Washington Mutual bank folds - Another U.S. financial failure - Customers Not to worry
2008-09-26 15:01:49 (GMT) (Caymanmama.com - Banks & Banking Top Stories News)
WAMU Website - Now Chase states. “We’re proud to welcome you to one of the nation’s largest banks; as of September 25, 2008, JPMorgan Chase & Co. has acquired the deposits, loans, and branches of Washington Mutual. Your deposits remain insured by the FDIC and are now also backed by the strength and security of JPMorgan Chase. Our combined company will offer superior banking convenience - over 5,400 branches and 14,000 ATMs in 23 states.
Washington, D.C. (CaymanMama.com) — It seems every time the news broadcasts, stories come from all over the nation about financial struggles, debt and corporate failures. In a surprising story from the Associated Press on Friday, banking has seen its first historic loss in the history of the United States as one of the nations largest banks - Washington Mutual Inc. - has crumbled under the weight of insurmountable bad debts in the mortgage market.
In the wake of a highly publicized debate of the government-proposed $700 billion bailout, the FDIC seized all assets of the company on Thursday and then immediately sold the assets to large and stable JPMorgan Chase & Co. for a hefty $19 billion. Founded in 1889 in Seattle, Washington, Washington Mutual survived 119 years before becoming the largest bank to fail in U.S. history. According to the report, “Its $307 billion in assets eclipse the $40 billion of Continental Illinois National Bank, which failed in 1984, and the $32 billion of IndyMac, which the government seized in July.”
On the upside, the sale of the bank to JPMorgan Chase will prevent a total collapse and depletion from the FDIC’s insurance fund, however that will offer little consolation to Americans who are facing severe financial concerns and are worried about plunging stock portfolios closely resembling the downfall leading the the Great Depression. In light of WaMu’s heavy mortgage burden and other risky debts, JPMorgan Chase has a plan to lower WaMu’s loan portfolio by nearly $31 billion. That number is subject to change if and when the government’s bailout plan goes through and JPMorgan will hop on the bandwagon.
In a conference call on Thursday night, JPMorgan’s Chief Executive Jamie Dimon said, “We’re in favor of what the government is doing, but we’re not relying on what the government is doing. We would’ve done it anyway.” He added that he was unsure if JPMorgan would take full advantage of the bailout plan.
The acquisition of WaMu only strengthens JPMorgan’s portfolio as it is the company’s second financial takeover after the buy out of Bear Stearns Cos. in March for $1.4 billion plus another $900 million in stocks to secure it. Now a force to be reckoned with, JPMorgan is now the 2nd largest bank in the U.S. following Bank of America Corp. who recently bough Merrill Lynch.
JPMorgan also said Thursday it plans to sell $8 billion in common stock to raise capital.
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