Federal regulators seized Washington Mutual tonight and sold nearly all of its operations to JPMorgan for $1.9 billion, the Washington Post reports. It is the largest bank failure in US history. WaMu, previously the nation's largest savings and loan, had been reeling from bad mortgage loans and put itself up for sale last week. The feds took action because no serious bidders emerged. The move averts a government bailout of the bank's depositors.
WaMu held more than $200 billion in deposits, far more than any bank that has ever gone under. The FDIC, which insures bank deposits, would have paid out about half the money in its fund without a deal, the Post notes. The acquisition will give JPMorgan a foothold in California and make it a rival of Bank of America, the nation's biggest commercial bank.