Straits Times

September 18, 2008

US officials are fiercely putting out a series of economic fires with all eyes now focused on the fate of Washington Mutual after AIG became the latest company to be thrown a lifeline.

According to the New York Post, US banking regulators are actively searching for a candidate to take over the Seattle, Washington-based bank amid fears it could be the next to be felled by the economic maelstrom.

The New York Times said on Wednesday that the bank had hired Goldman Sachs to discuss a possible sale, with possible bidders including institutions such as Wells Fargo, JPMorgan Chase and HSBC.

Washington Mutual, the country’s largest savings and loan, is now seen as one of the firms the most exposed to the current mortgage crisis sweeping the ailing housing sector.

Known as WaMu, it has seen its stocks savaged in a bloodbath on US markets in recent weeks, losing some 85 per cent of their value this year.

Shares plunged again on Wednesday on the stock market losing some 13.36 per cent to end the day at US$2.01 (S$2.87).

The west coast bank’s total share value is now set at less than US$4 billion.

The Wall Street Journal said Wells Fargo and Citigroup had shown an initial interest. But if no buyer emerges, the government could be forced to place the bank into conservatorship, the New York Times said.

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