After depositors withdrew more than $16 billion in less than two weeks, Washington Mutual Bank has been acquired by JPMorgan, federal regulators confirmed late Thursday.
Washington Mutual’s banking operations have been acquired by JPMorgan after federal regulators seized the bank following 10 days during which nervous depositors withdrew nearly $17 billion.
The Office of Thrift Supervision said in a statement late Thursday that depositors in the nation’s sixth-largest bank withdrew more than $16 billion between Sept. 15 and Sept. 24. The deposits JP Morgan is acquiring total $134.7 billion.
Regulators said depositors and other customers should not notice any impact from the acquisition by JP Morgan, and bank branches will be open Friday morning as usual.
The FDIC said JP Morgan paid $1.9 billion for the assets it is acquiring. There will be no cost to the FDIC’s deposit insurance fund, the agency said.
- Mount St. Helens, still steaming, holds the world’s newest glacier
- Whitest big county in the U.S.? It’s us
- Seattle sets heat record for July 4
- For escapee, prison now will mean 23 hours a day in a cell
- Sound Transit planning heats up for light-rail expansion and public vote
Most Read Stories
JPMorgan has long been thought to be the leading contender to buy WaMu, after the ailing thrift — by far the nation’s largest — began scouting out potential acquirers last week.
The New York-based bank, led by CEO Jamie Dimon, has long coveted a West Coast presence; WaMu’s nearly 1,000 branches in California, Washington and Oregon would give it that presence.
WaMu’s retail banking customers — considered by nearly all observers to be the company’s most valuable asset — shouldn’t feel any immediate impact, though those whose accounts have been bought by JPMorgan eventually would transition to that bank’s systems.
The reports came after a day when Washington Mutual shares thudded to a new multiyear low closing price of $1.69, reflecting traders’ uncertainty over details of the $700 billion federal bailout package and its implications for a rescue of the nation’s sixth-largest bank.
The stock lost 57 cents, or 25 percent, on record volume. Shares traded as low as $1.53 and as high as $2.69 during the day.
A record 392 million WaMu shares changed hands today, more than twice the daily average this month and seven times the average over the past year, Bloomberg reported.
Several big banks, including JPMorgan Citigroup, Toronto-Dominion Bank of Canada and Spain’s Banco Santander, reportedly examined WaMu’s books, but none made a bid for the whole company. Private-equity firms also reportedly were approached, to no avail.
Speculation has been that WaMu’s fate was tied to the prospects for a massive government bailout of the financial sector, which has been staggering under the weight of trillions of dollars in mortgage-backed securities.
The collapse of the housing sector has eaten away at the value of many of those securities. But because of their complexity banks can’t say for sure how much they’re worth, and because no one wants to buy them there’s no market-set price. As a result, much of the U.S. financial sector has been paralyzed with fear, and lending of all kinds has shriveled.
Though Congressional leaders said they’d reached general agreement today on the Bush administration’s proposed $700 billion bailout plan for mortgage-backed securities, the details remain unclear.
Resolving WaMu’s situation “is a positive,” Patrick Becker Jr., who oversees $2 billion as chief investment officer at Becker Capital Management in Portland, Oregon, told Bloomberg News. “That’s been a big cloud over the market and financial shares.” His firm does not own JPMorgan or WaMu shares.