JP Morgan To Purchase WaMu Deposits

The WSJ is reporting that JP Morgan will purchase the bulk of Washington Mutual's operations. This is being billed as a "government brokered deal," although it is not expected to affect the FDIC.  Perhaps the Fed is granting yet another one of its generous Bear Stearns-like loans?  The Fed seems to like arranging these types of deals for JP Morgan.  Details of who exactly will be swallowing the losses from WaMu's $60 billion option arm portfolio will be revealed on the conference call at 9:15 pm Eastern.    

Update: JP Morgan is acquiring Washington Mutuals assets and deposits from the FDIC for $1.9 billion.  Reuters reports that the FDIC felt it had to seize the bank before Friday to quell customer anxiety fueled by media leaks.  WaMu had suffered an exodus of $16.7 billion in deposits since September 15th, leaving it with insufficient liquidity.  Shareholders and senior bondholders will be wiped out in the deal.  

Why do we need a $700 billion bailout when JP Morgan can just buy every ailing bank?  Seriously, this is a fine example of why we shouldn't allow the government to pay "hold-to-maturity" prices for assets.  In this situation, a bank failed, and a healthier bank was willing to purchase the assets and deposits.  Shareholders and bondholders were wiped out, depositors were saved, and JP Morgan assumed the remaining risk in WaMu's portfolio because it purchased the assets at what it determined was a good price.  This proves that investors are willing to make opportunistic acquisitions at the right price.  Paulson and Bernanke's idea of buying assets from banks at prices above fair value would be a money-losing proposition.