NOTICE On the surface, it seems that JPMorgan Chase got a good deal. It only paid $1.9 billion for about $300 billion in assets. But Chase had to write down $31 billion in bad loans. It also needed to raise $8 billion in new capital to keep the bank going. No other bank bid on WaMu. Citigroup, Wells Fargo, and even Banco Santander South America passed on it.
But Chase wanted WaMu's network of 2,239 branches and strong deposit base. The acquisition gave it a presence in California and Florida. It had even offered to buy the bank in March 2008. Instead, WaMu selected a $7 billion investment by the private-equity firm, Texas Pacific Group.
Who Suffered the Losses
Bondholders, shareholders, and bank investors paid the most significant losses. Bondholders lost all $30 billion in their investments in WaMu. Most shareholders lost all but two cents per share.
Others lost everything. For example, TPG Capital lost its entire $1.35 billion investment. The WaMu holding company sued JPMorgan Chase for access to $4 billion in deposits. Deutsche Bank sued WaMu for $10 billion in claims for defunct mortgage securities. It said that WaMu knew they were fraudulent and should buy them back. It was unclear whether the FDIC or JPMorgan Chase was liable for many of these claims.
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