The seizure of Washington Mutual (WM) and transfer of deposits to JPMorgan Chase (JPM)has gone smoothly and will not cost taxpayers a dime, said Sheila Bair, the chairman of the Federal Deposit Insurance Corporation, in a Friday interview on FOX Business.
Federal regulators seized the deposits of Seattle-based Washington Mutual Thursday night. WaMu’s failure is the largest bank failure in U.S. financial history.
Bair said the FDIC and other federal regulators decided to move forward with the seizure of WaMu on a Thursday -- instead of the traditional Friday seizure -- because of increasing press reports that WaMu was about to be taken over.
“We needed to expedite the situation,” Bair said.
Because JPMorgan Chase has decided to back all of WaMu's deposits, Bair said the FDICwill not have to tap into its $45 billion insurance pool. Also, the FDIC has more than enough deposits to cover any future bank failures.
“We always have enough,” she said. “People need to remember that we’re the government, and are backed with the full faith and credit of the United States Government. No one has ever lost a dime of insured deposits in our 75-year history.”
Since the subprime mortgage crisis has caused several banks to fail, there have been some worries that the FDIC would not have enough to cover a massive banking failure. WaMu’s $150 billion in deposits could have theoretically wiped out the FDIC’s $45 billion insurance fund.
Bair said there has been “some re-balancing” of banking customers moving uninsured deposits into insured deposits.
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