EVERETT — As Dave Carlson heard the news of a potential sale of Washington Mutual Inc. Thursday, he moved quickly to pull out more money.
“I’m working on a house project, and I didn’t want to be locked out,” he said. “I’ve been watching the news and hearing about all the problems in the market.”
Carlson said that he’d already pulled out a big chunk of change, but he wanted to remove more to ensure his money wasn’t tied up “while the FDIC sorted things out.”
What started as a rumored sale soon became fact late Thursday.
The bank was shut down by the Office of Thrift Supervision on Thursday in the largest bank failure in United States history. The Federal Deposit Insurance Corp. soon took over and facilitated a deal in which JPMorgan Chase acquired WaMu’s deposits and some of it branches.
The FDIC, which insures banks, said it won’t have to dip into its failure fund because of the deal with JPMorgan.
“JPMorgan Chase acquired the assets, assumed the qualified financial contracts and made a payment of $1.9 billion,” said Sheila Bair, the FDIC chairman, in a prepared statement.
Customers have no reason for concern, the federal agencies said.
“For all depositors and other customers of Washington Mutual Bank, this is simply a combination of two banks,” Bair said. “For bank customers, it will be a seamless transition. There will be no interruption in services, and bank customers should expect business as usual come (this) morning.”
Seattle-based Washington Mutual was the nation’s largest savings and loan, with assets of $307 billion, according to the thrift supervision office.
The bank has a strong presence in the West, making it a good fit with JPMorgan, whose branches are mostly in other regions of the country. WaMu has 2,239 branches in 15 states. As of June, it had 43,198 employees, but many have been cut as the company first worked to remain solvent and then tried to find a suitor.
WaMu’s assets eclipse those of Continental Illinois National Bank, which failed in 1984 with a balance sheet of $40 billion.
JPMorgan was among a group of potential buyers that included Citigroup, Wells Fargo and others. It will pay $1.9 billion for the deal, its second takeover of a major financial institution that was hobbled by billions in debt due to bad mortgage loans.
When the stock market closed Thursday, WaMu shares were down 25 percent to $1.69. As word of the deal spread, the stock plummeted 73 percent to 45 cents in after-hours trading.
Earlier in the day, things were hectic at WaMu branches in Snohomish County and throughout the Puget Sound area.
As they have been for days, customers like Carlson were showing up hoping to pull their money out.
“There was a lady right next to me, and I think she was doing the same thing,” Carlson said.
He noted that he was told that the bank employees at the branch at Everett and Colby avenues “had to check the machine in back” to ensure they had enough money for his withdrawal.
“It’s a scary thing to be told they might not have enough cash,” he said.
Another customer who wouldn’t give his name told The Herald he removed $33,000 from Washington Mutual but had to go to four different branches Thursday to do it because individual offices said they didn’t have enough money on hand. He added he knew that his money was insured by the FDIC, but he was concerned something would happen to keep him from getting it back.
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