bye bye WaMu

[Col. Crackpot]

CNBC reports WaMu seized by OTC. FDIC is handing over WaMu over to JP Morgan Chase

The Federal Deposit Insurance Corp will seize Washington Mutual and sell its deposits to JPMorgan Chase for an undisclosed sum, CNBC has learned. The deal is expected to be announced during a Thursday night conference call at 9:15 p.m. ET.

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 [JPM 43.46 2.96 (+7.31%) ] 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.

Washington Mutual [WM 1.69 -0.57 (-25.22%) ] had been trying to sell itself the past two weeks. Interested banks included Citigroup [C 19.41 0.45 (+2.37%) ], HSBC Holdings [HBC 81.59 1.79 (+2.24%) ], Toronto-Dominion Bank [TD 62.00 --- UNCH (0) ] and Wells Fargo [WFC 34.12 -0.15 (-0.44%) ].

WaMu came under further pressure to sell Wednesday when Standard & Poor's slashed its credit rating deep into "junk" territory. The thrift replaced its chief executive this month after suffering losses totaling $6.3 billion over the previous three quarters.

RELATED LINKS

Current DateTime: 04:52:22 25 Sep 2008
LinksList Documentid: 26893934

* Bailout Accord Up In Air; Some Claim Deal Is Dead
* Wall Street Firms Provide Way Around Short-Sell Ban
* Morgan to Seek Waiver for Commodity Trading

It has projected $19 billion in mortgage-related losses through 2011, but analysts have said credit losses could reach $30 billion.

Complicating the sale process is what to do with the thrift's $227 billion book of real estate loans, more than half of which consists of home equity loans, option adjustable-rate mortgages, and subprime mortgages.

It was not immediately clear how much of WaMu's troubled loans might be eligible for Washington's $700 billion financial industry bailout program.

WaMu has a significant presence in California and Florida, two of the states hardest hit by the nation's housing crisis. But its 2,239-branch network could appeal to many lenders looking to expand in retail banking, especially in the western United States and the New York City area.

WaMu ended August with $143 billion in retail deposits -- roughly triple the size of the entire Federal Deposit Insurance Corp fund that backs customer deposits. It has also said it expects to end the quarter with a "well-capitalized" status well in excess of federal minimums.
© 2008 CNBC

Honestly, we all knew this was happening. It went surprisingly well. Depositors and many WaMu employees may actually remain unscathed.

[The Kernel]

Like you say, we knew this was coming. Personally I was pulling for Citigroup to buy up Wamu to increase their retail presence, but I guess JPMC works just as well.

Honestly, I think the only reason this took as long as it did was because of a bidding war between Citigroup and JPMC.

[Col. Crackpot]

Like you say, we knew this was coming. Personally I was pulling for Citigroup to buy up Wamu to increase their retail presence, but I guess JPMC works just as well.

Honestly, I think the only reason this took as long as it did was because of a bidding war between Citigroup and JPMC.

I was pulling for RBS... A cushy conversion gig in California would have been peachy come winter.

Seriously though, i can;t think of a better possible outcome.

No hit to the FDIC reserves
The branches stay open (albeit with a new sign in the window)
the bulk of jobs are retained
Depositors have access to their funds
Chardok doesn't have sell a kidney on eBay as he will likely remain employed.

I'd like to see the details, methinks JP MorganChase will make a fortune on this long term. This gives them a HUGE new presence out west.

[The Kernel]

I said this about the BofA deals recently to snap up Countrywide and Merrill but the right parties are going to make out like bandits on this one. Anytime a lot of companies go boom you have a few parties with a lot of money and long-term vision that are going to do very, very well.

I was hoping that Citi would pick them up since I have a financial interest in Citi improving their retail presence, but oh well.

[J]

It has projected $19 billion in mortgage-related losses through 2011, but analysts have said credit losses could reach $30 billion.

Complicating the sale process is what to do with the thrift's $227 billion book of real estate loans, more than half of which consists of home equity loans, option adjustable-rate mortgages, and subprime mortgages.

It was not immediately clear how much of WaMu's troubled loans might be eligible for Washington's $700 billion financial industry bailout program.

That's the $227 billion dollar question. This may well end up being the largest taxpayer assisted bailout in history if the bailout program now before Congress ends up eating the cost of those WaMu loans.

[apocolypse]

I have WaMu checking. I guess I'll be getting a new card soon.

[J]

I have WaMu checking. I guess I'll be getting a new card soon.

Keep your card around, it might be worth something someday.
Like my single WaMu stock certificate.


Ah well, I so much for my big FDIC Friday party...

[Chardok]

SHAME on Killinger.....

[Loner]

So does this mean my payment from my employer will be there tomorrow?

