JPMorgan Chase & Co. Inc. on Thursday night acquired the banking operations of Washington Mutual Bank (WaMu), the largest thrift in the United States, in a transaction facilitated by the Federal Deposit Insurance Corporation (FDIC).

JPMorgan Chase acquired the assets, assumed the qualified financial contracts and made a payment of US$1.9 billion, and claims by equity, subordinated and senior debt holders were not acquired, according to a statement released by the FDIC.

Federal regulators said WaMu has suffered an exodus of US$16.7 billion in deposits since Sept. 15, leaving the Seattle thrift "with insufficient liquidity to meet its obligations."

As a result, WaMu was in "an unsafe and unsound condition to transact business," according to the Office of Thrift Supervision (OTS).

"The housing market downturn had a significant impact on the performance of Wamu's mortgage portfolio and led to three straight quarters of losses totaling US$6.1 billion," said OTS Director John Reich.

WaMu, specialized in providing home mortgages, credit cards and other retail lending products and services, has more than 43,000 employees, more than 2,200 branch offices in 15 states and US$188.3 billion in deposits.

This is the second time the Bush administration has gone to JPMorgan as a buyer of last resort. In March, the government agreed to backstop JPMorgan's takeover of Bear Stearns.

Thursday's deal will create the nation's second-largest branch network -- with locations reaching 42 percent of the U.S. population.

"For all depositors and other customers of Washington Mutual Bank, this is simply a combination of two banks," said FDIC Chairman Sheila C. 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," he stated.

(Xinhua News Agency September 26, 2008)

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