Washington Mutual Rise and Fall

Topics: Washington Mutual, Mortgage, Subprime mortgage crisis Pages: 11 (3801 words) Published: June 21, 2013
University of central Punjab

Final Project

Financial Markets of Pakistan

SUBMITTED TO: Miss. Kainat Riaz

SUBMITTD BY GROUP MEMBERS:

Muhammad Zubair Humayun L1S09BBAM0057
Omer Yousaf L1F09BBaAM2037 Waqas Rafique L1F07BBAM2075

SECTION: A

Washington Mutual

ACKNOWLEDGEMENT

In the name of Almighty Allah who is most Merciful, and who give us strength to accomplish honors. We take this opportunity to acknowledge our teacher’s efforts Miss Kainat Riaz without which our success would not have been possible. Also would like to pay my gratitude to the very cooperative group members Omer, Waqas and Zubair and also want to applaud our parents for their selfless efforts and cooperation.

Executive Summary
This report explains that what were the rise and fall of the Washington Mutual the 119 year old bank. How JP Morgan acquired this bank? How it got bankrupt?

CONTENTS

Acknowledgement2
Executive Summary……………………………………………………………………………….2
History of WASHINGTON MUTUAL4
Principle Line of Business...............................................................................................................5 Reasons of Rise of Washington Mutual…………………………………………………………...6 Reasons of fall of Washington Mutual……………………………………………………………8 Conclusion……………………………………………………………………………………….12 Recommendations…………………………………………………………………………..........13 References………………………………………………………………………………………..14

Washington Mutual
Introduction of Washington Mutual
Washington Mutual, Inc. is a savings bank holding company and the former owner of Washington Mutual Bank, which was the United States' largest savings and loan association. Washington Mutual was incorporated as the Washington National Building Loan and Investment Association on September 25, 1889, after the great Seattle fire destroyed 120 acres (0.49 km2) of the central business district of Seattle. The newly formed company made its first home mortgage loan on the West Coast on February 10, 1890. It changed its name to Washington Savings and Loan Association on June 25, 1908. By September 12, 1917 it was operating under the name Washington Mutual Savings Bank. The company purchased its first company, the financially distressed Continental Mutual Savings Bank, on July 25, 1930. Its marketing slogan for much of its history was "The Friend of the Family". Despite its name, Washington Mutual ceased being a mutual company in 1983 when it demutualized and became a public company on March 11. As of June 30, 2008, Washington Mutual Bank had total assets of US$ 307 billion, with 2,239 retail branch offices operating in 15 states, with 4,932 ATMs, and 43,198 employees. It held liabilities in the form of deposits of $188.3 billion, and owed $82.9 billion to the Federal Home Loan Bank, and had subordinated debt of $7.8 billion. It held as assets of $118.9 billion in single-family loans, of which $52.9 billion were "option adjustable rate mortgages" (Option ARMs), with $16 billion in subprime mortgage loans, and $53.4 billion of Home Equity lines of Credit (HELOCs) and credit cards receivables of $10.6 billion. It was servicing for itself and other banks loans totaling $689.7 billion, of which $442.7 were for other banks. It had non-performing assets of $11.6 billion, including $3.23 billion in payment option ARMs and $3.0 billion in subprime mortgage loans. The FDIC sold the banking subsidiaries (minus unsecured debt or equity claims) to JPMorgan Chase for $1.9 billion, which re-opened the bank the next day. The holding company, Washington Mutual, Inc. was left with $33 billion assets, and $8 billion debt, after being stripped of its banking subsidiary by the FDIC. The next day, September 26, Washington Mutual, Inc. filed for Chapter 11 voluntary bankruptcy in Delaware, where it is incorporated.

Principle line of business
Washington Mutual (WAMU) is a leader in the banking industry, offering a...
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