Many are owed bank pay-outs from Washington Mutual. With Washington Mutual going into the history books, many of its customers might be entitled to one last withdrawal coming into their mailbox. Millions of dollars held in accounts which have been dormant at the time of its bankruptcy have been transferred to the states’ unclaimed property offices.
J.P. Morgan Chase purchased Washington Mutual in 2008 after its failure to serve the interests of its customers. The Federal Deposit Insurance Company (FDIC) which was the supervising agency in the seizure of Washington Mutual handed over at least $251.4 million in unclaimed money to different states.
With state treasuries already experiencing an insurmountable pile of unclaimed funds, the addition of unclaimed funds to this vault, increasing the combined unclaimed asset of states to almost $33 billion. “We get money from the FDIC [takeovers] all the time, but it’s usually very minimal,” says John Gabriel, the president of the National Association of Unclaimed Property Administrators and Tennessee’s unclaimed property director. “This is an unusual spike.”
This incident also sheds light on the fact that every bank has unclaimed funds and with Washington Mutual being the sixth largest bank in the country, the volume of unclaimed funds was even greater. “[The amount] has nothing to do with the fact that the bank failed,” says David Barr, a spokesman for the FDIC. Washington Mutual was the sixth largest bank in the country at the time of its demise, and the figure reflects that. “Banks have unclaimed funds,” he says. “Obviously a bank that size is going to have more.”
Under normal circumstances of unclaimed funds, the funds slowly reach the state treasuries after a dormancy period of three years. On the other hand, in the case of a bank failure, the period of dormancy is only 18 months. After that, the unclaimed funds have to be handed over to FDIC, from where it makes its way to the state treasuries.
Customers of Washington Mutual who had dormant accounts at the time of bank failure had their accounts transferred to FDIC. Active account holders were able to make successful switch. Chase customers who successfully made the switch from Washington Mutual after its failure weren’t affected, says Chase spokesman Tom Kelly. The unclaimed accounts are those that were already dormant at the time of acquisition, likely from consumers who forgot about small amounts left in their accounts when they moved or switched banks. Some may be from deceased customers with no known heirs, or simply poor local bank records, Gabriel says.
As a protocol, FDIC had mailed claim forms to the last known addresses of any account holder with more than $75 due. The names of those who had at least $25 in accounts had their names posted online. Though Chase bank assumed most of Washington Mutual’s active accounts, the FDIC is considering all the accounts to be inactive; those with no record of a deposit, withdrawal, or other positive contact with the account holder for at least three years.
As a final attempt to reunite the owners of unclaimed accounts, Chase sent out notifications in April 2010 to the account holders of the imminent transfer of funds to FDIC.