Washington Mutual
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| Washington Mutual logo | |
| Industry | Finance and Insurance |
|---|---|
| Founded | September 25, 1889[1] |
| Defunct | September 25, 2008[1] |
| Fate | Insolvency. Closure by the Office of Thrift Supervision. Transferred to the FDIC who then sold WaMu to JPMorgan Chase. |
| Successor | JPMorgan Chase |
| Headquarters | Seattle, Washington, United States |
Key people | Alan H. Fishman, Chief Executive Officer |
| Products | Consumer Banking Financial Services |
| Revenue | US$15.962 billion |
Number of employees | 49,403 |
| Subsidiaries | WaMu Investments, Inc; Washington Mutual Insurance Services; Washington Mutual Card Services |
Washington Mutual (abbreviated to WaMu) was the United States' largest savings and loan association.[2] Despite its name, it ceased being a mutual company in 1983. It was publicly traded on the New York Stock Exchange.
On September 17, 2008, it was announced that Washington Mutual had put itself up for sale and that Goldman Sachs had begun an auction a few days before.[3] On September 25, 2008, the United States Office of Thrift Supervision (OTS) announced that it was seizing WaMu and would sell most of its functional assets to JPMorgan Chase.[4] At September 26, 2008, the collapse of WaMu is the largest U.S. bank failure in history.[5]
Summary
As of June 30, 2008, Washington Mutual had $309.7 billion in total assets. They had 327.9 billion in total assets at the end of 2007. Total assets dropped by 5.5% since the beginning of 2008. Washington Mutual's total assets were in decline beginning December 2006. In fewer than two years, Washington Mutual's total assets had declined by 10.6%.
Washington Mutual's principal activities were to provide financial services to consumers and small businesses such as retail banking, mortgage lending, consumer lending, business banking, business lending, insurance services, credit-card services, commercial real estate mortgage and consumer-investment services.
Washington Mutual was the final surviving major Seattle-based bank after the flurry of mergers in the 1980s and 1990s ended the independence of Rainier Bank, Seafirst Bank, and Peoples National Bank, among others.
Washington Mutual operated more than 2,600 retail-banking, mortgage-lending, commercial-banking, and financial-services offices, as of June 30, 2006.
On September 15, 2008, shares slipped 27% and the price dropped to $2 per share. The bank's rating by Standard & Poor's was lowered to "BB-".[6]
History
Washington Mutual was founded as the Washington National Building Loan and Investment Association on September 25, 1889, in an attempt to save Seattle's economy after a fire nearly destroyed the city. The newly formed company made its first home mortgage loan on the West Coast on February 10, 1890. Its name was changed to Washington Savings and Loan Association on June 25 1908. During World War I, its assets expanded by 68%.
By 1930, it was now called Washington Mutual Savings Bank. The company purchased its first company, Continental Mutual Savings Bank, on July 25 1930. Over the next fifty years, it was involved in pioneering cash machine networks and telephone banking.
Its marketing slogan for much of its history was "The Friend of the Family". It is now "Simpler Banking, More Smiles".
In 1983, Washington Mutual bought the brokerage firm, Murphey Favre, and demutualized. By 1989, its assets had doubled.
In October 2005, Washington Mutual purchased the "subprime" credit card issuer Providian for approximately $6.5 billion.
In March 2006, Washington Mutual began moving into its new headquarters, WaMu Center, located in downtown Seattle. The company's previous headquarters, Washington Mutual Tower, still stands about a block away from the new building on Second Avenue.
In August 2006, Washington Mutual began using the official abbreviation of WaMu in all but legal situations.
Subprime mortgage crisis
In December 2007, WaMu announced a reorganization of its home-loan division which resulted in closing 160 of its 336 home-loan offices. This resulted in a loss of 2,600 positions in its home-loan staff (a 22% reduction).[7]
In April 2008, WaMu, responding to losses and difficulties sustained as a result of the 2007-2008 Subprime mortgage crisis, announced a $7 billion infusion of new capital by new outside investors led by TPG Capital, formerly Texas Pacific Group. TPG agreed to pump $2 billion into WaMu; other investors, including some of WaMu's current institutional holders, agreed to buy an additional $5 billion in newly issued stock. The bank announced that 3,000 people companywide would lose their jobs, and the company stated its intent to close its approximately 186 remaining stand-alone, home-loan offices, including 23 in Washington State and a loan-processing center in Bellevue, Washington. It stopped buying loans from outside mortgage brokers — known in the trade as "wholesale lending." [8]
Losses continued to mount, however. In June 2008, Kerry Killinger stepped down as the Chairman, though remaining the Chief Executive Officer.[9] On September 8, 2008, under pressure from investors WaMu's board of directors ousted Kerry Killinger as the CEO. Alan H. Fishman, chairman of mortgage broker Meridian Capital Group, and a former chief operating officer of Sovereign Bank, was named the new CEO.[10]
On September 17, 2008, The New York Times reported that WaMu's share prices had fallen to $1.54 and that the company had hired Goldman Sachs to facilitate an auction of the bank.[11]
On September 25, 2008, federal regulators seized WaMu assets and sold most of it to JPMorgan Chase & Co. WaMu directors were kept in the dark before the announcement.[12] JPMorgan Chase purchased WaMu's assets and qualified financial contracts for $1.9 billion. At the same time, the Office of Thrift Supervision closed WaMu and made the FDIC receiver. The transaction, arranged by the FDIC, does not require drawing from the FDIC insurance fund.[13] Washington Mutual equity shares were not bought and it is believed shareholders will be wiped out in the deal.[12]
Gallery
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A Washington Mutual Financial Center in San Jose, California
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Washington Mutual's new headquarters, WaMu Center (center left) and former headquarters, Washington Mutual Tower (center right) in Seattle, Washington.
References
- ^ a b Bansal, Patriosh (2008-09-26). "FDIC crashes WaMu's birthday bash". DealZone. Thomson Reuters. Retrieved 2008-09-26.
{{cite web}}: Check date values in:|date=(help) - ^ $5 Billion Said to Be Near for WaMu - New York Times
- ^ " WaMu puts itself up for sale, report says"
- ^ " J.P. Morgan to Take Over Faltering WaMu"
- ^ [1]
- ^ "WaMu lowered to junk by S&P". CNN. September 15, 2008.
- ^ "Washington Mutual to Take Writedown, Slash Dividend (Update2)By Elizabeth Hester
- ^ "$7 billion gives shaky WaMu firmer footing for now", Drew DeSilver, Seattle Times, April 9, 2008. Retrieved April 9, 2008.
- ^ "WaMu Strips CEO Killinger of Chair Title
- ^ " WaMu replaces CEO, signs agreement with regulator"
- ^ "WaMu puts itself up for sale, report says"
- ^ a b Dash, Eric (September 26, 2008). "Government Seizes WaMu and Sells Some Assets". Business. The New York Times. p. A1. Retrieved 2006-09-26.
{{cite news}}: Unknown parameter|coauthors=ignored (|author=suggested) (help) - ^ "JPMorgan Chase Acquires Banking Operations of Washington Mutual". FDIC. 2008-09-25.
See also
- Whoo hoo! - Washington Mutual advertising campaign