By Paritosh Bansal
July 19 The remnants of Washington Mutual Inc,
the biggest U.S. bank to fail, has hired Blackstone Group LP
to advise it on how to grow -- possibly in a business
other than banking.
In an unusual step, WMI Holdings, the parent
company of the failed bank, is considering buying companies or
starting businesses using a $125 million credit facility,
"substantial cash" and advice from the Wall Street private
WMI has not decided what it would buy and the target may not
be a financial services company, sources familiar with the
The idea is to find a good management team and a profitable
operating business that can be grown, the sources said, adding
that the process was still in the initial stages.
One attraction for the company is its net operating
liabilities, or NOLs, which can be used to reduce the tax bill
for a profitable business, the source said.
But for that WMI would have to be the buyer, as NOLs do not
carry over if the company that holds them is acquired, the
"It could create a lot of value to buy a business," the
Based in Seattle, Washington Mutual was 119 years old when
regulators seized it on Sept. 25, 2008, at the height of the
financial crisis. With $307 billion in assets, it was one of the
biggest corporate casualties of the crisis, alongside Lehman
Brothers Holdings and Bear Sterns, and remains the largest U.S.
bank or thrift to fail.
Regulators arranged the immediate sale of the main banking
operations, known as WaMu, to JPMorgan Chase & Co for
$1.88 billion. Washington Mutual's holding company filed for
bankruptcy protection the next day.
A series of acquisitions carried out by Chief Executive
Kerry Killinger in the 1990s transformed the company from a
small savings and loan to what would become the sixth-largest
U.S. bank by assets. In 1999, WaMu acquired Long Beach
Financial, a subprime mortgages lender based in California. More
acquisitions followed in the coming years, and WaMu, through
aggressive sales, became the nation's largest mortgage lender.
The company exited bankruptcy in March, after nearly three
and a half years of court battles. Blackstone
had served as an adviser to the company during its Chapter 11
The assets of WMI Holdings include a unit that is winding
down a Washington Mutual reinsurance business.