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It's Morning Edition from NPR News. I'm Steve Inskeep.
LINDA WERTHEIMER, Host:
And I'm Linda Wertheimer. Good morning. Americans wake up this morning to more dramatic news about the financial bailout. That big meeting between President Bush, the presidential candidates and congressional leaders blew up yesterday. Negotiations continue today, and this morning, both President Bush and Senate Democrats said they expect to get a deal done. Still, there's news of more trouble in the economy. The nation's largest savings-&-loan has failed. The government's 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 this company got into so much trouble?
JIM ZARROLI: Washington Mutual was another casualty of the mortgage downturn. It did a lot of mortgage lending especially in California and Florida, which, as you probably know, are sort of ground zero in the foreclosure crisis. The Office of Thrift Supervision, which regulates the banks, said it lost than $6 billion in the last three quarters, and that was bad enough, but then in the past week or 10 days or so, something else had happened. There's been so much turmoil on Wall Street that customers have been pulling money out of the bank, about $16 billion since, I think, September 15th, which is about nine percent of Washington Mutual's total deposits, as of June 30th. So, the government figured, you know, it had to step in, so that's what it did.
WERTHEIMER: Washington Mutual, we should keep in mind, is a retail bank. It has customers that have deposits. What happens to them?
ZARROLI: Well, the government says it's reopening today as usual. It will just have new owners. They say it will be a seamless transition. Customers won't even know anything is different, and because the bank is being purchased by JPMorgan Chase, the customers' deposits will be protected. The regulators are just trying to do what they always do in situations like this, which is just convince people things are normal, so there isn't a run on the bank.
WERTHEIMER: Why does JPMorgan Chase step in on this one? Why take over a troubled bank like this one?
ZARROLI: Well, the regulators were pressuring some of the big banks to step in, meeting with them recently, getting them to try to do a big deal. JPMorgan Chase was the one that stepped forward. They're the ones, you may remember, that bought Bear Stearns last March. They are in a pretty good position right now for a bank, and they can go around shopping for deals, and Washington Mutual I guess they saw as a good deal. It's got 2200 branches. A lot of them are on the West Coast. JPMorgan Chase doesn't have a lot of branches on the West Coast. So, they thought it was a good fit, and it's going to pay about $2 billion. Of course, it's also got to take on a lot Washington Mutual's questionable mortgage securities, some of its bad debts, but they obviously think they can make the deal work.
WERTHEIMER: Jim, negotiations will continue this morning on that $700 billion bailout plan for Wall Street. What's your take on where things stand?
ZARROLI: Well, what's happening today, as you say, is that talks are continuing over, you know, the structure of the bailout plan, what the details will be. There was a big meeting at the White House yesterday, which was really pretty extraordinary just in the way it broke down in finger-pointing and disagreement. It was supposed to be sort of a summit where the leaders of Congress and the Bush administration and the two, you know, presidential candidates would all get together and sort of show that they were working to solve this.
ZARROLI: But the Republicans in particular just revolted against it. This morning, House Speaker Nancy Pelosi said she thinks there will be an agreement within the next 24 hours. They really have no choice. It's just too important to the economy and the financial markets.
WERTHEIMER: Jim Zarroli, thank you very much.
ZARROLI: You're welcome.
WERTHEIMER: NPR's Jim Zarroli.
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