Last updated October 8, 2008 5:06 p.m. PT
Cantwell seeks explanation of WaMu seizure
By BILL VIRGIN
P-I REPORTER
Sen. Maria Cantwell wants federal regulators to explain the timing and sequence of decisions and actions that led to the seizure and sale of Washington Mutual's banking operations.
The Washington Democrat said the answers she gets will determine whether to pursue an inquiry into the Sept. 25 takeover of the bank, such as formal hearings.
In raising the issue, Cantwell is echoing the complaints of many WaMu shareholders who were left with virtually worthless stock in the parent holding company once the Office of Thrift Supervision took over the subsidiary bank and the Federal Deposit Insurance Corp. sold most of the operations to JPMorgan Chase.
In particular those shareholders question whether regulators acted too hastily in taking over WaMu and should have allowed the company more time to find a buyer or raise additional capital. Regulators have said they had to move in because a run on the bank's deposits threatened its safety and soundness. Shareholders say regulators' notice to potential bidders that they were planning to move on WaMu effectively closed off the potential of a sale that might have returned something to them.
"We definitely want OTS and FDIC to walk us through that," Cantwell said.
Another point of contention with shareholders is why other troubled financial companies were given time to work out sales, while WaMu was taken over. "There have been different approaches to what's happening," Cantwell said, adding that she'd like to hear why regulators took the action they did in the case of WaMu.
Cantwell has raised the issue before. In remarks on the Senate floor Oct. 1, during a debate over a federal bailout plan for Wall Street and banks, Cantwell asked "who were the winners and losers" in the sale of the banking operations to JPMorgan Chase. "It is very convenient for us to now choose that we are going to add to J.P. Morgan's bottom line," she said.
She called on JPMorgan Chase to stand up for retirement and deferred compensation plans (which the bank is doing). She recommended the federal government make equity investments in financial institutions so that it got a share of good assets as well as bad loans.
In other news concerning WaMu:
JPMorgan Chase named David Schneider, who had been president of WaMu's home loan operations, to be head of WaMu's retail banking operations and its 2,200 branches.
Schneider said he'll be responsible for running WaMu branches until they're converted to the Chase brand, and planning for the switch and consolidation of locations that are close to one another. He said no timetable has been set for the conversion. Schneider joined WaMu in June 2005.
Microsoft Corp. filed a notice of appearance in federal court in Delaware in the bankruptcy case of Washington Mutual Inc., the holding company that has filed for Chapter 11 protection. "We filed a notice of appearance because we have existing contracts for software licenses and consulting services with Washington Mutual and we want to make sure those contracts are properly administered through the bankruptcy process," a spokesman said.
Chase Bank said it has linked its network of automated teller machines to Washington Mutual's, allowing WaMu customers to use Chase ATMs without a fee and vice versa. WaMu had nearly 5,000 ATMs. With the addition of WaMu, Chase now operates 14,000.
P-I reporter Bill Virgin can be reached at 206-448-8319
