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Home >> Keeping Your Money Safe
What to do after WaMu failure
I woke up this morning to news that Washington Mutual -- WaMu -- had failed. I have all my banking business there -- checking account, some CDs, my car loan and mortgage, and my IRA, too! Please tell me I don't have to panic. |
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 Relax with your morning coffee. Washington Mutual was, indeed, put into receivership Thursday afternoon, September 25, 2008. WaMu's federal regulator, the Office of Thrift Supervision (OTS), appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. The OTS said that the action was taken because WaMu had experienced "material outflows" of deposits since September 15 due to upheavals in national and world financial markets. The $16.7 billion in deposit withdrawals was also the result of adverse ratings of the stock of the bank's holding company, Washington Mutual, Inc.
The FDIC immediately announced that JPMorgan Chase (Chase) had acquired WaMu's banking operations. Chase took over WaMu's assets and financial contracts. The FDIC press release said that it should be "business as usual" at WaMu offices Friday morning. Because Chase acquired all of WaMu's deposits, customers with balances over the limits of FDIC coverage will not experience any losses as a result of the receivership and sale. Your account numbers won't change -- at least until late next year (2009) when Chase will begin combining the two banks' systems and operations. You can also continue to make payments on your car loan and mortgage, and any automatic account transactions -- direct deposit, loan payments, insurance premium payments, etc., will not have to be updated.
If you have deposit accounts at both WaMu and Chase, you should check your combined balances, and talk to a bank customer representative about FDIC coverage limits. If your balances were under the limits in the two banks before Chase took over, those balances will continue to be treated as if they are in separate banks for six months (special rules apply to CD accounts; ask about them). After that grace period, your balances will be combined under one set of insurance limits.
All in all, the WaMu receivership has resulted in a speeded up purchase of the bank. At least for the next several months, there should be no significant changes (other than signage and new color schemes at former WaMu offices). However, we do recommend that you pay careful attention to any notices from the bank, in the mail, with statements, or on its website. As with all bank mergers, when operations finally get combined there will be some changes you will need to make. The bank will tell you when you can use Chase branches for deposits and withdrawals, when the two banks' ATM networks will be merged, whether there will be changes affecting your accounts, if branches will be combined or closed, etc. Keeping up with those notices will help ensure that you aren't surprised by the changes that will eventually come.
We hope that sets your apprehensions to rest. If you need more information, we have noticed that Chase has already posted an informational notice on the WaMu website (wamu.com). You will find more helpful information there.
Published on BankingQuestions.com 9/26/2008
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