I used to have Great Western as my bank, which then turned into Washington Mutual, which apparently will now be JPMorgan Chase. WaMu was seized by regulators last night – not waiting for the typical Friday afternoon – and all of its deposits and most of its assets were purchased by JPM, although Chase didn’t take any WaMu debt. So any bond holders, hoping to reap those huge yields a few months ago, may be out of luck unless there are large amounts of cash available.
With this FDIC takeover (the largest one yet) and $1.9 billion sale to JPMorgan Chase, Chase became the biggest U.S. bank by deposits. You may recall that back in March, WaMu rejected a $4/share offer by Chase. Depositors may see little change today (I drove by last night to see if there was a padlock on the door, but nothing so dramatic had happened). This also leaves many small institutions (who probably sold them a good portion of the $19 billion in bad loans) scratching their heads, wondering why they’re still around while companies like IndyMac, Lehman, Merrill, and Bear are all gone.
