This one will resonate big in Florida. Washington Mutual just became the largest bank failure in U.S. history.
Thursday's seizure and sale is the latest historic step in U.S. government attempts to clean up a banking industry littered with toxic mortgage debt. Negotiations over a $700 billion bailout of the entire financial system stalled in Washington on Thursday.
Washington Mutual, the largest U.S. savings and loan, has been one of the lenders hardest hit by the nation's housing bust and credit crisis, and had already suffered from soaring mortgage losses.
Washington Mutual was shut by the federal Office of Thrift Supervision, and the Federal Deposit Insurance Corp was named receiver. This followed $16.7 billion of deposit outflows at the Seattle-based thrift since Sept 15, the OTS said.
"With insufficient liquidity to meet its obligations, WaMu was in an unsafe and unsound condition to transact business," the OTS said.
Customers should expect business as usual on Friday, and all depositors are fully protected, the FDIC said. Apparently, news leaks forced an early announcement. Usually, these things are done on Friday, so the auditors can spend the weekend going through the books. The bank has $307 billion in assets and $188 billion in deposits. What's also on tap here? Mega consolidation of U.S. banks:
... The largest previous U.S. banking failure was Continental Illinois National Bank & Trust, which had $40 billion of assets when it collapsed in 1984.
JPMorgan said the transaction means it will now have 5,410 branches in 23 U.S. states from coast to coast, as well as the largest U.S. credit card business.
It vaults JPMorgan past Bank of America Corp to become the nation's second-largest bank, with $2.04 trillion of assets, just behind Citigroup Inc. Bank of America will go to No. 1 once it completes its planned purchase of Merrill Lynch & Co. Be afraid. Be very afraid.
Labels: bank failures, economic crisis, the Bush bailout, the McCain-Bush economy |
