Federal regulators have expedited their search for a deal for Washington Mutual, as the saving-and-loan continues to bend to mounting pressure, according to The New York Times.
Despite the workings of the bank bailout now in full-swing on Capitol Hill, WaMu has continued to slide deeper into financial distress. Standard & Poors yesterday downgraded WaMu’s debt further into junk territory, citing the increased chance that the company may have to be split up to allow for a sale.
WaMu insists that the downgrades do not affect the safety of customer deposits, which are “insured up to the limits allowed” by the federal government. Brad Russell, a WaMu spokesperson, declined to comment to NYT on rumors regarding a possible sale. Shares fell 24 percent to $2.26/share yesterday, down 83 percent this year.
Citigroup, JPMorgan Chase, HSBC, Banco Santander, and Wells Fargo have all expressed interest in buying all or part of WaMu. Citigroup had considered an offer but will not proceed unless there is some form of government support, according to NYT.
JPMorgan and Wells Fargo are reportedly still pursuing the deal while interest from HSBC and Banco Santander has cooled. It is unknown what form of federal assistance regulators will offer at this point.
Analysts project that WaMu will accumulate losses of up to $30 billion or more because of the worsening housing crisis.