FDIC Takeover May Be WaMu’s Fate

September 22, 2008 No Comments »

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Despite drawing interest from a number of powerful suitors, struggling thrift Washington Mutual may still up end in the hands of the FDIC, according a report from the WSJ.

Throughout the weekend, WaMu held talks with potential buyers, though expected mortgage losses of $19 billion over the next two years and change continue to be a serious deal killer.

And even if a deal were to happen, it would likely be government-assisted takeover, similar to the situation over at Indymac Federal Bank.

Interested banks such as Citigroup, Chase, Wells Fargo, and Banco Santander would opt for the FDIC to seize control of the bank and mortgage lender, and then divvy up the good assets and hold onto the bad.

The WSJ noted that other options are still out on the table, including a possible capital infusion from federal regulators, though given they burnt through their last $7 billion from TPG, it might not make a lot of sense.

Regardless of the scenario that ultimately plays out, it doesn’t look good for shareholders, especially since the FDIC seems to be looking for resolution sooner rather than later.

Shares of WaMu were down 71 cents, or 16.71%, to $3.54 in early trading Monday on Wall Street.

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