in "an unsafe and unsound condition to transact business", according to the Office of Thrift Supervision (OTS).

"The housing market downturn had a significant impact on the performance of Wamu's mortgage portfolio and led to three straight quarters of losses totalling $6.1 billion," OTS director John Reich said.

WaMu, specialised in providing home mortgages, credit cards and other retail lending products and services, has more than 43,000 employees, more than 2,200 branch offices in 15 states and $188.3 billion in deposits.

This is the second time the Bush administration has gone to JPMorgan as a buyer of last resort. In March, the government agreed to backstop JPMorgan's takeover of Bear Stearns.

Thursday's deal will create the nation's second largest branch network - with locations reaching 42 percent of the US population.

"For all depositors and other customers of Washington Mutual Bank, this is simply a combination of two banks," said FDIC chief 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."
Source: IANS
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