September 25, 2008 / 2:13 PM / 10 years ago

Regulators try to broker WaMu deal: reports

NEW YORK (Reuters) - U.S. regulators are trying to quickly broker a deal for Washington Mutual Inc (WM.N), a large U.S. savings and loan crippled by mortgage losses, the New York Times reported on Thursday.

A pedestrian walks past a Washington Mutual bank branch in New York City September 17, 2008. REUTERS/Mike Segar

Separately, the Wall Street Journal reported that Washington Mutual had approached private equity firms about a takeover.

Carlyle Group CYL.UL and Blackstone Group LP (BX.N) are among firms that are considering a deal, the Journal said, citing unnamed sources. It reported that these firms would team up with Texas billionaire and bank investor Gerald J. Ford for a possible transaction.

Both newspapers said federal regulators were actively involved in deciding the fate of the thrift, including soliciting interest in a potential government-assisted transaction.

Sources previously told Reuters that regulators are eager for the company to forge a deal, but no deadline or requirement has been placed on the bank to accept a takeover offer or split itself among several suitors.

The Journal said it was not clear if discussions with private equity firms would result in a deal, and WaMu is moving ahead with other efforts that include a sale to another financial institution.

Spain’s Banco Santander SA (SAN.MC) has withdrawn as a suitor, and Canada’s Toronto-Dominion Bank (TD.TO) has expressed only tepid interest, the Journal said.

Citigroup Inc (C.N), J.P. Morgan Chase & Co (JPM.N) and Wells Fargo & Co (WFC.N) are reluctant to absorb WaMu’s loans after conducting due diligence, it said.

WaMu came under further pressure on Wednesday when Standard & Poor’s slashed its credit rating deep into “junk” territory.

The thrift replaced its chief executive this month after suffering losses totaling $6.3 billion over the previous three quarters. It has projected $19 billion in mortgage-related losses through 2011.

Washington Mutual ended August with $143 billion in retail deposits, roughly triple the size of the entire Federal Deposit Insurance Corp fund that backs customer deposits.

WaMu declined to comment on Journal report, the newspaper said.

Spokespeople for Banco Santander and Citigroup declined to comment when contacted by Reuters.

WaMu, Carlyle Group, Blackstone Group, Toronto-Dominion Bank, J.P. Morgan, Wells Fargo and Gerald Ford could not immediately be reached for comment.

Reporting by Paritosh Bansal; Additional reporting by Savio D'Souza in Bangalore; editing by John Wallace

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