As part of the deal, JPMorgan Chase will absorb WaMu's subprime and option-ARM mortgages. The emergency sale was announced late Thursday and was arranged by regulators. Deal value was $1.9 billion. CNBC reports WaMu saw an exodus of $16.7 billion in deposits since Sept. 15, in a massive 10-day bank run. The severity and speed of the decline of WaMu prompted regulators to seize control on Thursday night, rather than Friday, which is more typical for bank closures.
BBC reports WaMu "had about $307bn of assets but only about $188bn of deposits, which meant it had to raise funding on money markets, which has become increasingly expensive." Banks are unusual in that its assets are its loans (the reverse of a normal company) and deposits are its liabilities. The size of WaMu's assets have made it the biggest banking failure in history.
Who is WaMu anyway? The bank was incorporated on September 25 1889, providing a vehicle for investing and lending and helping Seattle residents rebuild after a fire. The bank went public in 1983, and within 6 years of going public, the banks assets more than doubled.
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