JPMorgan to gain $29 billion in income off bad WaMu loans and accounting change
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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JPMorgan Chase to cut 3,400 WaMu jobs in Seattle
Well this is a lost for Seattle, I personally have a couple friends that I am trying to reach to see what their fate is. You know what they say, “s&%t closest too home, hits you the hardest”.
JPMorgan Chase said it will eliminate 3,400 jobs at Washington Mutual’s banking operations in Seattle.
Of that total, 1,500 jobs are being eliminated now, with those employees to be gone by the end of January. Another 1,900 employees will stay on in temporary, transition jobs that will disappear next year.
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WaMu may file for bankruptcy shortly according to Merrill Lynch analyst
Now it looks like its time to seek protection from their creditors. I feel very bad for anyone who put money in this company during the last 6 months. It is sad they could not get the capital they need to weather the storm.
Press Release:
Washington Mutual may file for bankruptcy shortly, said Merrill Lynch analyst Kenneth Bruce terminating coverage of the stock.
The top U.S. savings and loan bank, whose market value has been virtually wiped out because of soaring mortgage losses, was closed by regulators on Thursday, and its banking assets were sold to JPMorgan Chase & Co or $1.9 billion.
The company witnessed $16.7 billion in deposit outflows from September 15 to September 24, according to an Office of Thrift Supervision statement.
“We suspect the series of ratings downgrades and concerns over the position of U.S. financial institutions, in particular Washington Mutual, led to the deposits outflow,” Bruce said.
Shares of Washington Mutual sank 90 percent to 16 cents in morning trade Thursday.
Source: Reuters
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JPMorgan acquires Washington Mutual’s (WaMu) Bank Deposits
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 www.jpmorganchase.com). 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.
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WaMu on auction block, Goldman hired on for sale as FDIC shops bank around
Well is has been rumored for some time now. With Goldman Sachs hired on with assistance of the FDIC to find a suitor for the nations largest deposit savings bank. The Texas Pacific Group has giving their blessing for a sale after investing $1.5 billion dollars into Washington Mutual in April of 2008.
I have heard estimates that they have $19.5 billion dollars of mortgages on their books with many of them being Option-ARM which are resetting to payments the borrowers can not afford. At the time of this writing, WaMu has a market capitalization of $3.43 billion dollars that make this a difficult situation with no silver linings. This is sad because I personally use WaMu for one of my accounts and I do like their customer service.
Article:
Washington Mutual appeared closer to finding a new owner Wednesday. The Seattle bank hired Goldman Sachs to explore a possible sale, while news reports said federal regulators recently approached Wells Fargo, J.P. Morgan Chase, and others about a possible buyout should WaMu fail.
Goldman reportedly has been shopping the bank around for several days and has approached Wells Fargo, HSBC, Citigroup and J.P. Morgan Chase, among others, about a possible deal.
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WaMu debt downgraded to “junk,” projects $4.5 billion loss reserve
Good to hear they have long term funding in place so this hopefully won’t affect them too much. They did re-affirm their commitment to maintaining there preferred dividend in this volatile market. Their stock is down to 1990 levels which is not a good sign.
They are still the largest deposit bank in the U.S., it would be ashame to see them lose their independence because of the aggressive lending practices. With their deposit base they will retain value in any acquisition.
Release:
In a statement, the thrift called the Moody’s downgrade “inconsistent” with its finances, but said it does not expect a “material” impact on borrowings, collateral or margin requirements, or to suspend dividends on its preferred stock.
It also said it has $50 billion of liquidity from “reliable funding sources,” and expects capital to remain “significantly above” regulatory minimums for “well-capitalized” lenders.
Popularity: 1%
Washington Mutual (WaMu) REO Department
No review for WaMU REO properties as this time. I could not find any information on their website or a link to a national broker that was handling their REO listings. Through searching the web I did happen to pull up a phone number you can call that has a automated voice menu. Enjoy
REO Phone Number:
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