[phongn]

So does this mean my payment from my employer will be there tomorrow?

You will be fine.

[Zed Snardbody]

I have WaMu checking. I guess I'll be getting a new card soon.

I'm glad I switched banks a few months ago. Couldn't happen to a nice bunch of assholes.

My personal feelings aside though, this will probably scare the fuck out of a lot of people. This is one of the big personal banks, the ones next to the McDonalds or the grocery store, not a big investment house that people have only ever heard of never interacted with.

[aerius]

My personal feelings aside though, this will probably scare the fuck out of a lot of people.

But not nearly as much as straight FDIC takeover, where we wake up tomorrow to Federal Washington Mutual Bank. That might actually get people off their asses to protest the fuck out of the bailout bill going through Congress right now. As in a big fucking march that shuts down a city or 2.

[Soontir C'boath]

So what usually happens to people who took a loan out of these companies? Do they pay higher interest rates?

I ask as my mom has a loan from WaMu.

[apocolypse]

My personal feelings aside though, this will probably scare the fuck out of a lot of people.

But not nearly as much as straight FDIC takeover, where we wake up tomorrow to Federal Washington Mutual Bank. That might actually get people off their asses to protest the fuck out of the bailout bill going through Congress right now. As in a big fucking march that shuts down a city or 2.

I kinda doubt it though. A good many of my co-workers also have WaMu, but if it's pretty much business as usual (which it sounds like it is) then it'll probably be a bunch of "Oh no, that sucks" and then, "what are we getting for lunch?"

And interesting point J, maybe I will hang onto it, for old times sake or something.

[Loner]

So does this mean my payment from my employer will be there tomorrow?

You will be fine.

I was more concerned that I could still buy stuff with my debit card or not.

[J]

So what usually happens to people who took a loan out of these companies? Do they pay higher interest rates?

I ask as my mom has a loan from WaMu.

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

VI. Loan Customers
If you had a loan with Washington Mutual Bank, you should continue to make your payments as usual. The terms of your loan will not change because they are contractually agreed to in your promissory note. Checks should be made payable as usual and sent to the same address until further notice.

For all questions regarding new loans and the lending policies of JPMorgan Chase Bank, please contact your branch office.

[Uraniun235]

My personal feelings aside though, this will probably scare the fuck out of a lot of people.

But not nearly as much as straight FDIC takeover, where we wake up tomorrow to Federal Washington Mutual Bank. That might actually get people off their asses to protest the fuck out of the bailout bill going through Congress right now. As in a big fucking march that shuts down a city or 2.

I don't get how people would make the connection between "WaMu failed and FDIC took it over" and "bailout bill is bullshit". If anything I would think it would scare them more into thinking "oh my god everything's crumbling we need to do SOMETHING!!"

[Chardok]

Why YOU should hate corporate america

Nice work — if you can get fired from it.

That's just what one Alan H. Fishman might have thought when he woke up Friday morning.

Fishman was the new chief executive officer for Washingon Mutual — WaMu — the nation's largest savings and loan, which was taken over Thursday night by federal bank regulators and quickly dumped in a fire sale to JPMorgan Chase for the Wal-Mart-like price of $1.9 billion.

But don't cry for Fishman, who reportedly was sky-high — literally — last night, on a flight from New York to Seattle, when WaMu collapsed. Even though he's only been on the job for less than three weeks, he's bailing out with parachute worth close to $20 million, according to an executive compensation analysis conducted for the New York Times by James F. Reda Associates.

That's right, $20 million for 17 days on the job ... and his company failed.

Fishman, who formerly was chairman of Meridian Capital Group, apparently was much coveted by WaMu, which was counting on him to lead the failing thrift out of mortgage troubles that pushed the bank to a $3.3 billion second-quarter loss.

According to filings with the Securities and Exchange Commission, WaMu threw a $7.5 million bonus at Fishman when it hired him on Sept. 8, and guaranteed him an immediate cash severence of $11.6 million — both of which he gets to keep.

He also was eligible for annual bonuses of up to 365 percent of his annual base pay — set at $1 million — to go with millions of shares of company stock.

Fishman does lose out on a big bonus that would have kicked in had he remained on the job through 2009.

Documents show WaMu was going to pay their new boss $8 million to simply not screw up and get fired — all negotiated as the Seattle-based banking giant's loses climbed to an estimated $20 billion.

[Patrick Degan]

Why YOU should hate corporate america

Nice work — if you can get fired from it.

That's just what one Alan H. Fishman might have thought when he woke up Friday morning.

