| Page 2 of 2 < |
U.S. Forces WaMu Sale As Bank Founders
|
TOOLBOX
   Resize
COMMENT
 Discussion Policy
 CLOSE
Comments that include profanity or personal attacks or other inappropriate comments or material will be removed from the site. Additionally, entries that are unsigned or contain "signatures" by someone other than the actual author will be removed. Finally, we will take steps to block users who violate any of our posting standards, terms of use or privacy policies or any other policies governing this site. Please review the full rules governing commentaries and discussions. You are fully responsible for the content that you post.
Who's Blogging  |
J.P. Morgan chief executive Jamie Dimon said he was undeterred by Washington Mutual's financial problems and relatively unconcerned about the short-term struggles of the financial industry -- or the congressional debate about a possible bailout.
"We're getting franchises of this company for a long period of time," Dimon said on a conference call last night. "We didn't do this because we're guessing the economy is going to get a little bit better or going to get a little bit worse."
Washington Mutual had rejected a March offer of $8 a share from J.P. Morgan. The company's then-chief executive was subsequently fired.
With the acquisition, New York-based J.P. Morgan will gain a massive, long-desired presence on the West Coast. Neither company has branches in the Washington area. Washington Mutual's branches are concentrated in California, with large clusters in New York, Florida, Texas and the company's home state of Washington. J.P. Morgan has large numbers of branches in the Midwest, the Southwest and New York.
J.P. Morgan and Bank of America are emerging as the great winners in the current crisis. Funded by deposits and less involved in the business of securitizing loans, they are strong at a moment of weakness for erstwhile rivals. J.P. Morgan already has carried off the remnants of investment bank Bear Stearns, which collapsed in March. Bank of America has picked up Countrywide Financial and Merrill Lynch.
"Some in corporate leadership are now coming to Washington for help, others are coming to Washington to help," Bair said. She applauded J.P. Morgan's willingness "to put private capital at risk" and compared Dimon's actions to long-ago rescues orchestrated by the company's legendary namesake.
J.P. Morgan is not buying the holding company that owns the thrift, nor is it paying anything to shareholders in the company, who have essentially been wiped out, or those who have purchased its bonds. The $1.9 billion J.P. Morgan paid to the government will be paid out to the holding company's surviving creditors, but many of them will suffer large losses.
Washington Mutual's stock dropped 25 percent, to close at $1.69 yesterday, then fell 73 percent more, to $0.45, in after-hours trading, reflecting the remaining value of what is now a shell company.
The failure marks the second time in recent months that a large bank has been seized by regulators before it was included in the FDIC's quarterly count of troubled institutions. IndyMac Bancorp, another large mortgage lender, was seized by regulators in July. That reflects the rapid pace of the financial crisis but has also raised questions about the care with which regulators are scrutinizing trouble companies.
The Washington Mutual-J.P. Morgan deal is not subject to any of the reviews that normally attend a major bank merger.
"When you have a failing institution, you don't have time for that," Bair said.
Staff writer Zachary A. Goldfarb contributed to this report.
