Hidden in the Details: $30B+ of Writedowns

Key to JPMorgan Chase & Co.'s ability to take over Washington Mutual is a dramatic, $30 billion proposed writedown of WaMu's home loan portfolio, far in excess of the remaining loss rate WaMu had earlier projected on the portfolio. In addition, JPMorgan expects to write down other assets in WaMu's overall portfolio by about $1 billion. JPMorgan Chase has already unveiled plans to raise $10 billion in capital related to the acquisition of WaMu's $307 billion in assets. JPMorgan Chase priced an offering of approximately 247 million common shares at $40.50 per share Friday morning, with an option to sell up to an additional 37 million shares. WaMu's assets included $176 billion of residential mortgage loans. As of June 30, when the mortgage portfolio was slightly larger, payment-option adjustable-rate mortgages accounted for $52.9 billion of that total. Subprime mortgages accounted for $16 billion. WaMu's home loan portfolio also included $60.4 billion of home equity products.