Washington Mutual fails.
Shareholders and some bondholders will be wiped out. WaMu deposits are guaranteed by the Federal Deposit Insurance Corporation up to the $100,000 per account limit. Customers of Seattle-based WaMu are unlikely to be affected.
JPMorgan Chase — which acquired Bear Stearns only six months ago in another shotgun deal brokered by the government — is to take control Friday of all of WaMu's 2,300 branches, which stretch from New York to California. The New York-based bank will oversee its big portfolio of mortgage and credit card loans. It will also acquire all of WaMu's deposits with the sale.
It is, as you'll hear again and again, the largest bank failure in American history. But the failure was widely expected, so this doesn't upset or alter negotiations in D.C.