David Bonderman and Alan Fishman got a big surprise yesterday from the federal government.
Bonderman, founder of TPG private equity firm, was a major investor in the struggling Washington Mutual. Fishman became CEO of the bank just three weeks ago.
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In the nation’s biggest bank failure to date, the FDIC seized WaMu last night, and then quickly sold it to JPMorgan Chase for $1.9 billion.
Bonderman, a former WaMu director who led a $7 billion investment in the company in April, will lose big. Fishman, however, has a golden parachute.
The New York Times reports that Fishman will keep his $7.5 million signing bonus and is eligible for another $11.6 million in severance pay.
With $307 billion in assets, WaMu was a threat to the solvency of the FDIC, which insures customer bank accounts up to $100,000 per person, per institution. The federal insurance fund,depleted by the earlier failure of IndyMac Bank, totaled just $45.2 billion at the end of June.
The Times reports that the WaMu takover was a shock to the company’s board as well as its CEO, who was flying from New York to Seattle when the deal was completed.
TPG released a statement yesterday, saying simply: “Obviously, we are dissatisfied with the loss to our partners from our investment in Washington Mutual.”
The Wall Street Journal’s report today was equally bleak:
The fact that no bank was willing to buy WaMu until it failed shows how badly confidence has eroded in a banking system awash with record profits just a few years ago. Faced with deepening losses on mortgages, credit cards and other loans, big and small banks across the country are struggling with what many bank executives say is a crisis far deeper than the savings-and-loan debacle.
This is the second fire sale in which JPMorgan has acted as buyer. The company bought Bear Stearns in March.
([Muckety.com](https://createpositivechange.org/2008/09/26/wamu-seized-by-federal-regulators-sold-to-jpmorgan-chase/5222)