J.P. Morgan Buys WaMu After U.S. Seizes Thrift

[bluevoter4life]

Source: Washington Post

Washington Mutual, the nation's largest thrift, was seized by federal regulators last night and sold immediately to J.P. Morgan Chase for $1.9 billion, avoiding the need for a government bailout of depositors in the troubled company.

The deal was facilitated by the Federal Deposit Insurance Corp., which said there would be no payment from its insurance fund.

Washington Mutual, based in Seattle, made thousands of mortgage loans that its borrowers cannot repay. That has left it saddled with billions of dollars in bad debts. It has been unable to raise the money it needs to survive.

Last week, the company placed itself on the auction block, but bidders failed to materialize. That forced federal regulators to encourage a deal for the company.

Read more: http://www.washingtonpost.com/wp-dyn/content/article/2008/09/25/AR2008092503710.html?nav=hcmodule

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I am sick of this fucking bullshit. I have all my money in WaMu. What's next for me and fellow customers? This shit needed to be addressed years ago but all this partisan bickering has taken its toll on the economy. The largest thrift in the country just went under and no one is still doing much about it. What the FUCK is it going to take to get some goddamn action in this country. I apologize for all the profanity, but I've had it.

[mckara]

1. Our World is Changing Tonight

The fools blocking progress will regret it, after the depression enters its second decade.

They're bastards!

[bluevoter4life]

4. Every last one of them

Democrats, Republicans. ALL have the blood of the countries economy on their hands. We can only hope that this serves as a wake up call for future generations of politicians who have the mental capacity to realize the catastrophic failures of their predecessors. This is a very dark period in American history my friends.

[question everything]

2. Supposedly the accounts are safe, are now owned by JP Morgan Chase

instead of WaMu

http://www.fdic.gov/bank/individual/failed/wamu.html

I just wrote a check from our WaMu account, and, according to this link, it should clear in a normal fashion.

[BanzaiBonnie]

3. Have you tried using your WAMU?

Will any transactions be disrupted by this or will it be business as usual. My husbands paycheck is due to be deposited in WAMU at midnight.

[Hawkowl]

9. Routine

There should be absolutely no short term changes. These buyouts are smooth and happen all the time, unfortunately. I have a WAMU account as well :)

[lurky]

10. I wouldn't worry.

There's no reason these changes in upper management should affect the day-to-day operations of the bank.

[blayne]

5. WaMu didn't fail. It was purchased.

You can relax now, because JP Morgan/Chase/WaMu won't be allowed to fail. Have a glass of wine. You're in the clear...unless you have over $100,000...oh never mind.

[FVZA_Colonel]

6. I thought they only bought pieces of the company, not all of it?

And that the rest was still being held by the government.

[Waiting For Everyman]

7. JP Morgan owned 1/3 of the $45 Trillion swaps market, BEFORE buying

Bear Stearns, which owned another $2.5 Trillion of it... so that's $17.5 Trillion in swaps JPM had already... and now WaMU and however much they have in swaps. It looks like most of this fraudulent market is being corraled into JP Morgan.

[spag68]

8. JP Morgan

This really smells to me. I would be willing to bet that after clearing the really bad mortgages, that they will have accounts worth ten times that 1.9 billion. We will be buying all the bad ones, and even they might be worth something. I can't understand how a house can be worthless, even if the mortgage is "bad".

[Waiting For Everyman]

11. It's because of "tranching"...

creating cross-slices of income across large numbers of mortgages in a pool - that's what is "bad", the slices. Even a given mortgage which is "bad" in that slice or income period, may not be in outright foreclosure. It's a stupid idea, it's a fraud, and it makes re-working mortgage terms impossible (thousands of investors in these bits of mortgages would have to be contacted to agree). Plus foreclosure judges have found that investors in tranched mortgages (mortgage-backed securities) don't have actual title of any given mortgage transferred to them.

It makes mortages designed to "go bad" when they don't have to, and it creates securities out of mortgages, both good and bad, which ultimately can't be valued by anybody - not even experts.

Total smoke and mirrors, because there's nothing real about it. It takes a real, tangible asset and makes it hypothetical and fictional.

The only thing more fraudulent is credit default swaps, which go with them... which are bets on these MBSs. The creators of the MBSs knew they were designed to make mortgages default, and then created a way to take bets from "suckers" on that - CDSs. So I'd expect that whoever owns a whole lot of the short-side of mortgage CDSs, is among the guilty insiders who created this mess (along with Phil Gramm).

I'm surprised to see it but the SEC is now investigating just that, and Congress should send over an army of investigators along with a big check to the SEC to fund it, and wait for the outcome of that before bailing out anybody.

U.S. seen probing if derivatives walloped banks (Dan Wilchins 9/25/08)
http://www.reuters.com/article/bondsNews/idUSN2553212120080926?sp=true

[snoogens]

12. regulation... no one too big to fail

the government arranges deal with JP Morgan
the government arranges deal with JP Morgan
the government
the government
the government

the government saved taxpayers from bailing out (FDIC) a friend of mine on a CD he bought 2 days ago... by making the market on this deal... why was the government required to broker this? can't WAMU shop itself? free advertising for months! 'we are dying, come buy us'!