Fishman was the new chief executive officer for Washingon Mutual — WaMu — the nation's largest savings and loan, which was taken over Thursday night by federal bank regulators and quickly dumped in a fire sale to JPMorgan Chase for the Wal-Mart-like price of $1.9 billion.

But don't cry for Fishman, who reportedly was sky-high — literally — last night, on a flight from New York to Seattle, when WaMu collapsed. Even though he's only been on the job for less than three weeks, he's bailing out with parachute worth close to $20 million, according to an executive compensation analysis conducted for the New York Times by James F. Reda Associates.

That's right, $20 million for 17 days on the job ... and his company failed.

Fishman, who formerly was chairman of Meridian Capital Group, apparently was much coveted by WaMu, which was counting on him to lead the failing thrift out of mortgage troubles that pushed the bank to a $3.3 billion second-quarter loss.

According to filings with the Securities and Exchange Commission, WaMu threw a $7.5 million bonus at Fishman when it hired him on Sept. 8, and guaranteed him an immediate cash severence of $11.6 million — both of which he gets to keep.

He also was eligible for annual bonuses of up to 365 percent of his annual base pay — set at $1 million — to go with millions of shares of company stock.

Fishman does lose out on a big bonus that would have kicked in had he remained on the job through 2009.

Documents show WaMu was going to pay their new boss $8 million to simply not screw up and get fired — all negotiated as the Seattle-based banking giant's loses climbed to an estimated $20 billion.

And this is why shit like this is going to keep happening —for so long as there are no penalties for failure amongst the corporatists.

[Stargate Nerd]

Like you say, we knew this was coming. Personally I was pulling for Citigroup to buy up Wamu to increase their retail presence, but I guess JPMC works just as well.

Honestly, I think the only reason this took as long as it did was because of a bidding war between Citigroup and JPMC.

I was with Chase before going to Wamu. I really dislike Chase so I guess I need to start looking for a new bank.

[aerius]

I was with Chase before going to Wamu. I really dislike Chase so I guess I need to start looking for a new bank.

Stay away from Wachovia since they're headed down the crapper. They're about where WaMu was around 1-2 months ago, I'm almost certain they'll get taken out by the FDIC in the next few months.

[Mlenk]

So, anyone here know how good (or bad) Citibank is doing? As someone who keeps their money with them, should I be worried/

[Broomstick]

Is your money in FDIC insured accounts? Then, at this point, I would not be much concerned. For WaMu customers covered by the FDIC it was business as usual today, they all had access to their money. If no one fucks anything up, it will continue to work that way, as it has for 75 years whenever a bank failed whether large or small.

If, however, you are still nervous then I'd move your accounts now to a bank you have more confidence in rather than waiting for your current bank to run into serious trouble. The key is to keep as much as possible in FDIC covered accounts.

Could the FDIC fail? Sure. Large rocks have been known to fall out of the sky, too, but I don't wander around worried about it. Right now the FDIC is doing fine.

[Erik von Nein]

I was with Chase before going to Wamu. I really dislike Chase so I guess I need to start looking for a new bank.

Stay away from Wachovia since they're headed down the crapper. They're about where WaMu was around 1-2 months ago, I'm almost certain they'll get taken out by the FDIC in the next few months.

That's for sure. They're already looking around for a buyer. Well, thinking about it, anyway.

Wachovia Explores Sale
By DAN FITZPATRICK, CARRICK MOLLENKAMP and DAVID ENRICH

Wachovia Corp. has entered into preliminary discussions with a handful of potential suitors, including Banco Santander SA of Spain, Wells Fargo & Co. and Citigroup Inc., according to a person familiar with the situation.

The talks underscore escalating efforts by the Charlotte, N.C., bank to escape mounting loan losses and a plunging stock price. On Friday, Wachovia shares tumbled 27%, or $3.70, to $10 in New York Stock Exchange composite trading.
[Wachovia image] Getty Images

People walk by a Wachovia branch in New York City.

Wachovia officials don't believe they need to rush into a deal, and the bank isn't feeling any liquidity pressures, a person familiar with the company said. Still, given the uncertainty swirling through the economy, financial markets and the U.S. banking industry, Wachovia executives are exploring various strategic options.

Bank executives are expected to be in New York this weekend to discuss possible deals.

Wachovia declined to comment on the discussions. Earlier Friday, a spokeswoman said the bank is "aggressively addressing our challenges" and "working to strategically strengthen and manage capital and liquidity in this challenging environment." The bank's deposit base, stretching from California to the Northeast, is "large and stable," the Wachovia spokeswoman added.

Banco Santander, Citigroup and Wells Fargo declined to comment.

Earlier this month, Wachovia was in talks about a potential merger with Morgan Stanley. But the investment bank's conversion Sunday night into a traditional bank-holding company is seen as putting that scenario on hold.

