WaMu deja vu: Is it Meritor Savings all over again?

Anyone else hear the echoes of 1992 in the federal seizure and quick sale of Washington Mutual Inc. to JPMorgan Chase & Co.?

I'm thinking about Meritor Savings Bank, better known by the bank's storefront name of Philadelphia Savings Fund Society.

On Friday, Dec. 11, 1992, regulators seized Meritor and immediately sold 27 branches and $2.5 billion in deposits to Mellon Bank Corp. for $181 million. Meritor shareholders were wiped out.

Now there is a critical difference between Meritor and Washington Mutual, or WaMu. Meritor was being nursed back to health following an overly aggressive expansion in the 1980s. WaMu has been drowning in a mortgage mess of its own making and seemed to be losing the battle.

Both, however, were hurt by weak national economies and a housing market downturn. And JPMorgan's glee at acquiring a "fabulous franchise," in the words of its CEO Jamie Dimon do mirror Mellon's thrill at snapping up Meritor's branches.

"We wanted to win this bank. We wanted to own this bank," said Mellon vice chairman Tom Donovan back then.

But the seizure of Meritor angered some large shareholders who thought the federal government had changed the rules of the accounting game. Their lawsuit has gone on for years and, despite the odds, they won a judgment of $371.7 million, or $6.75 per share, in February 2006. It's on appeal.

Does that mean WaMu shareholders have any hope of recovery? I wouldn't hold my breath. (And if Meritor shareholders held their breath between 1992 and 2006, I don't like their chances either.)

But you can be sure that the questions will be asked whether federal regulators had to pull the trigger so fast on WaMu. They didn't even wait until the customary Friday night, so that's an indication that they felt they had to move.

And like Mellon back in the 90s, JPMorgan got something it wanted all along.

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