Washington Mutual’s failure is the largest bank failure in American history. Federal regulators seized Washington Mutual or WaMu on Thursday. This symbolizes the failure of the excesses of the mortgage boom. Federal regulators responded immediately by brokering an emergency sale. They arranged the sale of Washington Mutual, which is a reputed, and one of the largest savings and loan institutions in America. JP Morgan Chase bought it for $1.9 billion. This was a welcome sale as the lawmakers had already reached a stalemate over the regulation of the bailout fund. This averted a financial catastrophe for one of the most prestigious banks in America.
There is not much cause to worry for the clients of WaMu. The clients and accountholders based in Seattle are relatively safe; as The Federal Deposit Insurance Corporation has guaranteed payments up to $100,000.In case there are any extra deposits they will be picked up by JP Morgan Chase. They will be taking over at least $31 billion of the losses.
Sheila C. Bair, the chairwoman of the F.D.I.C., said “This institution was a big question mark about the health of the deposit fund,t 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.” She further added that the banks fast deteriorating condition made it imperative to seize it Thursday, instead of a Friday as is typical for bank closures.