What the heck! I went out for the evening and came home to find that Washingon Mutual had been closed by the Feds and its assets sold — sold already! — to J. P. Morgan.

It’s the 13th bank failure this year, and the biggest American bank failure ever, outstripping a record set all the way back in 1984.  An FDIC spokesperson admitted that they usually do these things on Friday afternoons so the markets have a chance to digest the information before trading begins anew on Monday morning.  They had to pull the plug earlier, to the surprise of board members, because of media leaks.  News of failure is almost a bigger deal than failure itself in the markets.

I can’t honestly say I am shocked. My dealings with WaMu as a customer are well documented (if you were to Google for “talk to a human at WaMu” the first hit is a post at my personal site;  I get visitors each month searching for that info).  Less documented are the troubles colleagues and I have had dealing with them as a mortgage originator, and as a lien holder on short sale properties.  Wall Street wasn’t terribly surprised either, if a one year stock chart is anything to go by.

If you have less than $100,000 in accounts at Washington Mutual, have no fear: the FDIC will see to it you get all your money. If you didn’t follow the gem of wisdom at the end of my last post, and you have more than $100,000 in accounts at Washington Mutual, you will definitely get $100,000 back but the rest may be a different story. Mortgage pending?  Call them in the morning, but be ready for your second call to be to another mortgage broker.  Buying a property they own, or a short sale where they are the lien holder?  Keep breathing because it’s gonna be an interesting ride ahead.  I wouldn’t blame J.P. Morgan for wanting to know what they had before selling it off.

I sincerely hope this is the only surprise government takeover this week. FDIC only insures deposits to $100,000.  Please, if you still have more than that in any one bank, diversify!