Wamu fails, bailout plan update

Here's a quick update from the Wall Street Journal web site regarding Washington Mutual:

"J.P. Morgan Chase & Co. was expected to announce as early as Thursday night a deal to acquire the bulk of Washington Mutual Inc.'s operations in a deal that would mark the end of independence for what once was the largest U.S. thrift.

"Federal regulators have been heavily involved in orchestrating the transaction, which comes as WaMu was besieged by a mountain of bad mortgage loans. WaMu, of Seattle, has been scrambling to find a solution and put itself on the auction block last week. A number of interested parties have been studying WaMu's books, but the bank didn't receive any offers.

"While the exact structure of the transaction wasn't immediately known, J.P. Morgan is expected to acquire Washington Mutual's deposits and branches, as well as other operations.

"The deal isn't expected to result in any hit to the bank-insurance fund, which would be a huge relief given that some analysts worried that a failure of the thrift could cost more than $20 billion."

UPDATE: More details should come out at 9:15 this evening, when JPMorgan is scheduled to hold a conference call on the matter, per the New York Times.

Meanwhile, some resistance from Republicans, including Senator Richard Shelby of Alabama appears to be throwing a wrench in the bailout plan works temporarily. From the New York Times:

"The status of a rescue plan for the nation’s financial system was in doubt, at least for the moment, on Thursday as lawmakers emerged from a White House meeting with President Bush to say that negotiations have a ways to go.

“My hope is that we can get a deal,” said Senator Christopher J. Dodd, chairman of the Senate Banking Committee, hours after House and Senate negotiators had announced that an accord was at hand. It had also been President Bush’s hope that an agreement could be announced after the late-afternoon meeting.

"Looking tired and annoyed, Mr. Dodd complained that late complications were making the episode sound more like “a rescue plan for John McCain,” the Republican presidential candidate, than one for the country’s financial system.

"It does no good, Mr. Dodd said, “to be distracted for two or three hours by political theater.”

"The senator was apparently alluding to a growing revolt by conservative House Republicans against the proposed $700 billion rescue, and the fact that Senator McCain has not yet endorsed the plan, whose concept runs contrary to the policy positions he has taken for years."

UPDATE2: The FDIC and JPMorgan have more on Wamu. Here is the FDIC release. The release refers to the OTS "closing" Wamu, which would likely make this the biggest bank failure in the history of the country.