Washington Mutual has been closed by the US government in by far the largest failure of a US bank. Its banking assets were sold to JPMorgan Chase for $1.9 billion.
Last night's seizure and sale is the latest historic step in US government attempts to clean up a banking industry littered with toxic mortgage debt.
Washington Mutual has been one of the lenders hardest hit by the US housing bust and credit crisis, and had already suffered from soaring mortgage losses.
Washington Mutual was shut after a $16.7 billion outflow of deposits since September 15.
Washington Mutual has about $307 billion of assets and $188 billion of deposits. The largest previous US banking failure was Continental Illinois National Bank & Trust, which had $40 billion of assets when it collapsed in 1984.
The deal puts JPMorgan past Bank of America to become the country's second-largest bank, just behind Citigroup. Bank of America will go to number one once it completes its planned purchase of Merrill Lynch.
The deal comes four months after JPMorgan acquired the failing investment bank Bear Stearns at a fire-sale price through a government-financed transaction.
