WAMU SUITORS LOOK AT BOOKS

Potential buyers of Washington Mutual continued to examine the company’s books yesterday, but a takeover of the nation’s largest savings and loan was far from certain despite a number of interested parties, according to sources familiar with the matter.

Of primary concern to the potential buyers is the amount of potentially toxic mortgages WaMu has on its books and whether federal regulators, loathe to seize the bank’s assets if it goes under, are willing to take on some of the bad loans.

Sources familiar with WaMu’s auction process, which is being handled by Goldman Sachs, said several banks including Citigroup, JPMorgan Chase, Wells Fargo, Bank of America, HSBC and Spain’s Banco Santander are currently examining the Seattle-based company’s books.

The government, led by The Federal Deposit Insurance Corp., is said to be pushing WaMu to find a partner quickly in order to avert a federal takeover of the bank, which has $143 billion in assets.

WaMu officials insist the bank has $50 billion of available liquidity and is not in danger of becoming insolvent.

But the feds are concerned that further declines in WaMu’s stock price could prompt customers to begin pulling their funds, causing a run on the bank.

Sources said WaMu has not lost a significant amount of deposits in the last week.

The potential buyers, aware that the FDIC wants to avoid seizing the bank, are pushing the feds to give them concessions, sources said.

Those include orchestrating a takeover that could leave WaMu’s equity holders with little or nothing should the buyer agree to take on the mortgage assets; the feds taking on some of the mortgage assets in exchange for a higher price for WaMu; or allowing the buyer several years before they have to take writedowns on the bad mortgages.

“The price is going to be determined by how much help the feds can provide the buyer,” said one person close to one of the potential buyers.

The huge jump in financial stocks over the last two days could buy WaMu some more time, analysts said. WaMu ended up 42 percent to $4.25 yesterday.