JPMorgan Chase to buy WaMu deposits, many branches

From Times staff writer E. Scott Reckard:

JPMorgan Chase & Co. tonight will announce it’s buying most or all of Washington Mutual Inc.'s deposits and branches, according to a source close to WaMu.

JPMorgan has scheduled a conference call with investors and analysts for 6:15 p.m. PDT.

Separately, the Federal Deposit Insurance Corp. has announced a conference call with Chairwoman Sheila Bair for 6:30 p.m. PDT, without disclosing the topic. Speculation is that the government will announce that it will seize WaMu, paving the way for the deal.

New York-based JPMorgan has long been considered the most likely buyer of some or all of ailing WaMu, the nation’s largest thrift, with $182 billion in deposits.

The arrangement is expected to assure that the FDIC won't have to take a hit on WaMu's insured deposits.

JPMorgan has long coveted WaMu’s extensive branch network in California and Florida. It had offered to buy the Seattle-based thrift in spring, but WaMu instead accepted a $7 billion private equity investment from TPG, the former Texas Pacific Group.

WaMu put itself up for sale this month after its board ousted CEO Kerry Killinger.

The need for WaMu to strike a deal has become more urgent in recent days as the company’s debt rating was downgraded to deep-junk levels, and as its stock has plunged anew. The shares dived 57 cents, or 25%, to $1.69 today, the lowest since the 1980s.

It wasn’t clear what help the government might provide WaMu in dealing with its huge portfolio of troubled mortgages. Bad loans have forced the thrift to record $6.5 billion in losses over the past three quarters.

WaMu, or a successor bank, conceivably would benefit from the Bush administration’s proposed $700 billion bailout of the financial system, which would involve Treasury purchases of bad loans. But the debate over the bailout in Congress this week had given pause to several banks, including JPMorgan, that had been looking over WaMu’s books at the urging of the government, according to several sources who had been briefed on the matter.

Photo credit: JB Reed / Bloomberg News

Comments

[cooltoeluke]

it may be small potatoes, but nothing dived,
the past tense of dive is dove.

[Dave G.]

cr-p, there goes my 4% online savings rate...chase's rates bl-w.

[Hugo]

Dammit! Ever had the Chase credit card? They suck!! Looks like I better find another bank. You think Chase might honor the free checking, no minimum balance checking account? No, of course not.

[Miss Grammar]

Well, cooltoeluke,

Classically, "dove" specifically refers to the past tense of "dive" when referring to a dive in water. Just like the fact that we "hang" a picture and we "hang" a criminal, but looking back on it, the picture was "hung" and the criminal was "hanged." The proper usage of these terms is all but lost in general conversation - and that's perfectly fine - but the rules of journalism continue to be followed by some. Archaic as they may seem to be to others.

[H.%20Craig%20Bradley]

I told you so! It has been obvious for months that WAMU is not likely to make it as an independent business. Going, Going, Gone?

[Dan]

I've banked with WaMu dating back to the Great Western days. Chase just lost me as a customer, because I've already been scarred by dealing with them once. It won't happen again, thank you very much.

[Sam]

Interesting news for my family my to say the least.

I guess I may be speaking for a lot of people when I ask what will happen to our mortgage loan and assorted other accounts (incl. savings, credit card, money market fund, etc.) now that Wamu will effectively cease to exist as we knew it? I believe the MMF is/was managed by AIG and we don't have more than $100,000 in any particular account w/Wamu FWIW.

[Lily]

I am a little confused. I have a wamu visa, will I now be issued a Chase credit card, and if so, how soon?

[Judy]

Concerned about employees - daughter VP in Seattle - What a shame - banking industry so important in our economy-everyone realizes it now.

[anthony ruth]

The government just stole the life savings of many common shareholders. I am ashamed to be an american at this time.

[jamie]

What will happen to WAMU stock now? I have 300 of them that I bought for $3?

