$700-Billion Bailout Plan In A Quandary
The Bush administration’s $700 billion bailout plan to save the American financial system seems to have hit a stalemate after leaders could not reach an agreement, reports Wall Street Journal. The hectic negotiations by leaders on Capitol Hill on Thursday night failed to deliver any concrete result.
WSJ reports that negotiators broke off talks Thursday night with no agreement. Apparently what caused the trouble was a competing plan by Republicans late Thursday, which “derailed a carefully crafted compromise previously taking shape”.
JPMorgan Chase Acquires WaMu’s Deposits, Assets & Liabilities
JPMorgan Chase & Co. has announced it has acquired all deposits, assets and certain liabilities of Washington Mutual’s banking operations from the Federal Deposit Insurance Corporation (FDIC), effective immediately. Excluded from the transaction are the senior unsecured debt, subordinated debt, and preferred stock of Washington Mutual’s banks. JPMorgan Chase will not be acquiring any assets or liabilities of the banks’ parent holding company (WM) or the holding company’s non-bank subsidiaries.
As part of this transaction, JPMorgan Chase will make a payment of approximately $1.9 billion to the FDIC. The acquisition expands Chase’s consumer branch network into the attractive states of California, Florida and Washington State and creates the nation’s second-largest branch network – with locations reaching 42% of the U.S. population.
Chase expects to convert Washington Mutual’s consumer banking, home lending and credit card businesses to the Chase brand and technology platforms over the next two years.
JPMorgan Chase Announces $8 Billion Capital Raising Plan
JPMorgan Chase & Co. has also announced it intends to offer $8 billion of its common stock for sale to the public. J.P. Morgan Securities Inc. will serve as sole bookrunning manager and underwriter for the transaction. The underwriter will have a 30-day option to purchase up to an additional 15% of the offered amount of common stock from the company to cover over-allotments, if any.
Citigroups May Sell $79B Of Assets
Vikram Pandit led Citigroup’s assets worth $79.4 million may be eligible for sale under the government’s proposed bail out plan. Citigroup may also raise capital to allay fears in the market and send a signal about its soundness, according to a report in Reuters.