New York (HedgeCo.Net) – JPMorgan Chase & Co. has purchased Washington Mutual’s branch network for $1.9 billion, making them the largest U.S. bank by deposits. The deal was encouraged by the U.S. government after consumers withdrew over $16 billion from the nation’s largest savings and loan in the latter half of September.

WaMu was having trouble finding a buyer after the Treasury’s proposed $700 billion bailout package created reluctance among would-be investors. Others companies said to have been considering an offer included Citigroup and Wells Fargo.

Many believed that WaMu was next in line to sink thanks to over $180 billion in outstanding mortgage-related loans and the paranoia of a pending liquidity crunch. On top of that, Standard & Poors once again cut WaMu’s ratings to CCC from BB-, though the company was quick to quell any fears associated with the downgrade.

"Washington Mutual Bank’s deposit rating from Standard & Poor’s continues to be investment grade and it is important to note that Standard & Poor’s rating actions do not affect the safety of customer deposits, which are insured up to the limits allowed by the FDIC," said WaMu in a recent statement.

Washington Mutual continued to deny rumors of any problems. The bank recently stated they had over $50 billion in liquidity despite being hit hard by the subprime mortgage fallout.

It was just a few months ago that WaMu rejected a bid from JPMorgan for about $4 a share, even after JPMorgan urged the bank to consider a deal before the economy got worse.

JPMorgan, who also acquired Bear Stearns earlier this year, will not inherit WaMu’s liabilities, including claims by shareholders and subordinated and senior debt holders. By purchasing WaMu, Chase can now increase their presence on the West Coast and in Florida.

Julie Scuderi
Senior Editor for HedgeCo.Net
Email: julie@hedgeco.net

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Tags: bankruptcy-filing, buyouts, chief-executive, curbs, doldrums, eliot-spitzer, environmental-technologies, film-financing, fullman, housing-loans, junk-status, mutual-fund, paul-touradji, security-authorities, small-group

Folks, I want to share some information with you on "hedge funds."

I have wanted to do this for some time now, but it seems each week some other topic pushes this one aside.

Hedge funds are simply large – no, huge is a better term – piles of money. The very rich and very large institutions, like pension funds and banks, give billions of dollars to a "money manager" to play with. These funds aren’t used to produce anything. They are mainly for the manipulation of markets.

Hedge funds are the least regulated of all money institutions. That in itself is scary because when we deregulated the savings and loan industry, greed cost the taxpayer, you and me, in the neighborhood of $750 billion. Then, when we deregulated the banking industry, it cost us, the taxpayers, $500 billion to save banks from their own greed. This was the recent sub-prime mortgage fiasco. And of course the sub-prime problem not only cost taxpayers, it also cost home owners a number too large to write in this space, in lost home value.

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Tags: allegations, capitalists, citgroup, crude-prices, doldrums, indefinite-period, luxuries, mayhem, OH, portfolio-managers, subsidies

Reuters – An activist British hedge fund has taken a 6 percent stake in Washington Mutual Inc as the largest U.S. savings and loan tries to rebound from billions of dollars of mortgage-related losses.

The London-based fund, Toscafund Asset Management, also reported a 5.1 percent stake in Sovereign Bancorp Inc, the second-largest U.S. thrift.

Toscafund revealed the passive stakes in separate filings Thursday with the U.S. Securities and Exchange Commission.

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Tags: aftermath, bad-news, bankruptcy-filing, doldrums, finance, firebrand-partners, investment-arm, mayhem, new-marketplace, news-press, taylor-wimpey, trillion