Washington Mutual Seized and Sold Simultaneously

Washington Mutual, in the space of 24 hours has become America's largest ever bank failure, seized by regulators and sold to JPMorgan for $!.9bn. The rescue is the second by JPMorgan to help the US taxpayer avoid shelling out for assuming $31bn in losses.

The Federal Deposit Insurance Corporation protected WaMu' account holders to a $100,000 limit. Additional deposits are guaranteed by JPMorgan. Shareholders and bondholders are not likely to feel so well. Branches in New York and Chicago are likely to feel the cold as an expected 10% of WaMu's branches are closed.

This institution was a big question mark about the health of the deposit fund,” Sheila C. Bair, the chairwoman of the F.D.I.C., said on a conference call Thursday. “It was unique in its size and exposure to higher risk mortgages and the distressed housing market. This is the big one that everybody was worried about.”

Bank seizures by regulators usually occur on Fridays. WaMu's took place on Thursday due to the rapidly deteriorating state of the company's finances.

Not even hiring Goldman Sachs to help look for a bidder saved the bank. Massive exposure to the subprime debacle meant that none of the four rumoured bidders could make the figures add up.