[T Upandoher]

does anyone have any information if you have a heloc from wamu that u owe nothing on... what happens? do u still get to keep the entire line of credit

[Scott]

I am so. over. all of this. (sorry Miss Grammar, it's my mood, not intentional bad punctuation). I don't care if it's a bailout of who or what for how mucn, but somehow, some way this needs to go away, at least from the standpoint of us average people whose everyday status rarely changes regardless of prevalent economic conditions, yet we are forced to sit through these stupid recessions every few years because of someone else's brilliant "ideas."

I suppose this is better than the mess they had at IndyMac, but I could have sworn I read a few months back that Wamu was in ok shape, then all of a sudden they were in trouble with a vengeance. Whether I'll stay with this JPMorgan Chase place is anyone's guess, but it sure makes you wonder where you can go.

[raj]

what happens to our money in checking and savings account ??
will it be safe??

[Markus]

Dealt with a chase credit card a couple of years back and when I dropped them I vowed to not only never go back, but to let folks know how bad they su-k.

But all I really care about is that the online interface stay the same, or maybe see some improvements, like when you set up a payment it is immediately reflected in the available balance. But what I really like is that you yourself verify that the payment information is accurate when setting up the online bill pay account, as opposed to having to wait 3 days to a week (as it is with BOA). The flexibility to send a electronic check to the babysitter, or the landlord is awesome....something I couldn't do with BOA's anal system.

In the end, I do believe that JPMorgan will be vastly better than a buyout by BOA.

I could be proved wrong though....

[jr]

dang.. bought at 2, could have sold at 4 now I'm broke.... will shares be worth ANYTHING at all in the futurE?

[John]

My wife and I have WaMu cards, biggest crooks ever, they raise your rate to 33.99% if you are late on a payment, and you can never get free of them. H.R. 5988 seems to be stalled in commitee, a bill to cap credit card rates at 20%. Seems like they had the banks over a barrel and could have added that in as a stipulation for the 700 billion. Instead they just tacked on a billion or so more in pork barrel projects. I for one am looking forward to working with Chase. I'll bet the first thing they change is the tone of the harrasing phone calls. Maybe it will take less than 3 months for them to change my due date for my payment, another WaMu story. Sorry for the investors, but I, for one, am glad they are gone. Company attitude like that only thrives if it is condoned or encouraged from the top down.

[Bills]

Well if you paid your bills on time, you won't have to pay the 33.99%!! The biggest crooks are those that run up their credit cards and then whine about having to pay them off. Your lack of personal responsibly now makes it tougher on the people who do pay their bills on time.

[Lars Olsen]

I have had the unfortunate transfer of my Washington Mutual (Cabela's Visa) to Chase. The first thing that chase did was to increase my interest rate to 18%. No reason, when I called they stated that was their rate and I was stuck with it.

Wa Mu was a company that in my opinion provided a fair interest rate and a good customer service.

Chase provides neither.

[BossMann]

Never been pleased with anything Chase has offered.

I LOVED the competitive interest rates WAMU was providing and (as a person trying to monitor his progress in rebuilding his credit) LOVED the monthly update on my credit score that WAMU provided FREE!!!!

The FIRST thing I see out of JPMorbid is a notice that "they're sorry that the cannot continue the free credit score trending, BUT for an additional fee you can get the same information through one of their offers...." What a LOAD of crap. I guess there really isn't any money in taking care of your customers after all.....

[Mel]

*Sigh* my 3.6% APY online savings account has just sunk to a stinky 2.00%. Guess it's time to start searching for a new bank. I think I will cancel my WaMu credit card too. I like my Discover card better and Chase isn't impressing me much. I'll miss WaMu. R.I.P.

[Richard Stiefel]

My wife and I, (long time) WAMU customers just received a notice our credit card rate is now 17.99%. Yea, right. Am going down to our WAMU branch, closing our checking, savings and credit card accounts. I suppose this is how Chase is to recover their money from the buy out.