WaMu Sale Hasn't Closed, Document Suggests
It seems hard to believe, but the sale linked to the biggest bank failure in U.S. history is still pending.
Federal regulators confirmed to me today that their deal to sell Washington Mutual to JPMorgan Chase remains in the works nearly two years after they seized it. While they didn't rule out the possibility that some details of the deal could change, they said changes are likely to be minor and wouldn't affect the price.
The Federal Deposit Insurance Corp. agreed to sell WaMu to JPMorgan Chase for $1.9 billion on Sept. 25, 2008. But thanks to a series of extensions the deal has never actually closed.
The fact arose because of an FDIC document that shows the deal's final settlement has been extended until Aug. 30, 2010. The document surfaced after a WaMu shareholder made a public disclosure request to find out if the sale had closed, and was surprised by what he found.
“Everyone is saying the sale is finalized,” said the shareholder, Farokh Lam, of Woburn, Mass. “It is not.”
Lam noticed that on pages 7 and 9, the original WaMu purchase and assumption agreement allows the FDIC to extend the settlement date. He says he asked about it, and the FDIC confirmed in phone calls and emails that the settlement date was set for Aug. 30, 2010, and could be extended further.
This raised hopes of some compensation for WaMu shareholders, who lost all of their investment the moment regulators seized the bank. WaMu's final days were chronicled in depth by Puget Sound Business Journal Staff Writer Kirsten Grind in an award-winning series.
Lam is one of these shareholders. He said he hoped the FDIC would change the price and demand more from JPMorgan Chase. Other shareholders have chimed in with comments on our blog and have sent Lam messages via Facebook.
But the FDIC cautiously downplayed those hopes today. "The P and A is signed," said FDIC spokesman Andrew Gray. Extensions allow the FDIC "to settle administrative issues," he added, such as options on leases for branch offices, reconciling account balances and in some cases pending litigation.
"Generally speaking," Gray said, "administrative issues would not affect the purchase price."
Tom Kelly, a spokeswoman for New York-based JPMorgan Chase & Co. (NYSE: JPM) declined to comment on the record about the question because he didn't want to raise false hopes among shareholders.
Another FDIC official also said the deal isn't likely to change much.
"We’re working with Chase to make sure that the original transaction is satisfied and everyone is happy with the deal," said Mark Taylor, acting manager of receivership oversight for the Federal Deposit Insurance Corp., based in Dallas.
Apparently, many of the other bank sales the FDIC has conducted since the financial crisis also are still pending. "Since 2007, (extension) is the rule rather than the exception," Gray said. "There are other P and As that have not settled that were prior to WaMu." The FDIC has been receiver for some 250 failed banks since the financial crisis began.
WaMu "is one of 250," Gray said. "This is a very large transaction, there’s no denying that."
Read more: WaMu sale hasn't closed, document suggests - Puget Sound Business Journal (Seattle)
seattle.bizjournals.com/seattle/blog/2010/...ent_suggests.html
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