A Washington Mutual ATM and branch in Lincolnshire, Illinois
A Washington Mutual ATM and branch in Lincolnshire, Illinois - 
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Stacey Vanek-Smith: The stakes for lawmakers have gotten even higher today. Washington Mutual failed last night. Federal regulators seized the bank and sold it to JP Morgan for just under $2 billion. Thought we'd run this by Marketplace Money's Tess Vigeland. Tess, biggest bank failure in U.S. history, but not exactly a surprise.

Tess Vigeland: No, Stacey. Unfortunately, we are living in an era where the near collapse and almost dead-of-night takeover of the country's largest savings and loan is not a big surprise. But I think what probably is something of a surprise here is that this is not going to require the takeover by the Federal Deposit and Insurance Company, the FDIC. So now it is JP Morgan to the rescue and, gee, that's becoming a familiar story, isn't it? You know, first Bear Stearns, and now Washington Mutual.

Vanek-Smith: Unfortunately, yes. What exactly is the FDIC's role in this private takeover?

Vigeland: Yeah, it's an interesting way to do it. Basically the Office of Thrift Supervision, which will seize the banks, it closed WaMu yesterday and handed it over to the FDIC, and then JP Morgan was kind of waiting in the wings to buy big chunks of it.

Vanek-Smith: Why would JP Morgan want to buy WaMu right now? It sounds like it took quite a bit of convincing by the FDIC over the last few days to get the deal done.

Vigeland: Yeah, the FDIC was desperate to find a buyer, because there was actually concern out there that if the agency had to take over WaMu, that the FDIC's budget would take a severe whack. As for why JP Morgan might think this was a good idea, you know, even though customers have been running away from WaMu for the past two weeks, it still had more than $300 billion in assets. Of course, it's also got loads of nasty mortgage debt, but at this point I think it's willing to gamble that it's going to be able to handle all that debt, and maybe Congress and the White House will take over all that debt over anyway, the bailout package.

Vanek-Smith: Now, this isn't the first time, though, that JP Morgan has made an overture to WaMu?

Vigeland: No, actually, they did make an offer back in April for I think it was about $8 a share, and WaMu spurned that offer saying, no, no we can handle it ourselves.

Vanek-Smith: Well, Tess, what does this mean for customers of Washington Mutual and for shareholders?

Vigeland: Well for customers, it's not really going to change anything. JP Morgan will just absorb WaMu's customer base. For shareholders, it's not that easy. In fact, they are pretty much going to be wiped out.

Vanek-Smith: Wow. At least it's Friday, right?

Vigeland: It is Friday. TGIF, Stacey.

Vanek-Smith: Tess Vigeland hosts our weekend personal finance show Marketplace Money. Tess, thanks so much.

Vigeland: My pleasure.