Yves Smith of Naked Capitalism has put it rather succinctly : Hope you like the smell of napalm in the morning. Otherwise, this will not be your sort of day.

The biggest bank meltdown in US history and it has to be Washington Mutual, the bank that's holding most of my money. Geezus! This from the Financial Times :

JPMorgan Chase has acquired the banking operations of Washington Mutual which was seized by US regulators on Thursday night in the biggest bank failure in US history.

Under the deal, which was brokered by government, JPMorgan will pay $1.9bn to the banking regulator, and acquire all insured and uninsured deposits, assets and some of the liabilities of WaMu’s banking operations, including its troubled mortgage portfolio.

Holy crap! Where's my money? AUUUUUUUGH!

I was actually going to take all my money out earlier in the week but decided to leave it for today. I should have done what the thousands of other depositors did. Take my money out of WaMu. Of course, the deposits run killed the bank, but now I have to run over there and find out if I have access to my cash.

Oh, wait! Here's the Federal Deposit Insurance Commission (FDIC) :

"For all depositors and other customers of Washington Mutual Bank, this is simply a combination of two banks," said FDIC Chairman Sheila C. Bair. "For bank customers, it will be a seamless transition. There will be no interruption in services and bank customers should expect business as usual come Friday morning."

This is just incredible. Here's the New York Times :

Washington Mutual, with $307 billion in assets, is by far the biggest bank failure in history, eclipsing the 1984 failure of Continental Illinois National Bank and Trust in Chicago, an event that presaged the savings and loan crisis. IndyMac, which was seized by regulators in July, was one-tenth the size of WaMu.

Yet this deal stinks and I wouldn't be shocked if lawsuits are going to fly on this one. I can't see the FBI not investigating this one either. Did I point out that the FDIC's seizure of the bank took the WaMu board completely by surprise? It's as if the government is going all Robin Hood for the enrichment of the few investment banks that are left out there.

After everybody comes down from the panic mode, I expect this to get uglier.

For one, Alan Fishman, the CEO, gets to pocket close to $20 million in executive compensation. Yet bond and stockholders are being completely wiped out in the deal.

Oh. There's the little detail of JP Morgan being the same bank that "bailed out" Bear Sterns. How come JP Morgan gets to buy WaMu's and Bear Stearns assets just like that? Bank of America noticed and it seems they displeased with the preferential treatment.

Either way, Felix Salmon says there's no clear winners in all of this :

No one is a winner here. Yes, JP Morgan looks as though it's got itself a good deal for WaMu -- basically buying the bank for $1.9 billion unencumbered by any corporate debt or preferred stock. JP Morgan also now owns the bank which was largely responsible for reinventing retail banking over the past decade, and WaMu's abilities on that front will be very valuable at for the Chase brand. But unless House Republicans start getting constructive on bailout negotiations today, no financial institution is going to look very healthy. (And top management at Goldman Sachs will look like geniuses for raising $15 billion just before everything fell apart.)

We'll see about that once I find out if I do indeed have access to my money.