The queasy acceleration of bank rescues continued in the U.S. and in Europe last week and over the weekend. JPMorgan Chase acquired Washington Mutual; Citigroup absorbed Wachovia; the Dutch, the Belgian, and Luxembourg governments bailed out Fortis; and the U.K. treasury nationalized Bradford & Bingley, with Santander’s Abbey National taking over B&B’s branches.
While neither WaMu nor Wachovia failed in the eyes of the Federal Deposit Insurance Corp., there is little doubt that without government intervention the institutions would have been failures 13 and 14 in 2008. The JPMorgan Chase/WaMu deal looks like the better one for U.S. taxpayers: the bank will pay the FDIC $1.9 billion for WaMu’s banking business, and will mark down by $31 billion the broken loan portfolio that comes along with all those branches. The FDIC Deposit Insurance Fund was not tapped.