US govt sells WaMu to JPMorgan in $1.9bn fire sale

26 September 2008 09:13  [Source: ICIS news]

SINGAPORE (ICIS news)--US banking group Washington Mutual (WaMu) has been sold to financial services giant JP Morgan Chase & Co for $1.9bn (€1.29bn) after it was seized by the US government, federal bank regulator Office of Thrift Supervision (OTS) said in a statement on Friday.      

WaMu, with more than $307.02bn in assets as at 30 June, was in an unsafe and unsound condition to transact business as it had insufficient liquidity to meet its obligations, according to the OTS.

“The housing market downturn had a significant impact on the performance of WaMu’s mortgage portfolio and led to three straight quarters of losses totalling $6.1bn,” said OTS director John Reich.

The US Federal Deposit Insurance Corporation (FDIC) was named as receiver of WaMu and also held the bidding process which resulted in the acquisition by JP Morgan Chase.

The fallout follows the collapse of US investment bank Lehman Brothers, the corporate rescue of American International Group (AIG) and the controversial $700bn bailout proposal by the Federal Reserve.

($1 = €0.68)

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