Washington Mutual Inc., a holding company for the savings and loan that became the biggest US bank to fail, filed for bankruptcy protection along with its unit WMI Investment Corp. WaMu, the 119-year-old Seattle-based thrift, filed for Chapter 11 bankruptcy in US Bankruptcy Court in Delaware, according to a release from Business Wire. The Delaware bankruptcy Web site was closed for site maintenance. Ian Campbell, a spokesman for the bankrupt holding company with Abernathy MacGregor Group, said he couldn't provide further details. WaMu had its banking unit seized Sept. 25 by government regulators after customers withdrew $16.7 billion over 10 days. JPMorgan Chase & Co. became the biggest US bank by deposits when it bought WaMu's branches with a $1.9 billion payment to the Federal Deposit Insurance Corp. WaMu had fallen 98 percent over the past year on losses tied to subprime lending before trading was halted on news of the FDIC seizure. The company was one of the financial firms the US Securities and Exchange Commission protected from short selling this month as part of an effort to stabilize equity markets. WaMu's bank had $188 billion in deposits. The company's collapse makes WaMu the latest victim of the credit crunch, which also forced Lehman Brothers Holdings Inc. and IndyMac Bancorp into bankruptcy, drove Merrill Lynch & Co. to sell itself to Bank of America Corp. and brought about the Federal Reserve-financed purchase of Bear Stearns Cos. by JPMorgan Chase & Co. JPMorgan, Citigroup Inc., Wells Fargo & Co., Banco Santander SA and Toronto-Dominion Bank had all expressed interest in buying all or parts of WaMu ahead of the JPMorgan purchase. WaMu was expected to lose as much as $19 billion on bad mortgages during the next 2 1/2 years. Standard & Poor's cut the bank's credit rating twice in nine days, to eight levels below investment grade. The failure of WaMu will have a “significant'' effect on collateralized debt obligations.
