online.wsj.com
WaMu, Under U.S. Pressure, Scrambles for Deal or Capital
By DAN FITZPATRICK, ROBIN SIDEL and DAVID ENRICH
Washington Mutual Inc. pushed Sunday to decide its fate, continuing talks with potential buyers amid mounting pressure from federal regulators.
The Seattle thrift has drawn interest from potential suitors such as Citigroup Inc., J.P. Morgan Chase & Co., Wells Fargo & Co. and Banco Santander SA of Spain, according to people familiar with the situation.
While some people close to the discussions hope a deal could be struck within days, one stumbling block is that a straightforward sale of WaMu would require the buyer to absorb the company's troubled assets.
With WaMu expecting losses of $19 billion on its mortgage portfolio during the next 2½ years, some would-be bidders favor a government-assisted takeover, people familiar with the matter said. One scenario is that the Federal Deposit Insurance Corp. would seize control of WaMu's banking unit and then sell its deposits to another bank.
The buyer would have the right to pick the branches and assets it wanted to buy along with WaMu's deposits. But that would leave the government to grapple with the riskier leftovers.
Executives and directors at WaMu also are weighing other options, including raising additional capital, possibly with assistance from federal regulators. But falling housing prices and deepening tumult in the U.S. financial system have made it much harder to attract outsider investors.
At WaMu, pressure to resolve the uncertainty swirling around the company is coming from the FDIC, which has been taking an increasingly tough stance with troubled financial institutions.
A FDIC spokesman declined to comment Sunday. A spokesman from the Office of Thrift Supervision, which also regulates WaMu, said "we are aware of the situation and following closely" but declined further comment. |
