Chase to stabilize WaMu

By Eileen AJ Connelly ASSOCIATED PRESS | Monday, September 29, 2008

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NEW YORK | The collapse of Washington Mutual Inc. left customers and investors with many concerns and questions in the wake of the nation's biggest bank failure.

Succumbing to problems in its home loan business that have been evident since 2006, WaMu was seized Thursday by the Federal Deposit Insurance Corp., which then sold the thrift's banking assets to JPMorgan Chase & Co. for $1.9 billion.

JPMorgan Chase assured customers on both the WaMu Web site and its own that it's business as usual after it assumed the deposit and loan accounts, and all branches of Washington Mutual. "You can continue to access your accounts just the way you've accessed them in the past: Use your same branch, same debit, credit and ATM cards, same checks."

FDIC Chairman Sheila Bair also promised customers a seamless transition. For all depositors and other customers of WaMu, "this is simply a combination of two banks," she said.

"No one lost any money that was deposited in Washington Mutual Bank," the FDIC said. FDIC insurance protects deposits up to $100,000, or $250,000 for some individual retirement accounts and 401(k)s. However, that insurance should not be needed if the JPMorgan takeover proceeds smoothly. The purchase prevents WaMu's collapse from depleting the FDIC's insurance fund, which stood at $45 billion on Thursday.

The news is much worse. Stockholders, who had already seen shares plunge 95 percent since their October high of $36.47, have the lowest priority for claims against WaMu. "Equity investors generally get the short end of the stick on these kinds of things," said Stock Trader's Almanac author and publisher Jeff Hirsch. "The company goes belly up, you lose."

JPMorgan Chase says all those services will continue without interruption or change. Payment instructions and addresses remain the same.

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