There’s desperation in the air at Washington Mutual, and a 5 percent return on CDs to prove it.

The lender, caught in the throes of the real estate meltdown, is currently offering a rate for certificates of deposit that is over twice that of the Fed Funds and discount rates.

Desperate to attract money on deposit which then can be used to offset mortgage losses, a lender will often offer a much higher rate on depository accounts - in fact, it’s a well-chronicled step in death-spiral financing. Countrywide did it. IndyMac did. And now Washington Mutual is.

the 5% solution, originally uploaded by darkmatter.