Government Seizes WaMu and Sells "Some" Assets

As recently predicted here, Washington Mutual became the next big bank failure. However the details are slightly beyond my comprehension and I will have to wait for more details to understand exactly what happened here.

First of all, I have no idea what "some" or "virtually all" assets means.

[quote]Washington Mutual, with $307 billion in assets, is by far the biggest bank failure in history.

Regulators simultaneously brokered an emergency sale of virtually all of Washington Mutual, the nation’s largest savings and loan, to JPMorgan Chase for $1.9 billion, averting another potentially huge taxpayer bill for the rescue of a failing institution.

By taking on all of WaMu’s troubled mortgages and credit card loans, JPMorgan Chase will absorb at least $31 billion in losses that would normally have fallen to the F.D.I.C. [/quote]

Link to NYT article

And it is completely left unsaid why JPM would agree to eat $31 billion in losses the "normally would have fallen to the FDIC"

But I can explain that. That $31 billion will be foisted upon the unlimited billion bailout fund as soon as possible. In short, the US taxpayer is being asked to provide a massive grant to JPM so it can expand its business reach.

And, of course, the greed of Wall Street is so profound that they can't even resist the urge to rub this fact into the public nose.

[quote]“We are building a company,” Mr. Dimon said in a brief interview. “We are kind of lucky to have this opportunity to do this. We always had our eye on it.”[/quote]

As if you needed any further confirmation about just how out of control the looting and theft of the public funds really are, the NYT provides it in the very next paragraph.

[quote]Mr. Fishman [MW's new CEO], who has been on the job for less than three weeks, is eligible for $11.6 million in cash severance and will get to keep his $7.5 million signing bonus.[/quote]

$18.1 million dollars for less than three weeks. Only in America friends, only in America. We might like to tempt ourselves with the thought that this money came from some magic pool, but it came directly from investors, depositors and/or taxpayers.

This is a companion discussion topic for the original entry at

Thanks Chris, it is really transparent now. The Fed repayed JP Morgan’s loan to Leahman and now they will back their purchase of "good" assets from WaMu. We end up paying the bill. I dont’ think this the kind of capitalism that Ayn Rand had in mind.
Hopefully we will see continued pressure to stop CEO compensation craziness!

So JP Morgan bought Bear Sterns (using a Federal Loan?) and is now buying up WaMu with their own money or government backed funds? They couldn’t afford Bear sterns without government funding so how can they afford to buy WaMu?

Anyone else smell a monopoly coming? and, how can the SEC approve the sale?

This is no longer shocking. Instead it just begs the question: Who’s next? Wachovia?