$JPM may be the only FAILout recipient not doing too badly these days (it could be due to its incestuous ties to the Federal Reserve but I'll leave that conspiracy be for now), and while any good news will do these days, it seems the WaMu acquisition may be a bit more than our commercial banking pals can handle - despite the fat payoff they're looking forward to from the takeover:

JPMorgan Chase & Co. said [February 26] it expects to realize about $2 billion in savings related to its acquisition of Washington Mutual Inc., the failed Seattle thrift the bank acquired at the end of September.

The majority of the savings will be realized by the end of this year, according to slides on the company's Web site from an investor day presentation. This includes about $1.35 billion related to job cuts, the bank said. JPMorgan said about 12,000 jobs will be eliminated related to the acquisition. In December, the bank said it would cut a total of 9,200 jobs related to the WaMu deal. The 12,000 figure includes 2,800 jobs expected to be lost through attrition. At the end of December, the bank had a total of 224,000 employees worldwide.

Shares jumped $1.32, or 6.1 percent, to close at $23.05.

JPMorgan's purchase of Washington Mutual, the largest bank ever to fail in U.S. history, added massively to the bank's consumer banking business and helped the company book a $1.1 billion gain in the fourth quarter.

2800 due to attrition? Mmmkay.

$JPM is smooth sailing now, but inheriting WaMu's loans may prove too big a write-off to take, even for JP Morgan.

Assuming a 36 percent peak-to-trough decline in home prices, the bank expects remaining lifetime losses on WaMu's home lending portfolio to be $32 billion to $38 billion. The more home prices fall, the less banks will be able to reclaim on defaulted loans. The bank said it has not yet experienced losses beyond initial expectations. However, if delinquencies and losses did increase more than expected, the bank would need to add to loan loss reserves.

The bank sees $1 billion to $1.4 billion in quarterly losses from noncredit impaired home equity loans this year. Home equity losses are expected to level off in 2010, but will likely remain high, JPMorgan said.

Meanwhile, quarterly losses among subprime mortgage loans could be as high as $375 million to $475 million over the next several quarters, JPMorgan said.

Awww, poor JPM! That wasn't very nice of the FDIC to sell you troubled WaMu at bargain basement prices like that, even though you used government money to gobble it up. JPM has not yet posted a quarterly loss and plans to cut quarterly dividends by 5 cents per share to preserve precious capital.

And hey, if that doesn't work, maybe they can hit up the government for some more cash to eat up the floundering competition.