David Bonderman and Alan Fishman got a big surprise yesterday from the federal government.
Bonderman, founder of TPG private equity firm, was a major investor in the struggling Washington Mutual. Fishman became CEO of the bank just three weeks ago.
In the nation’s biggest bank failure to date, the FDIC seized WaMu last night, and then quickly sold it to JPMorgan Chase for $1.9 billion.
Bonderman, a former WaMu director who led a $7 billion investment in the company in April, will lose big. Fishman, however, has a golden parachute.
The New York Times reports that Fishman will keep his $7.5 million signing bonus and is eligible for another $11.6 million in severance pay.
With $307 billion in assets, WaMu was a threat to the solvency of the FDIC, which insures customer bank accounts up to $100,000 per person, per institution. The federal insurance fund,depleted by the earlier failure of IndyMac Bank, totaled just $45.2 billion at the end of June.
The Times reports that the WaMu takover was a shock to the company’s board as well as its CEO, who was flying from New York to Seattle when the deal was completed.
TPG released a statement yesterday, saying simply: “Obviously, we are dissatisfied with the loss to our partners from our investment in Washington Mutual.”
The Wall Street Journal’s report today was equally bleak:
The fact that no bank was willing to buy WaMu until it failed shows how badly confidence has eroded in a banking system awash with record profits just a few years ago. Faced with deepening losses on mortgages, credit cards and other loans, big and small banks across the country are struggling with what many bank executives say is a crisis far deeper than the savings-and-loan debacle.
This is the second fire sale in which JPMorgan has acted as buyer. The company bought Bear Stearns in March.
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