# Arithmetic of WaMu seizure & sale **URL:** \ **Category:** Factual Questions\ **Created:** [September 27, 2008, 12:56am UTC](https://boards.straightdope.com/t/arithmetic-of-wamu-seizure-sale/465423 "2008-09-27T00:56:39Z")\ **Posts on this page:** 4\ **Page:** 1
**Author:** ![CookingWithGas](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/cookingwithgas/32/485_2.png) [@CookingWithGas](https://boards.straightdope.com/u/CookingWithGas)\ **Post date:** [September 27, 2008, 12:56am UTC](https://boards.straightdope.com/t/arithmetic-of-wamu-seizure-sale/465423/1 "2008-09-27T00:56:39Z")
From an article quoted in another thread: > [@](#): > > Under the deal, JPMorgan Chase will acquire all the banking operations of WaMu, including $307 billion in assets and $188 billion in deposits. > > In exchange for scooping up WaMu, JPMorgan Chase (JPM, Fortune 500) will pay approximately $1.9 billion to the Federal Deposit Insurance Corporation. > > … > > The FDIC, however, was quick to point out Thursday evening that the WaMu-JPMorgan Chase deal would not have any impact to its insurance fund which covers customer deposits when banks fail. > > “WaMu’s balance sheet and the payment paid by JPMorgan Chase allowed a transaction in which neither the uninsured depositors nor the insurance fund absorbed any losses,” Bair said. OK, deposits are liabilities on the bank’s balance sheet. I don’t know what the assets are, probably some combination of buildings, investments, and receivables on loans that are still good (they plan to write off about $31 billion of subprime loans). So the net is roughly $200 billion. If FDIC didn’t have to pay any claims, and JPMC is getting a bottom line of $200 billion, why did they pay only 1% of that amount? This is like the bellhop and the missing dollar. (The stockholders lost everything, but they are not part of this equation. I don’t know what happens to the $1.9 extra large that the FDIC gets.) I hope I am asking a simple accounting question but I suspect this gets complicated. ---
**Author:** ![OldGuy](https://avatars.discourse-cdn.com/v4/letter/o/3bc359/32.png) [@OldGuy](https://boards.straightdope.com/u/OldGuy)\ **Post date:** [September 27, 2008, 8:17pm UTC](https://boards.straightdope.com/t/arithmetic-of-wamu-seizure-sale/465423/2 "2008-09-27T20:17:26Z")
> [@CookingWithGas](#): > > From an article quoted in another thread: > > OK, deposits are liabilities on the bank’s balance sheet. I don’t know what the assets are, probably some combination of buildings, investments, and receivables on loans that are still good (they plan to write off about $31 billion of subprime loans). So the net is roughly $200 billion. > > If FDIC didn’t have to pay any claims, and JPMC is getting a bottom line of $200 billion, why did they pay only 1% of that amount? This is like the bellhop and the missing dollar. (The stockholders lost everything, but they are not part of this equation. I don’t know what happens to the $1.9 extra large that the FDIC gets.) > > I hope I am asking a simple accounting question but I suspect this gets complicated. I don’t know without more information, but I suspect for one thing that in addition to writing off $31 billion, many of the other loans are not worth their face value which is probably the stated value of the assets in the description. ---
**Author:** ![SmackFu](https://avatars.discourse-cdn.com/v4/letter/s/53a042/32.png) [@SmackFu](https://boards.straightdope.com/u/SmackFu)\ **Post date:** [September 27, 2008, 10:48pm UTC](https://boards.straightdope.com/t/arithmetic-of-wamu-seizure-sale/465423/3 "2008-09-27T22:48:28Z")
If you look at the investor presentation on [this page](http://investor.shareholder.com/jpmorganchase/presentations.cfm), page 17 has the math. It’s formatted more nicely there, but here’s the numbers: > [@](#): > > Tangible assets assumed $296 > Liabilities assumed 265 > Net assets $31 > Loan marks (31) > Reversal of loan loss reserve 8 > Other PAA (6) > Adjusted net asset value $2 > Consideration (2) > Pro forma capital impact $0 ---
**Author:** ![CookingWithGas](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/cookingwithgas/32/485_2.png) [@CookingWithGas](https://boards.straightdope.com/u/CookingWithGas)\ **Post date:** [September 29, 2008, 5:27pm UTC](https://boards.straightdope.com/t/arithmetic-of-wamu-seizure-sale/465423/4 "2008-09-29T17:27:53Z")
> [@SmackFu](#): > > If you look at the investor presentation on [this page](http://investor.shareholder.com/jpmorganchase/presentations.cfm), page 17 has the math. It’s formatted more nicely there, but here’s the numbers: The answer seems to be buried in there. The article I quoted said deposits of $188 billion but didn’t mention other liabilities. This presentation shows liabilities of $265 billion. The presentation also shows assets of $296B and the article shows $307B. That pretty much accounts for the discrepancy (I made a $100 billion error in my OP, good thing I’m not their accountant :o). Thanks for finding the real numbers!!!