Updated from 8:23 a.m. EDT
You can find more stories like this in our On the Brink series. JPMorgan Chase (JPM Quote) struck a deal Thursday night to buy all the deposits, assets and certain liabilities of Washington Mutual's (WM Quote) banking operations after the Seattle-based company was seized by regulators. The takeover, arranged by the Office of Thrift Supervision and the Federal Deposit Insurance Corporation, excludes the senior unsecured debt, subordinated debt and preferred stock of Washington Mutual's banks. JPMorgan Chase won't acquire any assets or liabilities of the banks' parent holding company or the holding company's nonbank subsidiaries. As part of the transaction, JPMorgan Chase will pay the FDIC about $1.9 billion. Washington Mutual was once the largest U.S. thrift, and its failure is the biggest ever for a domestic bank. This is the second time this year JPMorgan has come to the rescue of an ailing financial giant. In March, it bought Bear Stearns after the investment bank nearly collapsed. The acquisition of Washington Mutual's banking operations should add to earnings immediately and boost profits by more than 50 cents a share in 2009. JPMorgan Chase expects to incur pretax merger costs of about $1.5 billion while achieving annual pretax cost savings of roughly $1.5 billion by 2010. Before being salvaged, Washington Mutual had been teetering for months, and its downfall makes it the latest financial institution to be undone by the housing slump and credit crisis.
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