From The Seattle Times:

Washington Mutual, just days ago the nation’s biggest thrift and once its biggest mortgage lender, earned a final, notorious distinction Thursday: It became by far the biggest U.S. bank in history to fail.

Seattle-based WaMu, laid low by its plunge into subprime mortgages and other less-than-sterling loans, was seized and closed by federal regulators Thursday afternoon. JPMorgan Chase, which has long coveted WaMu, bought all its deposits and banking assets for $1.9 billion.

“This is the big one that everybody was worried about,” said Sheila Bair, chairwoman of the Federal Deposit Insurance Corp., in an evening conference call. “I was worried about it.”

WaMu has been struggling to turn itself around for the past year, after it became clear falling home prices and the collapsed market for mortgage-backed securities had left it holding billions of dollars’ worth of dubious loans.

But the thrift’s financial situation deteriorated rapidly in the past two weeks, as credit-rating agencies slashed WaMu’s debt to junk-bond status and deposits began flowing out at an alarming pace.

Dwarfing IndyMac, WaMu is the largest U.S. bank failure, and only by arranging a shotgun marriage to JPMorgan Chase is the FDIC saved from coming in and making good all of WaMu’s insured depositors - a move which would have emptied the coffers of the FDIC.

But unfortunately, the writing has been on the wall for quite a long time on this, and few truly expected Washington Mutual to survive the current economic storms in any independent fashion.

Lucky, originally uploaded by KeithMokris.