Just days ago, the nation's biggest thrift and once biggest mortgage lender, earned a final, notorious distinction Thursday: It became the biggest U.S. bank in history to fail. WaMu has been struggling to turn itself around for the past year, after it became clear falling home prices and the collapsed market for mortgages back securities had left it holding billions of dollars worth of dubious loans.
Despite offering 5 percent interest o one-year certificates of deposit, one of the highest rates in the country, WaMu lost $16.7 billion in deposits between September 15 and this past Weds. JPMorgan Chase took over $134.7 billion in deposits from WaMu. Les than three weeks earlier, WaMu had held $181.9 billion in deposits.
JPMorgan was the highest bidder in the auction, beating out three other banks that submitted bids for WaMu's assets. WaMu's 43,200 employees won't feel any immediate impact, though it's likely JPMorgan will drastically shrink the thrift's headquarters staff.
WaMu investors for the most part are out in the cold. The 1.9 billion that JPMorgan paid for WaMu's operations will go into a fund overseen by the FDIC for WaMu's creditors. The only investors likely to get anything will be holders of WaMu's senior unsecured debt.
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