Federal Deposit Insurance Corporation seized Washington Mutual and sold to it to JP Morgan Chase. WAMU bank customers and employees will not notice a difference, according to the article, as JP Morgan Chase takes control of the bank’s 5,400 branches.
Fort Worth, TX (WiredPRNews.com)—Collapsing under the weight of bad sub-prime mortgage debt, the Federal Deposit Insurance Corporation took control of Washington Mutual Thursday night and immediately sold it to JP Morgan Chase, according to a September 26, 2008 Yahoo.com news article written by Madlen Read of the Associated Press.The article states that the 119-year-old, Seattle-based WaMu, with $307 billion in assets, is the biggest bank in US history to fail. However, bank customers and employees will not notice a difference, according to the article, as JP Morgan Chase takes control of the bank’s 5,400 branches.
The failure of WaMu, according to the article, is no surprise to many financial observers as the bank posted a $48 million loss on one billion dollars of net income in 2005. The Associated Press article states that in December of 2007, WaMu announced layoffs and a dividend cut to reduce operating expenses and in July of this year, the firm announced the largest second-quarter loss in the bank’s history – $3 billion.
According to Read’s article, WaMu did work with their mortgage customers who were behind on their payments so they home owners could stay in their homes and avoid foreclosure. However, fewer investors were willing to buy the debts backed by the risky loans, which reduced Washington Mutual’s available cash.