Savers at Wachovia and WaMu protected

Bank facade

Thanks to two recent bank buyouts, Washington Mutual customers are now JPMorgan Chase customers, and Wachovia customers will soon be Citibank customers.

Citibank announced Sept. 29 that it was buying Wachovia's banking operations. Federal regulators brokered the deal.

Although Wachovia didn't technically fail, it suffered big losses in the past year because of its involvement in the mortgage market, particularly with option adjustable-rate mortgages, which come with low teaser rates and allow homeowners to avoid paying some of the interest for years.

Wachovia customers won't notice any difference now because the transaction doesn't close until the end of the year. And there's no reason to yank your money out of Wachovia, especially if it means you'll have to pay early withdrawal penalties.

You can expect to see Wachovia branches and accounts turned into Citibank branches and accounts sometime next year.

But a Citibank spokesperson said that no decisions have been made about what (if any) changes will be made to Wachovia accounts once it takes over, and it plans to honor the terms of existing Wachovia CDs.

WaMu, on the other hand, did fail, which is why the government stepped in to take control of it on Sept. 25, in what's being called the biggest bank failure in history.

It wasn't the first bank to fail this year -- California-based lender IndyMac was seized by the government in July. Like IndyMac, WaMu has struggled with lots of bad mortgages over the past year.

Since mid-September, nervous savers have withdrawn $16.7 billion from WaMu, severely damaging WaMu's liquidity, according to the Office of Thrift Supervision.

As a result, concern mounted that WaMu would fail and put a big drain on the U.S. banking system reserves. So WaMu was taken over by federal regulators and sold to JPMorgan Chase.

The Federal Deposit Insurance Corp., a government agency formed during the Great Depression that insures accounts at its member banks, actually brokered the deal.

If you bank at Washington Mutual, don't worry: Your money is safe and fully accessible.

When a bank fails, federal regulators usually manage the business until they can deal with all of the bad loans and sell what's left of the business to another financial company.

But since WaMu was sold so quickly, JPMorgan began managing the business right away and this failure should be no more traumatic than any other bank acquisition for its customers.

Even though WaMu is now part of JPMorgan Chase, you can still use:

Your local branch. All WaMu offices will be open normal hours and fully functional.

WaMu ATMs. The bank's automated teller machines will still dispense and receive cash. Eventually WaMu customers will be also be able to use more than 9,300 Chase ATMs for free. But that will take a little time.

Your account info. Your WaMu account number, checks and online banking password still work.

WaMu debit cards. You can still deposit cash at your local branch, and your WaMu debit cards will remain active.

FDIC Chairman Sheila Bair said it should be a seamless transition for bank customers, stressing that there would be no interruption in services and that bank customers should expect business as usual.

If you had an account at both JPMorgan Chase and WaMu before the takeover, your deposits continue to be insured separately and generally will be for another six months, according to JPMorgan Chase.

So you won't have to worry if your deposits at the two banks exceed the maximum covered by FDIC insurance -- $100,000 per person or $250,000 per Individual Retirement Account.

In its last months, WaMu offered and heavily advertised Certificates of Deposits, or CDs --which earn you money when you committing to saving cash for anywhere from three months to even 10 years -- with great rates.

If you bought a WaMu CD before the takeover, JPMorgan chase says it will honor the rate. All rates are the same, all products are the same, according to a JPMorgan spokesperson.

However, although the lender said there were no plans at this time to change any WaMu rates or products, it reserves the right to alter them in the future.

Eventually, your local WaMu branch will become a Chase branch, and you'll get new Chase debit and credit cards. You'll eventually be able to use the Chase branches, too, sometime after this year.

But for now, you shouldn't notice much of a change.

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