JPMorgan to gain $29 billion in income off bad WaMu loans and accounting change

May 27, 2009 by · Leave a Comment
Filed under: Industry News 

Interesting how an accounting change can give so much benefit to a bank that had a bundle of bad loans on its books.  I would like to know more about the loan that are in question and if they figure they will become or stay current in the future or if this is using the losses to offset tax liabilities?

I was on the conference call with JP when they announce the Washington Mutual acquisition and what I can tell you is that they were very very happy when announcing the deal.  They talked about how low they paid for WaMu’s “good” assets and now matter how they looked at this purchase, it would be very beneficial to JP Morgan Chase in the future and you know what, I believe it.

News (Bloomberg):

JPMorgan Chase & Co. stands to reap a $29 billion windfall thanks to an accounting rule that lets the second-biggest U.S. bank transform bad loans it purchased from Washington Mutual Inc. into income.

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