The Collapse Of Washington Mutual Essay

1321 WordsNov 29, 20166 Pages
J.P. Morgan planned to close branches of Washington Mutual that J.P. Morgan was already settled and successful in. Sidel, Robin, David Enrich, and Dan Fitzpatrick. "WaMu Is Seized, Sold Off to J.P. Morgan, In Largest Failure in U.S. Banking History." WSJ. Wsj.com, 26 Sept. 2008, 25 Nov. 2016. Sidel, Enrich, and Fitzpatrick discuss what lead to the collapse of Washington Mutual back in 2008. Leading up to the collapse of Washington Mutual, the downfall of the housing market was impacting the mortgage portfolios of Washington Mutual. A month before the collapse the bank tried to auction itself off, with little to no offers. Washington Mutual’s customers began pulling out their deposits, reaching $16.7 billion in just a couple days after Lehman Brothers had filed for bankruptcy protection on September 15, 2008. Because of the overwhelming amount of deposits that had been pulled from the bank, Washington Mutual did not have enough cash or liquidity resources to meet their obligations and in turn proved to be an unsafe bank to do business with. The FDIC rapidly set a deadline for offers by parties interested in taking over the bank on a Wednesday instead of the usual Friday that the FDIC has been known to do in the past. Eventually on that Thursday, J.P. Morgan bought Washington Mutual for $1.9 billion. J.P. Morgan was able to start business in states that they had not been apart of before including California and Florida, where Washington Mutual had over 900 branches located.

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