JP Morgan has been saving its money and within the last few months has decided it’s time to strike. And by striking, JP Morgan has consumed Bear Stearns and now Washington Mutual, it’s just a matter of guessing what JPM will be buying next.
JPMorgan Chase & Co. Inc. came to the rescue of ailing Washing ton Mutual Inc. on Thursday, buying the ailing thrift’s banking assets after WaMu was seized by the Federal Deposit Insurance Corp. The deal will cost JPMorgan Chase $1.9 billion, and the bank said in a statement it planned to write down WaMu’s loan portfolio by approximately $31 billion. JPMorgan Chase also said it would sell $8 billion in common stock to raise its capital position.
The FDIC, which insures bank deposits, said it would not have to dip into the insurance fund as a result of the seizure. There had been concerns that the fund could be depleted by a WaMu seizure.
Seattle-based WaMu, the nation’s largest thrift, has roughly $310 billion in assets and had been searching for a lifeline after piling up billions of dollars in losses because of failed mortgages. WaMu has seen its stock price plummet 87 percent this year, and earlier this week it suffered a ratings downgrade by Standard & Poor’s that put it in danger of collapse.
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