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NEW YORK CITY — Washington Mutual has been seized by the U.S. government and sold to JPMorgan Chase & Co. for $1.9 billion.

Marking the largest U.S. bank failure in history, the move was a huge step by the U.S. government to clean up a banking industry littered with toxic mortgage debt. Washington Mutual was one of the hardest hit lenders in the nation’s housing bust and credit crisis.

Washington Mutual was shut down by the federal Office of Thrift Supervision (OTS) and the Federal Deposit Insurance Corp. (FDIC) was named receiver. According to the OTS, this followed $16.7 billion of deposit outflows at the Seattle-based thrift since Sept. 15.

“With insufficient liquidity to meet its obligations, WaMu was in an unsafe and unsound condition to transact business,” the OTS said.

The FDIC noted that customers should expect business as usual today, and all depositors are fully protected.

As a result of the acquisition, JPMorgan will now have 5,410 branches in 23 U.S. states.

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