The Hindu Business Line : Federal regulators moving fast to broker a deal for WaMu: report

NEW YORK: With financial pressure mounting on Washington Mutual, federal regulators are moving fast to broker a deal for US's largest saving and loan association, a media report says.

“Even as Washington moves to bail out financial institutions, the fortunes of Washington Mutual have spiralled downward,'' the New York Times report said.

On Wednesday, Standard & Poor's, a major credit rating agency, downgraded Washington Mutual's debt further into junk territory, citing the increased chance that the company might have to be split up to facilitate a sale, the report added.

However, the report further stated that WaMu insists it is well-capitalised and has adequate access to funding and noted “the rating actions do not affect the safety of customer deposits, which are insured up to the limits allowed'' by the federal govern ment.

Mr Brad Russell, a Washington Mutual spokesman, declined to comment on speculation about a possible sale, the report said.

The government's entrance suggests the sales process may be entering a new phase after the bank struggled to find an interested buyer.

WaMu had vowed that it could remain independent, but it quietly hired Goldman Sachs early last week to identify potential bidders, the NYT report said.

Among the banks that have expressed interest in buying all or part of Washington Mutual are Citigroup, JPMorgan Chase, HSBC, Banco Santander, and Wells Fargo. While, it is unclear what form of assistance federal regulators will now offer, the report adde d.

Analysts suggest that Washington Mutual, which plunged into the sub-prime mortgage and credit card business over the last few years, could rack up more losses totalling $30 billion or more. - PTI

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