JPMorgan Buys $307 Billion WaMu Washington Mutual
by John Seo
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As the biggest bank failure in American history, JPMorgan Chase & Co. have bought Washington Mutual's $307 billion in assets for $1.9 billion, preventing a potential shock to taxpayers and the Federal Deposit Insurance Corporation (FDIC) and making JPMorgan the largest bank in America in front of Bank of America.
Clients of WaMu Seattle will likely be unaffected, as $16.5 billion was withdrawn from the bank in September, but bond and stockholders will have worthless paper. JPMorgan Chase will have eaten $31 billion in losses from troubled mortgages that would have been an unwelcome amount for the FDIC to contribute. The valuation of WaMu mortgages have sent worries to Wachovia shareholders'. Wachovia has the largest amount of sub-prime ARM and variable interest loans of any bank.
JPMorgan Chase recently acquired Bear Stearns in a deal brokered by the government. And in another deal, with the government as the catalyst, they are taking control of WaMu's branches and deposits. Flowserve will be replacing WaMu's spot in the S&P 500.