Saddled with a mountain of troubled adjustable-rate mortgages inherited through its 2006 takeover of Golden West Financial Corp., Wachovia has seen its financial condition weaken. "I spend a lot of time trying to lay out the fact that we believe we're liquid," Wachovia CEO Robert Steel said earlier this month. "We believe we have the ability with our current financial position to respond to issues, and we also have some other levers to pull should we wish to enhance or improve our liquidity in the short term."

Banco Santander, Wells Fargo and Citigroup all pored over the books of Washington Mutual Inc. before the Seattle-based thrift was seized Thursday by federal regulators and its banking operations sold to J.P. Morgan Chase & Co. for $1.9 billion. Their interest in Wachovia is a further sign that the banking industry's turmoil is triggering a streak of opportunism by banks that consider themselves strong enough to made a deal, even though that likely would mean absorbing a slew of soured loans from the acquired bank.

Banco Santander is Europe's largest bank by market capitalization and has about $1.35 trillion in assets. Led by Emilio Botin, the bank is considered one of the sharpest retail-bank operators in the world. But it has trailed Spanish rival Banco Bilbao Vizcaya Argentaria SA at U.S. expansion.

Last year, BBVA acquired Compass Bancshares Inc., of Birmingham, Ala., giving it a retail footprint in the southern and western U.S. In the meantime, Santander has been more acquisitive in Europe and Latin America.

A move into the U.S. though would give Banco Santander an opportunity to expand in Texas and compete with BBVA and other U.S. banks for flows of money between the U.S. and Mexico. Santander and BBVA pride themselves on using retail computer systems in generating more sales to customers.

Before becoming preoccupied with its mortgage woes, Wachovia was working to expand its retail-banking reach in Texas, a push helped by its purchase of SouthTrust Corp, also based in Birmingham, Ala.

Wells Fargo is widely respected as one of the most careful lenders in the banking industry, helping the San Francisco bank avoid many of the excesses that have come back to haunt rivals. As an acquirer, Wells Fargo's stated preference is for small banks, but Wachovia would give Wells Fargo its first substantial presence on the East Coast.

"Wells understands how to extract value from the assets, and clearly they understand the mortgage business and how to curtail what went wrong at Golden West and Wachovia," said Christopher Marinac, managing principal at FIG Partners, a research firm in Atlanta.

It isn't clear how serious Citigroup would be about a potential deal with Wachovia. CEO Vikram Pandit has said that Citigroup's prospects are brightest outside the U.S., and buying Wachovia would do little to advance that push.

Still, Citigroup has raised more than $40 billion in capital and has deposits to fall back on as a reliable funding source. Citigroup executives also are eager to at least consider how to take advantage of the turmoil that is hobbling banks throughout the U.S.

One likely factor in the discussions is how much the Bush administration's proposed bailout plan would help Wachovia shift battered mortgage assets off its books. Mr. Steel also has said he wouldn't rule out the possibility of a "good bank, bad bank" structure, in which loans are moved to a subsidiary, allowing a bank to strengthen its capital levels.

Another hurdle in any sale talks will be the impact on Charlotte, N.C., where Wachovia is based. As Wachovia and hometown rival Bank of America Corp. have grown from regional banks into national powerhouses, they helped turn Charlotte into a banking powerhouse. The city's skyline is dominated by offices run by the two banks.

A purchase by Banco Santander likely would be the most palatable scenario for Charlotte, since the Spanish bank probably would use the city as its U.S. base.

Before regulators seized WaMu on Thursday, investors seeking to buy protection against a Wachovia default would have paid $670,000 annually to protect $10 million of corporate bonds for five years. On Friday morning, the same protection jumped to $1.7 million annually, according to Credit Derivatives Research.

Write to Dan Fitzpatrick at dan.fitzpatrick@wsj.com, Carrick Mollenkamp at carrick.mollenkamp@wsj.com and David Enrich at david.enrich@wsj.com

Copyright 2008 Dow Jones & Company, Inc. All Rights Reserved

This copy is for your personal, non-commercial use only. Distribution and use of this material are governed by our Subscriber Agreement and by copyright law. For non-personal use or to order multiple copies, please contact Dow Jones Reprints at 1-800-843-0008 or visit

www.djreprints.com

[Uraniun235]

If you're seriously worried about FDIC failing to cover your FDIC-insured deposits, then you should just pull all your money out right now and start building your little survivalist fortress.

I'm not kidding in the slightest. Anyone who thinks that FDIC will be allowed to fail to honor its obligations (even if doing so would require the Mint to turn the presses up to '11' and have agents delivering bags of cash everywhere) should not have the slightest confidence in any bank or credit union.