Bay Area reacts to WaMu collapse

September 26, 2008 11:11:38 PM PDT
Nothing has changed outside of Washington Mutual branches around the Bay Area, but inside all deposits and assets now belong to JP Morgan Chase. While Friday some depositors came to the bank to get answers to what they sale meant to their deposits, others came to the bank to pull out their money.

When Washington Mutual banks opened their doors in Oakland Friday morning some depositors lined up outside had decided that having their bank fail was a warning they could not ignore.

"At this point I'm just going to walk away," Washington Mutual customer Fernanda Fisher said. "As I said, it's something I thought of doing anyway, this just pushed me over the edge.'

Denise Carattini runs a chain of preschools in Salinas. For eight years she has banked with Washington Mutual. The news of its collapse and sale took he by surprise.

"I also have another account with Union Bank; I think I'm going to switch over," Carattini said. "I am going to take my money out."

The Federal Office of Thrift Supervision reports that since news of the bank's troubles first surfaced one year ago, depositors have pulled out around $16 billion.

Thursday, JP Morgan Chase bought Washington Mutual's name and assets for $1.9 billion, while the Federal Deposit Insurance Corporation, which had seized the bank, kept and will deal with its bad debts.

The bank became a deal JP Morgan Chase could not refuse, Stanford University economics professor Jonathan Berk said.

"In a liquidity crisis someone with liquidity is going to buy assets at a low price," he said.

JP Morgan Chase assures customers that they "may continue banking as usual, and feel confident that their deposits are secure, now backed by the strength and security of JP Morgan Chase," according to a statement on their Web site.

That sentiment was backed by Washington Mutual employee Craig Campbell.

"It is business as usually 100 percent, from a customer standpoint, you wouldn't notice a difference," Campbell said. "It'll take six months for that to happen."

Most depositors feel their money is secure.

"My funds are FDIC insured," Washington Mutual customer Patrick Tao said. "I'm not worried about losing my money at all."

Branches will continue to operate under the Washington Mutual name for the next six months, but at that point the JP Morgan Chase name will take over at all branches and customers will be issued new debit and credit cards with the new name.


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