JP Morgan Buys Washington Mutual

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WASHINGTON -(Dow Jones)– JPMorgan Chase & Co. (JPM) acquired Washington Mutual Inc. (WM) via a bidding process, after the thrift became the biggest bank failure in U.S. history, regulators announced late Thursday.

“With insufficient liquidity to meet its obligations, WaMu was in an unsafe and unsound condition to transact business,” the Office of Thrift Supervision said in a release.

The Federal Deposit Insurance Corp. took over as receiver of the thrift and held a bidding process that resulted in the takeover by JPMorgan, it said.

JPMorgan said in separate releases that it would pay the FDIC about $1.9 billion for all deposits, assets and certain liabilities of Washington Mutual’s banking operations. It also plans to sell $8 billion in common stock.

That payment means the FDIC’s national deposit-insurance fund won’t take a hit from WaMu’s demise, said FDIC Chairman Sheila Bair in a conference call with reporters.

“There will be no cost to the deposit insurance fund,” she said.

The acquisition of the $307 billion thrift marks the latest upheaval in the U.S. financial crisis that has claimed some of the biggest firms Wall Street this month, including government bailouts of insurer American International Group Inc. (AIG) and mortgage giants Fannie Mae (FNM) and Freddie Mac (FRE).

The Seattle-based company, which has been wracked by heavy losses in the mortgage crisis, suffered outflows of deposits totaling $16.7 billion since Sept. 15, the OTS said. WaMu, the largest savings association overseen by the agency, had more than $188.3 billion in deposits as of June 30, with 2,200 branch offices in 15 states.

“The housing market downturn had a significant impact on the performance of WaMu’s mortgage portfolio and led to three straight quarters of losses totaling $6.1 billion,” OTS Director John Reich said in the release, saying that conditions had deteriorated in the last three months.

The ownership change won’t impact the bank’s depositors or other customers, the OTS said, with branches scheduled to open Friday as usual.

However, while senior debt holders will have first claim to any asset recovery, shareholders could be wiped out.

-By Tom Barkley, Dow Jones Newswires; 202-862-9275; tom.barkley@dowjones.com

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Goldman, Morgan to Become Bank Holding Companies

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THE NEW YORK TIMES

DEALBOOK

In one of the biggest changes to Wall Street in decades, Goldman Sachs and Morgan Stanley, the last two independent investment banks, will become bank holding companies, the Federal Reserve said Sunday night.

The move fundamentally changes one of the mainstays of modern Wall Street. It heralds new regulations and supervisions of previously lightly regulated investment banks.

The move comes after the bankruptcy of Lehman Brothers and the near-collapses of Bear Stearns and Merrill Lynch.

Being a bank holding company would give Morgan and Goldman access to the discount window of the Federal Reserve. While they have had access to Fed lending facilities in recent months, regulators had planned to take away discount window access in January.

The regulation by the Federal Reserve brings a host of accounting rule changes that should benefit the two banks in the current environment.

In return, they will submit themselves to greater regulation, including limits on the amount of leverage they can take on.

–Vikas Bajaj and Michael J. de la Merced

Go to Federal Reserve Press Release »

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Sirius-XM Merger Approved by Justice Department

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Justice Department gives thumbs up to satellite radio merger more than one year after it was first announced.

CNN/MONEY

March 24, 2008: 4:21 PM EDT

In its decision, the Department of Justice determined that an XM-Sirius merger was not anti-competitive. The Justice Department argued that other media companies such as Clear Channel (CCU, Fortune 500), CBS (CBS, Fortune 500), or even Apple (AAPL, Fortune 500) with its iTunes software and iPod music player served as alternate options for music and media customers.

The Department of Justice did not place any conditions on the merger.

“Since we determined that there was no competition between the companies, we did not need to set any conditions as such,” said Assistant Attorney General Thomas Barnett during a conference call with reporters Monday afternoon.

But the Federal Communications Commission must also approve the deal. The FCC has yet to make a decision on the merger and it could decide to place conditions on the deal. A spokesperson for the FCC was not immediately available for comment.

Since Sirius and XM are still awaiting approval from the FCC, it is unclear exactly what a merger would mean for consumers. Both companies charge their customers a $12.95 per month subscription fee for their most basic packages. Some have feared that if Sirius and XM are allowed to merge, the two companies would raise the monthly price.

However, the companies said last year that they would be willing to offer a so-called “a la carte” price plan where consumers could pick certain packages for less money.

The merger would combine the nation’s only two satellite radio companies and create a company with about 14 million subscribers. It would bring together Sirius’ most well-known content, including shock jock Stern and National Football League games with XM’s Major League Baseball as well as programming from Oprah Winfrey.

Currently, subscribers for either Sirius or XM can only receive broadcasts from one of the two services with their satellite radios. But in a statement Monday, XM reiterated that radios owned by its current subscribers would not need to be replaced in order to continue receiving programming.

Shares of XM (XMSR) and Sirius (SIRI) both rose after the announcement.