Vigilant Investor

JPMorgan Chase & Co. became the biggest U.S. bank by deposits, acquiring Washington Mutual Inc.’s branch network for $1.9 billion after the thrift was seized in the largest U.S. bank failure in history.

Customers of WaMu withdrew $16.7 billion from accounts since Sept. 16, leaving the Seattle-based bank “unsound,” the Office of Thrift Supervision said late yesterday. WaMu’s branches will open today and depositors will have full access to all their accounts, Sheila Bair, chairman of the Federal Deposit Insurance Corp., said on a conference call.

This is really no surprise to anyone.  WaMu has been in an identifiable death spiral for well over a year, during which its stock price plummeted 95%.  About 6 weeks ago the sign of desperation was visible in its comparatively high CD rates vs. its competition — always a sign of desperation (let that be a warning to you!).  It was facing $19 billion mortgage losses.  When it’s credit rating was dumped to junk, that was it. At seizure time, its stock traded after hours at 45 cents.

The bigger news is that David Bonderman of private equity group, TPG, just lost its $2 billion cash infusion from earlier this year.

On the other hand, JPMorgan just bought a ton of bank branches for its new bank holding structure on the cheap.  With bailout in the air, it would seem the House of Morgan (at least 1/2 of it) is still alive and well, thriving through collapse, buying assets on the cheap — living up to its historic reputation.

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