New York, Sept.26 : US federal regulators have seized assets of Washington Mutual, the giant lender, and sold some of it in a bid to arrest the meltdown on Wall Street.
Regulators brokered an emergency sale of virtually all of Washington Mutual - the nation's largest savings and loan, with 7 billion in assets - to J P Morgan Chase, reports the New York Times. The move came as lawmakers were stalemated over the passage of a 700 billion dollar bailout fund meant to help ailing banks, and removes one of America's most troubled banks from the financial landscape while mitigating another potentially huge taxpayer bill for the rescue of another failing institution.
Shareholders and some bondholders will be wiped out.
The Federal Deposit Insurance Corporation guarantees up to the 100,000 dollars per account limit as far as Washington Mutual deposits are concerned.
J P Morgan Chase is to take control Friday of all of Washington Mutual's 2,300 branches, which stretch from New York to California.
The New York-based bank will oversee its big portfolio of mortgage and credit card loans. It will also acquire all of its deposits with the sale. The seizure and the deal with J P Morgan came as a shock to Washington Mutual's board, which was kept completely in the dark.
The company's new chief executive, Alan C. Fishman, was in midair, flying from New York to Seattle at the time the deal was finally brokered, according to these people.
Sheila Bair, the chairwoman of the F.D.I.C., said the government took action Thursday, and not on a Friday as is typical for bank closures, after reports of a deal seeped out, potentially causing depositors to worry.
The deal will end Washington Mutual's 119-year run as an independent company.