Rival investment bank purchases troubled firm including $176 billion in home loans.
JPMorgan Chase’s strategic move to rescue Washington Mutual allows the investment bank to gain the market lead in the West Coast after WaMu’s dominance in New York and other states. Though the public is assured that there will be no change of service with the planned acquisition, the nation was surprised with some of the news.
First, the troubled bank has a whopping real estate loan portfolio that other banks had already turned down before JPMorgan’s rescue. For a financial institution as large as WaMu, it was startling to know that it had blown things out of proportion with excessive loan-selling a few years back. Even its former chief Kerry Killinger admitted to the mistake. Then again, we need to know how JPMorgan can turn things around and manage the bad loans it has purchased.
Second, the newly elected CEO Alan Fishman, who is up until now unsure of whether he will be replaced, is guaranteed a severance pay of almost $6 million. Just a few weeks ago, the former CEOs of Fannie Mae and Freddie Mac, Daniel Mudd and Richard Syron, made big headlines because of their excessive compensations. Should America put up with golden parachutes in exchange for these ludicrous CEOs and their smothered companies?
Third, WaMu’s clients have mixed reactions with the bank’s recovery. It shouldn’t be a cause for panic now that it will be under new management. What should concern depositors is the financial institution’s mired reputation in the height of the crisis. Who would want to entrust their savings to a company that has been obsessed with greed? It’s not the only bank in the country where you and I can keep our money. Think about it.
If there is anything to be feared, it’s not WaMu’s future. It’s the string of bankruptcies that will continue to plague America in the coming months.