WaMu bank customers flock to branches to find business as usual
Washington Mutual depositors rush to check on their accounts at Southern California locations a day after the bank failed and was sold to JPMorgan Chase. So far, calm has supplanted panic.
Washington Mutual depositors flocked to Southern California branches to check on their accounts this morning, a day after their bank failed, was seized by federal regulators and sold to JPMorgan Chase & Co. But most were relieved to find it was pretty much business as usual.
At a WaMu branch in Larchmont Village in Los Angeles, about a dozen people waited in line before the doors opened at 9 a.m.
"Everybody is scared," said Zahira Fazilat of Laguna Niguel, who withdrew a few thousand dollars from her savings account last week and moved it to Bank of America. "It's recession time. You deposit money to pay your bills and God forbid the next day your bank is closed."
But after talking to a bank representative, Fazilat, a skin-care specialist, said she felt comfortable depositing two checks into her checking account.
Customers stood outside reassuring one another that things would be OK. Inside, bank workers were handing out papers with information on Thursday's takeover.
Although some depositors said they were worried, most said they expected a smooth transition to JPMorgan Chase.
"Everything just like usual -- no problem," said Patricia Arakaki of Hancock Park after depositing a check and withdrawing money. "I have a huge bank behind me, so I'm fine."
WaMu, which had suffered huge losses in its mortgage loan and credit card businesses, had seen its stock plummet and was further crippled as nervous depositors withdrew $16.5 billion in the last two weeks. Although its collapse was not entirely unexpected, the failure is the latest in a series that have shaken the financial world.
Thursday's sale of WaMu will make JPMorgan the No. 1 U.S. bank by deposits, with more than $900 billion. Bank of America Corp. will be No. 2, with $785 billion.
JPMorgan's stock rose today on the news, up $2.94, or 6.8%, to $46.40 in the midafternoon. But shares of other banks that have suffered problems similar to WaMu's were taking a beating.
Wachovia was down $5.15, or 37.6%, to $8.55. Downey Financial Corp fell $1.67, or 42.8%, to $2.23 about an hour before markets closed.
WaMu was brought down by the kind of lending practices that now jeopardize the global financial system -- including granting mortgages to borrowers without demanding sufficient collateral or proof of their ability to make payments. As housing prices have tumbled, many of these borrowers have defaulted on the loans.