"analysts estimated that a Washington Mutual failure could have soaked up half the money in the government insurance fund, forcing a huge increase in the premiums paid to the fund by other banks."

now, the largest bank (WAMU) that would have FAILED, is now larger (JP Morgan)... what happens if JP Morgan fails? the government rides in again, with 250B? more?... 2/3 of FDIC funds?, a third of the 'bailout' funding for one company?

JP Morgan needs to be divided into THIRDS, at a minimum, tomorrow. these 'too big to fail' companies are simply 'too big'... I'm AGAINST regulation in the weeds... SOX being a set of craziness I'm familiar with... I could care less if the CEO has a parachute. let's maintain altitude. NO ONE IS TOO BIG TO FAIL. that means if you are TOO BIG, you cease to exist... poof. if you fail, tough. we'll look to market incentives as the invisible back hand slap for any company that can't manage cash.

[RevolutionStartsNow]

13. On the wamu.com website...

it already says "Welcome to JP Morgan Chase!" Wow, that was fast. Some web guys working overtime tonight. Still says wamu at the top of the page, but there's an announcement about the purchase.

I have my business account and a checking and savings account at WaMu. I was switching my personal banking from Wells Fargo because I hate their customer service and exorbitant fees ($2.50 to use an ATM not in their system, and that's on top of whatever fee the non-WF ATM charges you), but have been rethinking since WaMu started to slide. Still I think I'll stick it out for now and see what happens.

[Piewhacket]

14. Government Seizes WaMu and Sells Some Assets

Source: NY Times


Washington Mutual, the giant lender that came to symbolize the excesses of the mortgage boom, was seized by federal regulators on Thursday night, in what is by far the largest bank failure in American history.

Regulators simultaneously brokered an emergency sale of virtually all of Washington Mutual, the nation’s largest savings and loan, to JPMorgan Chase for $1.9 billion, averting another potentially huge taxpayer bill for the rescue of a failing institution.

Read more: http://www.nytimes.com/2008/09/26/business/26wamu.html?ref=us

---

DUers called it yesterday. I pulled my (small) accounts this morning.
Business was being transacted normally at my branch (CA) through closing.
The impression was given that business will continue, although people I
spoke were (understandably) nervous. Shareholders are reportedly wiped out.

When people calm down and reason begins to prevail, we will all laugh
and say...

[onethatcares]

15. I need a new chair for my computer desk

think I'll get a bargain there?:rofl:

[regnaD kciN]

16. The ironic thing is...

...that when we were looking for a mortgage, in late 1992, we didn't go with WaMu, even though that was our bank. The reason was that, under that regime, they were very cautious about home loans and so, even though our credit was fine and we met all the income guidelines, they would still have charged us a half-point or more of interest than we could easily get elsewhere (on a 30-year fixed, BTW). Even so, we came away with a sense of respect for WaMu's caution, and thought it was a great sign for a bank.

Hard to believe that, barely more than 15 years later, that bank would become the biggest failure in U.S. history, and all because it was holding far too many risky mortgages. :-(

[cullen2382]

17. I just called WAMU

They told me that they are under a six month acquisition period with JP Morgan. Told me not to worry about my money, it was business as usual at my local branch.

I believe with my first check in October I will be opening an account elsewhere and by the end of October I'll be completely transitioned over to that other bank. The question is where...lol

[daggahead]

18. 10 Largest bank failures in U.S. History

Notice when they occurred. All, except one, during republican administrations!

10 Largest bank failures in U.S. History:

1. Continental Illinois National Bank and Trust, Chicago (1984)
Total assets: $40.0 billion

2. First Republic Bank, Dallas (1988)
Total assets: $32.5 billion

3. IndyMac Bank, Pasadena, Calif. (2008)
Total assets: $32 billion

4. American S&LA, Stockton, Calif. (1988)
Total assets: $30.2 billion

5. Bank of New England, Boston (1991)
Total assets: $21.7 billion

6. MCorp, Dallas (1989)
Total assets: $18.5 billion

7. Gibraltar Savings, Simi Valley, Calif. (1989)
Total assets: $15.1 billion

8. First City Bancorporation, Houston (1988)
Total assets: $13.0 billion

9. Homefed Bank, San Diego (1992)
Total assets: $12.2 billion

10. Southeast Bank, Miami (1991)
Total assets: $11.0 billion

THIS MAKES WaMu'S FAILURE ALMOST 8X LARGER THAN THE LARGEST BANK FAILURE IN HISTORY AND LARGER THAN ALL TOP 10 BANKS COMBINED!

[happyslug]

19. Which one was under a Democrat? In 1992 Bush Sr was President

I know Clinton was elected that year, but did NOT become president till January 20, 1993. Reagan was President from 1/20/1981 till 1/21/1989, then Bush Sr till 1/20/1993. Clinton was President from 1/20/1993 till 1/20/2001. Thus unless it incurred in 1980, any bank bankrupted in the 1980s was under Republican (That is Six of them). If the failure occurred before 1/20/1993, it is still under a Republican (that is three of them). That leave Indymac, who failed under Bush Jr. Thus from your list ALL of them failed under a Republican President.

[TrogL]

20. What about the TD and Manulife offers?

I thought they were better?