Uncle Sam Set to Take Over WaMu Branches

Ever since Chase snapped up WaMu’s assets, the fate of the bank’s 148 storefronts in New York City has hung in limbo. Now, the plot thickens.

It turns out that Chase has to turn over those Washington Mutual branches it doesn’t want to the Federal Deposit Insurance Corporation. That’s right, the F.D.I.C. will become a New York City landlord.

A legalese-heavy paragraph in Section 4.6a on page 14 of the Purchase and Assumption Agreement between the F.D.I.C., WaMu and Chase gives Chase 90 days to take over whichever WaMu branches it wants, according to a real estate attorney who translated for this story.

Those branches that Chase doesn’t want, the F.D.I.C. can take. In that case, the F.D.I.C. can either reject the lease, or sell it to another tenant.

According to sources, a crew out in Washington State is busy figuring out just which leases Chase wants to keep, a process one broker referred to as a “nightmare.”

“We are following the guidelines set by the F.D.I.C. and are currently reviewing WaMu’s leases and contracts,” a Chase spokesman said.

Cushman & Wakefield executive director Brad Mendelson said he doubts the F.D.I.C. will give the leases to other banks. “The WaMu bank branches were kind of weird,” he said. “They were set up like living rooms. It’s not a format that anyone really works with. And a lot of them are mid-block.”

Another broker said the true story lies with the F.D.I.C. “It’s more interesting what the F.D.I.C. will do with these properties and how it’s handled,” the broker said. “Isn’t that the mystery?”

And so apparently it will remain, at least for a while. F.D.I.C. spokesman Andrew Gray didn’t grant our request for elucidation.

drubinstein@observer.com