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September 26, 2008

Should investors worry about bank solvency?

Why Buy Now

"JPMorgan Chase has acquired the banking operations of Washington Mutual which was seized by US regulators on Thursday night in the biggest bank failure in US history.

Under the deal, which was brokered by government, JPMorgan will pay $1.9bn to the banking regulator, and acquire all insured and uninsured deposits, assets and some of the liabilities of WaMu’s banking operations, including its troubled mortgage portfolio.

JPMorgan will not acquire claims by equity, subordinated and senior debt holders, said the Federal Deposit Insurance Corporation, which facilitated the transaction.

The intervention by regulators follows months of intensifying pressure on WaMu, the latest to be brought down by the mortgage crisis.

Shares in WaMu, which specialised in providing home mortgages, credit cards and other retail lending products, have lost nearly all their value in recent months.

An outflow of deposits began on September 15 2008, totalling $16.7bn, making WaMu 'unsafe and unsound' to transact business, according to the Office of Thrift Supervision, WaMu’s main regulator, which closed the bank on Thursday night. "

*This information is solely an excerpt of a third-party publication and is incomplete. Please subscribe to the referenced publication for the full article. This is not an offer to buy or sell precious metals. Investors should obtain advice based on their own individual circumstances and understand the risk before making any investment decision.

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