Wall Street giant J.P. Morgan is poised to take over the assets and deposits of Washington Mutual, one of the major national banks on the verge of failure, CNBC has reported.
Why this matters to Washington and Capitol Hill: It shows the private sector swooping in to take over a bank with troubled assets regardless of where the bailout stands. According to the CNBC report, the Office of Thrift Supervision would seize Washington Mutual's assets, secure its deposits, and J.P. Morgan would take over. In theory, a failing bank like Washington Mutual could have been eligible for some piece of the bailout if it had the troubled debt that Treasury wants to purchase, but if the bank's assets are taken over by J.P. Morgan, then it might not need a bailout.
It's not clear if this type of Wall Street news directly effects the size and scope of the bailout, but it's the type of thing Treasury and Hill officials are watching closely as they craft the details of the legislation.