INSTANT VIEW: WaMu is largest U.S. bank failure

NEW YORK (Reuters) - Washington Mutual Inc (WM.N) was closed by the U.S. government in by far the largest failure of a U.S. bank, and its banking assets were sold to JPMorgan Chase & Co (JPM.N) for $1.9 billion. The rescue marks a historic step to clean up a U.S. financial system littered with toxic mortgage debt. Washington Mutual, the largest U.S. savings and loan, was closed by the federal Office of Thrift Supervision, and the Federal Deposit Insurance Corp was named receiver. Customers should expect business as usual on Friday, the FDIC said. Wamu shares, which plunged 25 percent in the main session, lost another 73 percent in after-hours trading. JPMorgan shares were up 2.4 percent. The following is reaction from investors, industry analysts: CHOI SEONG-LAK, MARKET ANALYST, SK SECURITIES "JPMorgan's acquisition of Washington Mutual's deposits comes as a relief to investors, as there have for sometime been anxieties about the fate of WaMu, whether it will go bankrupt like Lehman. JPMorgan's intervention has prevented the worst case scenario." CHANG IN-WHAN, CHIEF EXECUTIVE AND FUND MANAGER, KTB ASSET MANAGEMENT "It simply shows the entire financial crisis is still progressing, nowhere near an end. Even if they manage to salvage some financial firms, they will have to go through asset sales and widescale job cuts, which will inevitably hurt the economy and push house prices further down. The real economy, consumption and other aspects will feel the impact." LEE TAE-YOON, FUND MANAGER, MIRAE ASSET "We view the announcement as positive news. The direction in which problems with troubled banks have been resolved via acquisitions is right. That will help stabilize financial markets and have a positive impact on stock markets." GOH YOU-SUN, ECONOMIST, DAEWOO SECURITIES "I expect more acquisition cases similar to JP Morgan-Wamu ... but while this will definitely be a boost to market sentiment, it's hard to tell how strong an impact it would have without improvements in the fundamental mortgage sector ... which I don't see recovering until the first half of next year." IM NO-JUNG, MARKET ANALYST, SOLOMON INVESTMENT & SECURITIES "As we have seen in today's market moves, the news of JP Morgan's takeover of Wamu's assets sounds positive, but is just a minor issue compared to whether the United States finalizes the bailout plan or not." "The stock market is even going down after the news. In other words, the deadlocked bailout plan has a stronger impact." "To describe the situation, if an agreement on the U.S. bailout was a river, the Wamu deal would be a small stream." KIM HAG-JU, HEAD OF RESEARCH, SAMSUNG SECURITIES "WaMu's acquisition by JP Morgan is positive in that the troubled financial institution was able to be taken over, and its losses more or less absorbed by the acquirer, though the price tag would have been very low. Financial institutions, including those in South Korea, have been having a very hard time raising necessary capital as there's utter distrust in the markets. Hopefully things will get better from here as the markets regain some stabilization." SAVANTH SEBASTIAN, EQUITIES ECONOMIST AT COMMONWEALTH SECURITIES, SYDNEY "This is one step forward in helping to clear out the concerns in the U.S. financial system. Certainly, we are working our way through the crisis. What's really required at the moment is U.S. Congress to step forward and show united front on the bail out plan. That's really where the uncertainty is at the moment, that's really what will give markets a catalyst for turnaround." "This move to buy deposits and branches really will alleviate pressures on capital at JP Morgan and improve the funding base. It's good result for JP Morgan. Increasing the deposit base is always a good of a longer-term sources of cheaper capital." DAVID COHEN, SINGAPORE-BASED ECONOMIST AT ACTION ECONOMICS "The names that been on the market's minds, that people have been focused on for the last 6 months, have finally been dealt with. The final step this week will be passage of the $700 billion package by the U.S. that would come to grips with the toxic assets so banks can start lending." "The markets are going to remain volatile over the near term but at the same time, we could be reaching the end of all this uncertainty. Warren Buffett earlier this week wrote a check to buy a stake in Goldman and Li Ka-shing bought shares in Bank of East Asia. Historically, these guys have made money when everyone is running for the hills. You have to have a little bit of nerves I guess." SHANE OLIVER, HEAD OF INVESTMENT STRATEGY AT AMP CAPITAL IN SYDNEY "The problem has been known about for sometime so fundamentally it is a good thing. (Washington Mutual) being taken over by the FDIC and JPMorgan is positive as it removes an uncertainty from the market." "But U.S. futures are down. The problem is that markets are in a jittery stage. Washington Mutual provides another reminder how tenuous things are." NANCY BUSH, ANALYST, NAB RESEARCH, ANNANDALE, NEW JERSEY "It's very unsurprising. It had been speculated for a long time that JPMorgan was going to buy Washington Mutual or Wachovia, and Washington Mutual presented itself first. JPMorgan got branches from Bank of New York, and revamped them. So they've have plenty of experience in revamping retail franchises, which is what they'll be doing with these branches." "Washington Mutual had been teetering on the brink for quite awhile. It is surprising that it has hung on for as long as it has." RICK MECKLER, CHIEF INVESTMENT OFFICER, LIBERTYVIEW CAPITAL MANAGEMENT, NEW YORK, NY "JPMorgan is a strong hand, they're a good operator. It probably is a good deal for them." "I think it's really just showing you that the problems have become not only so large but in some ways they fed on themselves -- the more distressed sales you have, the more it creates problems for other security holders." "I think what (Dimon) did right is he appeared to have built up the fire power to step into these situations, in terms of having the capital, in terms of having avoided some of the problems that other people had. "He has been a good risk manager, he has been able to reap the benefits." MATT MCCORMICK, PORTFOLIO MANAGER AT BAHL & GAYNOR INVESTMENT COUNSEL, INC. IN CINCINNATI, OHIO "Jamie Dimon is clearly feeling that he has an opportunity to grab market share, and get it at firesale prices. There will clearly be two types of banks: those that survive, and those that don't. Dimon will survive and dominate. He's becoming an acquisition machine." (Reporting by Dan Wilchins and Elinor Comlay in New York, Denny Thomas in Sydney, Park Jung-youn, Kim Yeon-hee, Rhee So-eui, Angela Moon and Park Ju-min in Seoul, Kevin Lim in Singapore) ʘ