US government seizes control of Washington Mutual as it collapses overnight, selling most of its assets to JP Morgan
WASHINGTON, DC – Adding to the turmoil in the US financial markets, the country’s largest savings and loan bank, Washington Mutual, collapsed yesterday and control was seized by the US government, who has sold most of its assets to JP Morgan.
JP Morgan acquired the banking operations of Washington Mutual Bank for $1.9m in a transaction facilitated by the Federal Deposit Insurance Corporation (FDIC). In a statement, the FDIC confirmed that all WaMu depositors are fully protected and that there will be no cost to the Deposit Insurance Fund.
“For all depositors and other customers of Washington Mutual Bank, this is simply a combination of two banks,” said FDIC chairman Sheila Bair. “For bank customers, it will be a seamless transition. There will be no interruption in services and bank customers should expect business as usual come Friday morning.”
JP Morgan acquired the assets, assumed the qualified financial contracts and made a payment of $1.9 billion. Claims by equity, subordinated and senior debt holders were not acquired.
"WaMu's balance sheet and the payment paid by JP Morgan allowed a transaction in which neither the uninsured depositors nor the insurance fund absorbed any losses," Bair said.
Washington Mutual Bank also has a subsidiary, Washington Mutual FSB, Park City, Utah. They have combined assets of $307 billion and total deposits of $188 billion.
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