What is the largest US Bank that collapsed last September?
WASHINGTON — U.S. thrifts eked out a $4 million profit in the second quarter, but the number of troubled institutions continued to rise, the government said Wednesday. The Office of Thrift Supervision said the small profit in the April-June period marked the industry’s first positive earnings since the third quarter of 2007. It compared with a loss of $5.4 billion in the year-ago period, and $1.62 billion in the first quarter of this year. “Problem thrifts” on the Treasury Department agency’s confidential list, those rated by examiners as having significantly low capital reserves and other deficiencies, rose to 40. That’s up from 31 in the first quarter and 17 a year earlier. Thrifts, also known as savings and loans, differ from banks in that, by law, they must have at least 65 percent of their lending in mortgages and other consumer loans — making them particularly vulnerable to the housing downturn. The industry’s first-quarter loss of $1.62 billion was much wider than the previously
New York – Washington Mutual Inc. has been shut down by the US government in a move that marks the largest failure of a US bank, with JPMorgan Chase & Co. acquiring its banking assets through a bidding process for $1.9 billion. Hit by the credit crunch and subprime mortgage crisis, Washington Mutual or WaMu, the largest US savings and loan bank, was shut by the federal Office of Thrift Supervision (OTS) on Thursday while the Federal Deposit Insurance Corp (FDIC) was named receiver. According to OTS, the move was necessary as having “insufficient liquidity to meet its obligations, WaMu was in an unsafe and unsound condition to transact business.” “Pressure on Washington Mutual intensified in the last three months as market conditions worsened,” said John Reich, director of the OTS. After three straight quarters of losses totaling $6.1 billion on mortgages gone bad and as outflow of deposits that began on September 15 reached $16.7 billion, without sufficient cash to meet its obligations
Washington Mutual is long gone, but its lax lending could haunt us for years. After the chaos surrounding Lehman’s demise, WaMu was put to rest with little fuss. Regulators seized the nation’s sixth-biggest bank on a Thursday night — a departure from the customary Friday — and sold it to JPMorgan Chase (JPM, Fortune 500) for $1.9 billion. Even so, Americans will be paying for some years for the ill-advised loans made earlier this decade by WaMu and like-minded peers such as Wachovia. Defaults on the exotic mortgages the firms specialized in have been high, and they could rise even further in coming months as payments jump for some borrowers. That should add to the stress on the banking system, in the housing markets and in foreclosure-riddled communities. Sources: http://money.cnn.com/2009/09/08/news/economy/wamu.fallout.fortune/?
