Washington Mutual is no more. The Seattle-based thrift was seized by federal regulators last night and its branch network sold to JPMorgan Chase & Co. for $1.9 billion.
It was the largest bank failure to date, and the acquisition makes Chase the largest U.S. bank by deposits.
Its mortgage troubles aside, WaMu had experienced an old-fashioned run on the bank over the last few days, as customers withdrew $16.7 billion from accounts since Sept. 16. Regulators said that left the bank unsound and it was seized after closing time yesterday.
All of WaMu's branches will open today and depositors will have full access to all their accounts, Sheila Bair, chairman of the Federal Deposit Insurance Corp., said.
The sale is very good news for the U.S. taxpayer, since FDIC will not be required to make good on deposits. For depositors, its like the bank never went out of business.
"For all depositors and other customers of Washington Mutual Bank, this is simply a combination of two banks," said FDIC Chairman Sheila C. Bair. "For bank customers, it will be a seamless transition. There will be no interruption in services and bank customers should expect business as usual come Friday morning."
WaMu had about 2,300 branches and $182 billion of customer deposits at the end of June. During the past three quarters, it lost $6.3 billion. JPMorgan Chase plans to have 5,400 offices and $900 billion in deposits after it opens or acquires additional branches in California, Washington, Florida and elsewhere, the company said.
Its credit rating was slashed to junk and its stock price collapsed over the last few weeks, as it tried to deal with $19 billion of losses on mortgage loans. As in most bank seizures, depositors are protected but shareholders are big losers. WaMu's stock was down 95 percent for most of the year and dropped to 45 cents late yesterday.
WaMu's $310 billion of assets dwarf those of Continental Illinois National Bank and Trust, previously the largest failed bank, which had $40 billion when it was taken over in 1984.