JPMorgan scoops up WaMu for $1.9B, in line for Lehman cash
— -- Seattle-based WaMu, which was founded in 1889, is the largest bank to fail by far in the country's history. Its $307 billion in assets eclipse the $40 billion of Continental Illinois National Bank, which failed in 1984, and the $32 billion of IndyMac, which the government seized in July.
"For all depositors and other customers of Washington Mutual Bank, this is simply a combination of two banks," FDIC Chairwoman Sheila 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 Friday morning."
None of Washington Mutual's depositors, including those with uninsured deposits, will lose any money, Bair said Thursday night.
In other news Thursday night, JPMorgan Chase is listed as the largest secured creditor in the Lehman Bros. bankruptcy case, with an estimated $23 billion in claims, according to a recent court filing.
Secured creditors are the first to be repaid in a bankruptcy in the event there is money to be distributed. Secured creditors are paid before unsecured creditors — shareholders rank lowest and often get nothing.
Next on the list filed late Thursday in the bankruptcy court for the Southern District of New York is Hudson Castle Group's Fenway, which is owed $3 billion; Swedbank of Sweden with $1.35 billion in claims; and State Street with $1 billion. Lehman lawyers also listed as secured creditors: MetLife with an $878.4 million claim, New York-based SMBC ($870.3 million) and U.K.-based Danske Bank ($800 million).
Lehman filed the biggest bankruptcy in U.S. history on Sept. 15. It reported assets of $639 billion and debt of $613 billion.
Washington Mutual's shares have plunged nearly 90% in the past year on concerns about its large holdings of subprime mortgages. Wednesday, credit-rating agency Standard & Poor's cut WaMu's credit rating and preferred-stock rating further into junk status, noting an increased likelihood that any sale of the thrift would only be done in piecemeal fashion.
