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Bailout in chaos, WaMu is largest US bank failure

Posted by Manish Agrawal on Friday, 26 September, 2008

A rescue for the US financial system unraveled on Thursday amid accusations Republican presidential candidate John McCain scuppered the deal, and Washington Mutual was closed by US authorities and its assets sold in America’s biggest ever bank failure.

As negotiations over an unprecedented $700 billion bailout to restore credit markets degenerated into chaos, the largest US savings and loan bank was taken over by authorities and its deposits auctioned off. US stock futures fell by more than 1 percent.

The third-largest US bank JPMorgan Chase & Co said it bought the deposits of Washington Mutual Inc, which has seen its stock price virtually wiped out because of massive amounts of bad mortgages. The government said there would be no impact on WaMu’s depositors and customers. JPMorgan said it would be business as usual on Friday morning.

Had a bailout deal been reached in Congress, it may have helped the savings and loan, founded in Seattle in 1889. Efforts to find a suitor to buy WaMu faltered in recent days over concerns about whether the government would reach a deal to buy its toxic mortgages. Earlier on Thursday, US lawmakers had appeared close to a final agreement on the bailout, lifting world stock markets and sending the dollar higher. But things spun off course during an emergency White House meeting between Congressional leaders with US President George W. Bush.

In advance of that meeting, which included the two men battling to succeed him, Democrat Barack Obama and McCain, a compromise bipartisan deal seemed imminent.

After the session, Congressional leaders said an agreement could take until the weekend or longer.

Source : Economictimes.com

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