JPMorgan Chase Buys Washington Mutual The federal government seized Washington Mutual on Thursday in the largest federal bank failure in U.S. history. The assets of the nation's largest savings and loan were sold to JPMorgan Chase for nearly $2 billion. The deal averts taxpayers receiving a bill for the rescue of another failing institution.
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JPMorgan Chase Buys Washington Mutual

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JPMorgan Chase Buys Washington Mutual

JPMorgan Chase Buys Washington Mutual

JPMorgan Chase Buys Washington Mutual

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LINDA WERTHEIMER, host:

It's Morning Edition from NPR News. I'm Linda Wertheimer.

STEVE INSKEEP, host:

And I'm Steve Inskeep. Good morning. Americans wake up this morning to more dramatic news about the financial bailout. Stock markets are likely to open today without a plan in place. That big meeting between President Bush, the presidential candidates and congressional leaders blew up yesterday. Negotiations do continue today, and we'll have more on that story in a moment.

WERTHEIMER: We begin our coverage this morning with the failure of the nation's largest savings and loan. The government seized Washington Mutual, and much of the company will now be sold to JPMorgan Chase. NPR's Jim Zarroli joins me now. Jim, this is being called the largest bank failure in U.S. history. Can you remind us how the company got into so much trouble?

JIM ZARROLI: Well, the same that killed off Bear Stearns, that killed off Lehman Brothers, IndyMac, they are all hurt in the implosion of the mortgage market. Washington Mutual, in particular, did a lot of mortgage lending in California and Florida, which are - both states are states that have had a lot of foreclosures. The Office of Thrift Supervision, which regulates the banks, said Washington Mutual had lost than $6 billion in the last three quarters. Now, in the past week or so, something else had happened. We've seen this ramp-up in the - just the chaos in the financial markets, and customers have been pulling out about $16 billion worth of deposits, which is nine percent of Washington Mutual's deposits, as of June 30. So, the government figured now it had to step in. It had to act before things got much worst. So, it came in. It shut Washington Mutual down and arranged to sell it.

WERTHEIMER: So, in effect, preventing what looked like a - what was shaping up to be a run on this huge bank. Now, it's a retail bank, Jim. So, what happens to the customers and to the people who still have deposits there?

ZARROLI: The government says it's going to - it's reopening today as usual. It will just have new owners. There will be a seamless transition. The regulators are trying to do what they always do in situations like this. They want to convince people that, you know, things are normal, so there isn't a run on the bank. They don't want too many other - more people lining up to take their money out.