Copyright ©2008 NPR. For personal, noncommercial use only. See Terms of Use. For other uses, prior permission required.

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.

Copyright © 2008 NPR. All rights reserved. No quotes from the materials contained herein may be used in any media without attribution to NPR. This transcript is provided for personal, noncommercial use only, pursuant to our Terms of Use. Any other use requires NPR's prior permission. Visit our permissions page for further information.

NPR transcripts are created on a rush deadline by a contractor for NPR, and accuracy and availability may vary. This text may not be in its final form and may be updated or revised in the future. Please be aware that the authoritative record of NPR's programming is the audio.

Comments

 

Please keep your community civil. All comments must follow the NPR.org Community rules and terms of use, and will be moderated prior to posting. NPR reserves the right to use the comments we receive, in whole or in part, and to use the commenter's name and location, in any medium. See also the Terms of Use, Privacy Policy and Community FAQ.

Support comes from: