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What JPMorgan Bought From WaMu in 2008

JPMorgan acquired Washington Mutual Bank’s banking operations from the FDIC in 2008, while the parent company and non-bank subsidiaries remained outside the deal.
From TheFinanceBase Team2 min to read
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JPMorgan Chase acquired Washington Mutual Bank’s banking operations from the FDIC on September 25, 2008, after regulators closed the bank and appointed the FDIC as receiver. The deal did not include the parent company, Washington Mutual, Inc., or its non-bank subsidiaries. JPMorgan said it paid the FDIC approximately $1.9 billion.

What JPMorgan acquired from WaMu

The transaction transferred substantially all of Washington Mutual Bank’s assets and liabilities to JPMorgan Chase Bank under a Purchase and Assumption Agreement dated September 25, 2008. JPMorgan’s announcement described the acquired business as WaMu’s banking operations, including its deposits, assets and certain liabilities.

JPMorgan’s 2009 annual report described the acquisition as including 2,200 branches, 5,000 ATMs and 12.6 million checking accounts. It also reported approximately $240 billion in mortgage and mortgage-related assets, $160 billion in deposits and $38 billion in equity as part of the transaction.

What the deal did not include

JPMorgan’s September 25, 2008 announcement said it did not acquire Washington Mutual, Inc., the bank’s parent holding company, or its non-bank subsidiaries. It also identified the bank’s senior unsecured debt, subordinated debt and preferred stock as excluded from the assumption.

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The FDIC later characterized the transfer as covering the bank’s assets and most of its liabilities, including covered bonds and other secured debt. The exclusions should therefore be read as the specific categories named in JPMorgan’s announcement, not as a claim that all WaMu debt was left behind.

Why reported asset and deposit figures differ

The FDIC reports that WaMu had $307 billion in assets and $188 billion in deposits when it failed. JPMorgan’s 2009 annual report gives different transaction figures: approximately $240 billion in mortgage and mortgage-related assets and $160 billion in deposits. These figures come from different publishers and describe different contexts; the cited records do not explain the deposit discrepancy.

Figure Source and context
$307 billion in assets FDIC figure for WaMu’s assets at failure; the FDIC page does not state a publication year.
$188 billion in deposits FDIC figure for WaMu deposits at failure, also reported in the FDIC’s 2008 failure listing.
Approximately $240 billion in mortgage and mortgage-related assets JPMorgan’s 2009 annual report describing the transaction.
$160 billion in deposits JPMorgan’s 2009 annual report describing the transaction.

How much JPMorgan paid

JPMorgan said in its September 25, 2008 announcement that it would pay approximately $1.9 billion to the FDIC. This was the stated payment to the receiver for the banking operations; it is not a stated purchase price for the entire Washington Mutual corporate group.

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What happened to WaMu depositors and customers

The FDIC said all depositors were fully protected and banking services would continue without interruption. FDIC Chairman Sheila C. Bair described the transaction as: “For all depositors and other customers of Washington Mutual Bank, this is simply a combination of two banks.” She also said customers should expect a seamless transition and business as usual on Friday morning. Those were the FDIC’s assurances at the time.

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The FDIC said the resolution came at no cost to the Deposit Insurance Fund; its later status page confirms that the resolution was completed at no cost to the fund. The FDIC’s WaMu information page also reports that the bank had more than 2,300 branches when it failed, while JPMorgan’s annual report lists 2,200 branches among what it acquired.

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