Feds Seize & Sell WaMu; Biggest Bank Failure in US History

Administrative Law

Feds Seize & Sell WaMu; Biggest Bank Failure in US History

Posted Sep 26, 2008, 01:28 pm CST
By Martha Neil

Moving fast in the midst of an extraordinarily troubled U.S. economy, federal regulators seized—and sold—the troubled Washington Mutual bank last night.

"Regulators simultaneously brokered an emergency sale of virtually all of Washington Mutual, the nation’s largest savings and loan, to JPMorgan Chase for $1.9 billion, averting another potentially huge taxpayer bill for the rescue of a failing institution," reports the New York Times.

The sale of the bank is not expected to affect customers, but shareholders and some bondholders will lose the entire value of their investment, the newspaper writes.

Ordinarily, the story would be big news. But, in a sign of just how troubled the United States economy is right now, it caused only a relatively minor blip on the radar screens of the nation's consciousness as everyone focuses on whether Congress will agree to some version of the $700 billion bailout legislation now under discussion, reports the Christian Science Monitor's Global Credit Crisis Blog.

"WaMu’s $307 billion in assets outstrip the $40 billion affected in the 1984 failure of Continental Illinois National Bank, until now the largest US bank failure," the blog post recounts. "Earlier this year, (the) IndyMac failure involved $32 billion in assets."

Additional coverage:

Bloomberg: "WaMu Assets Sold to JPMorgan in Record Bank Failure"

Reuters: "FACTBOX- Key facts about Washington Mutual"

The Ticker (U.S. News & World Report): "Washington Mutual: Not the Last Domino"

ABAJournal.com: "1 Family + 43 WaMu Mortgages = $2.7M in Likely Lender Losses Since 2007"

ABAJournal.com: "Feds Probe Possible Fraud in IndyMac Bank Failure"

ABAJournal.com: "As Banks Reel, Regulation is Suddenly a Hot Topic"

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Posted by Joe Reisinger - 1 month, 3 weeks, 3 days, 22 hours, 33 minutes ago

Just another example of lack of leadership! When, if ever, will this country come to realize that if they want something to be responsibly administered, forget government regulation and bureaucratic oversight and merely provide statutory attorneys fees for any lawyer whose client(s) are injured by the misdeeds of these companies. Why do you think we have relatively safe cars, clean air, and healthy food? It certainly isn’t attributed to the politicians and government bureaucrats who regularly trade jobs with manufacturers, service providers and other industries that create the crisis!

If you need a well documented example to grasp this point, take a look at what happened to the quality of health care in California after passage of the 1975 proposition designed to protect profits of malpractice insurers. The epidemic of medical malpractice does not speak well for a society who professes to know enough to be legitimately entitled to tell other peoples/countries how to run their affairs.

As I see it, the events of this past month are but a few of the tiny, but persistent steps in our inevitable march toward a further loss of world and personal autonomy if we don’t get off this idea of “government as the answer” and return to what build this country’s greatness from the 1770’s to around the early 1900’s. Is there nothing for us to be learned from the collapse of the USSR?

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