Focus on Banking:FDIC Takes Action

When depositors made a run on Washington Mutual,withdrawing some 16 billion dollars U.S.in a hurry,the Federal Deposit Insurance Corporation took control of the institution,selling it to J.P.Morgan Chase for 1.9 billion dollars U.S..WAMU executives were surprised by the move.JPM assumed all assets,posting a welcome message on WAMU's website.All holders of WAMU debt and equity were essentially wiped out.The acquisition gave JPM more than 5400 branches and the largest U.S. depository base.It will result in 1.5 billion in pretax savings by 2010.There is a 10% overlap of JPM and WAMU operations.JPM will also raise eight billion of capital by a share offering,and it will write down 31 billion in bad WAMU holdings.Once again,JPM was a godsend,helping the government manage the financial crisis,having earlier purchased failed investment bank Bear Stearns.It is doubtful,however,that JPM could handle anything else in the near future,making a rescue plan all the more necessary.Jamie Dimon is CEO of J.P.Morgan Chase.The FDIC acted again Sunday night,taking control of Wachovia Bank(WB),and selling its banking operations to Citigroup(C).Wachovia will retain its brokerage and wealth management units.Citi is paying 1.00 of Citi stock per Wachovia share.Sheila Bair is Chairman of the FDIC.