The federal government has seized Washington Mutual. This is the largest bank failure in history.
I'm finding this out late at night, so my thots are brief. I don't bank there, so it doesn't affect me directly.
My first thot is that this makes the bailout picture more interesting, and hopefully brightens the picture a bit, because it takes a large degree of uncertainty out of it. JPMorgan Chase is taking over WaMu's retail operations, and writing down $31 billion in the process. That's a large chunk of change that the government won't have to worry about. So this is one example of the free market actually working. The strong and smart survivor, i.e. JPMorgan Chase, is taking over the weak failure. With the government's help.
It's not good news for WaMu, but it might be slightly good news for the rest of us.