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Originally posted by Mercenary2007
your right we do know now how much JPMorgan has agreed to pay. but we don't know how many assets they purchased with that. we also don't know what price they will be able to sell those assets for or when there will be a market to sell them in.
But lets say JPMorgan bought these assets at 1.9 billion(which they did) and they worked out a deal to resell them or rewrite the mortgages But they could only recover 800 million for those assets not a good deal for JPMorgan.
Plus with no way to get rid of these toxic assets right now or in the very near future they will have to sit on JPMorgans books causing illiquidy for JPMorgan thus acting like a weight dragging it to the bottom.
Washington Mutual, the largest U.S. savings and loan, was closed by the federal Office of Thrift Supervision, and the Federal Deposit Insurance Corp was named receiver. Customers should expect business as usual on Friday, the FDIC said.
JPMorgan Chase Acquires Banking Operations of Washington Mutual
FDIC Facilitates Transaction that Protects All Depositors and Comes at
No Cost to the Deposit Insurance Fund
FOR IMMEDIATE RELEASE
September 25, 2008
Andrew Gray (202) 898-7192
JPMorgan Chase acquired the banking operations of Washington Mutual
Bank in a transaction facilitated by the Federal Deposit Insurance
Corporation. All depositors are fully protected and there will be no
cost to the Deposit Insurance Fund.
"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."
JPMorgan Chase acquired the assets, assumed the qualified financial
contracts and made a payment of $1.9 billion. Claims by equity,
subordinated and senior debt holders were not acquired.
"WaMu's balance sheet and the payment paid by JPMorgan Chase allowed a
transaction in which neither the uninsured depositors nor the
insurance fund absorbed any losses," Bair said.
Washington Mutual Bank also has a subsidiary, Washington Mutual FSB,
Park City, Utah. They have combined assets of $307 billion and total
deposits of $188 billion.
Thursday evening, Washington Mutual was closed by the Office of Thrift
Supervision and the FDIC named receiver. WaMu customers with questions
should call their normal banking representative, service center,
1-800-788-7000 or visit www.WaMU.com. The FDIC's consumer hotline is
1-877-ASK-FDIC (1-877-275-3342) or visit www.fdic.gov.
# # #
Congress created the Federal Deposit Insurance Corporation in 1933 to
restore public confidence in the nation's banking system. The FDIC
insures deposits at the nation's 8,451 banks and savings associations
and it promotes the safety and soundness of these institutions by
identifying, monitoring and addressing risks to which they are
exposed. The FDIC receives no federal tax dollars – insured financial
institutions fund its operations.
FDIC press releases and other information are available on the
Internet at www.fdic.gov, by subscription electronically (go to
www.fdic.gov/about/subscriptions/index.html) and may also be obtained
through the FDIC's Public Information Center (877-275-3342 or
``We got this at a price that protects us, where if we were wrong, it still protects us,'' Dimon, 52, said in an interview. The FDIC accepted JPMorgan's bid this morning, he said, and he already sent an e-mail to all of WaMu's employees.
Dimon also said on the conference call that he's in favor of the government's proposed $700 billion plan to prop up the banking industry, but didn't rely on it to complete the deal.
JPMorgan is taking on $176 billion in mortgage-related assets and writing down the value of it and other portfolios by about $31 billion, the company said. The bank will make a one- time payment of $1.9 billion to the FDIC as part of the deal.