JPMorgan acquires Washington Mutual’s (WaMu) Bank Deposits

September 25, 2008 by · Leave a Comment
Filed under: Bank Failure, Industry News 

Well this has been rumored for some days now and it has now been completed. With their deposits 3 times the FDIC’s balance sheet, this was something that was going to happen. CNBC said a majority of there loan books contained home equity lines of credit, home equity loans, option adjustable-rate mortgages, and subprime mortgages. This does not look good for the existing operations after this purchase with the country going into a recession. It will put pressure on the borrowers to keep up with their obligations.

News Story:

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(1-877-238-4671 (U.S. and Canada) / 1-719-785-5594 (International) – access code: 814030 or via live audio webcast at This deal will mark the end of independence for what once was the largest U.S. thrift.

Federal regulators have been heavily involved in putting together the transaction, which comes as WaMu is besieged by a huge number of bad mortgage loans on its books.

The exact details of the deal aren’t known as yet, but JPMorgan is expected to acquire WaMu’s deposits and branches, as well as other operations. The deal isn’t expected to expected to result in any hit to the bank-insurance fund.

WaMu came under further pressure to sell Wednesday when Standard & Poor’s slashed its credit rating deep into “junk” territory. The thrift replaced its chief executive this month after suffering losses totaling $6.3 billion over the previous three quarters.

It has projected $19 billion in mortgage-related losses through 2011, but analysts have said credit losses could reach $30 billion.

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.

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