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Government Sells Washington Mutual Assets

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Government Sells Washington Mutual Assets

Economy

Government Sells Washington Mutual Assets

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LINDA WERTHEIMER, host:

NPR's business news starts with the biggest bank failure ever.

(Soundbite of music)

WERTHEIMER: The bank is Washington Mutual, the nation's largest savings and loan. After seizing Washington Mutual last night, government regulators brokered a deal to sell most of its operations to JPMorgan. That is the bank that bought up the failed investment firm Bear Stearns six months ago. Ironically, Washington Mutual's downfall occurred on the very day it was founded 119 years ago in Seattle. From member station KUOW in Seattle, Sara Lerner reports.

SARA LERNER: It's the largest bank failure in U.S. history. Washington Mutual is the latest victim of the subprime mortgage crisis. JPMorgan Chase now owns the Seattle-based bank's assets. Washington Mutual was worth $307 billion. JPMorgan Chase will pay the FDIC about $1.9 billion. JPMorgan execs admit, there is a negative factor, and that's dealing with Washington Mutual's bad assets. Charlie Scharf heads JPMorgan's retail business. In a conference call to investors, he was optimistic and he encouraged long-term thinking.

Mr. CHARLES W. SCHARF (Chief Executive Officer, Retail Financial Services, JPMorgan Chase): In a very severe recession, if we make nothing over the next three years, on a combined basis, we've got a wonderful franchise, which, incrementally, it's going to have three or four billion dollars in earnings and is just positioned terrifically on a strategic basis.

LERNER: JPMorgan acquired the failing investment bank Bear Stearns, and its execs say they've been pouring over this potential deal for weeks. And now, the bank can move into states they've been coveting, like California, Washington and Florida. JPMorgan will take over more than 2,000 of Washington Mutual's branches. The FDIC says Washington Mutual customers will see the bank running like normal today. For NPR News, I'm Sara Lerner in Seattle.

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