U.S. Financial Crisis Causes Washington Mutual To File Chapter 11 After FDIC Seizure

Seattle, WA (AHN) - The deepening financial crisis has claimed another victim, Washington Mutual, once the biggest holding company for savings and loans banks.

After a year long financial crisis caused by bad mortgage loans in the United States, Washington Mutual, Inc., filed for bankruptcy protection together with its wholly-owned subsidiary, WMI Investment Corp.

The bank had been trying to raise capital to shore up its finances amid its unsuccessful efforts to value the mortgage-related assets and to trade in the market that faces credit slump.

The announcement by the company to get bankruptcy protection after the Federal Deposit Insurance Corporation (FDIC) seized Washington Mutual (WM) in the country's largest bank failure ever.

Parts of the beleaguered bank was then sold to JPMorgan Chase for $1.9 billion for its insured deposits, assets and some liabilities of firm's banking operations.

The company commenced voluntary cases under chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware.

Once the biggest holding company for the savings and loans banks, Washington Mutual said in a statement that it filed Chapter 11 after the Office of Thrift Supervision had appointed the Federal Deposit Insurance Company as receiver of Washington Mutual Bank on Sept. 25.

Meanwhile, market analysts have speculated that the Federal Deposit Insurance Corporation may require additional capital of $150 billion to rescue or support potential banks at risk.

Accounts with more than $100,000 in deposits per bank are not insured, according to FDIC. The FDIC also does not cover insure financial products such as annuities, mutual funds, life-insurance policies, stocks and bonds.