Thursday, September 25, 2008

Largest US thrift seized

Posted By on Thu, Sep 25, 2008 at 11:56 PM

JPMorgan to Acquire Washington Mutual's Deposits

JPMorgan Chase will acquire the deposits of Washington Mutual, CNBC has learned. The deal is expected to be announced during a Thursday night conference call at 9:15 p.m. ET. This deal will mark the end of independence for what once was the largest U.S. thrift....

Complicating the sale process is what to do with the thrift's $227 billion book of real estate loans, more than half of which consists of home equity loans, option adjustable-rate mortgages, and subprime mortgages.

It was not immediately clear how much of WaMu's troubled loans might be eligible for Washington's $700 billion financial industry bailout program.

WaMu has a significant presence in California and Florida, two of the states hardest hit by the nation's housing crisis. But its 2,239-branch network could appeal to many lenders looking to expand in retail banking, especially in the western United States and the New York City area.

The L.A. Times has more:

JPMorgan has scheduled a conference call with investors and analysts for 6:15 p.m. PDT....

The arrangement is expected to assure that the Federal Deposit Insurance Corp. won't have to take a hit on WaMu's insured deposits. A failure of WaMu, without a deal, would have been by far the biggest bank collapse in FDIC history.

WaMu, based in Seattle, is huge on the West Coast; in California, Oregon, and Washington, this will be big bad news. Some talking head on CNBC just described it as "dispatching one of the walking dead with a minimum of bother."

I wish I understood more about this. And I wish I trusted the people who tell us about it.

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