JPMorgan Buys WaMu After OTS Takeover

The Office of Thrift Supervision seized control of Washington Mutual Thursday night and then handed the thrift over to the Federal Deposit Insurance Corp., which immediately sold the ailing servicing giant to JPMorgan Chase & Co. for $1.9 billion. The two parties -- which had been talking on and off about a deal over the past year -- agreed to terms after news reports began to surface that five mutual funds had formed a consortium to make a bid for WaMu. A handful of other bidders were looking at WaMu, a fact acknowledged by OTS Director John Reich, who noted that the pending $700 billion bailout of the industry affected the deal. "I think it was a significant distraction, and it probably played a role in the interest of some parties to decide not to make a bid," Mr. Reich said. The OTS said it closed WaMu Thursday because of a run on its "jumbo" deposits, particularly in California. WaMu had loan concentrations in California and Florida, which have the nation's highest foreclosure rates. "WaMu was a victim of one of the worst downturns in the housing market," said the OTS chief. The S&L is the nation's fifth-largest residential servicer, with $600 billion in housing receivables. It is also the nation's largest S&L, with $307 billion in assets.