Washington Mutual: Not the Last Domino

What sort of week would it be without a massive failure in the financial system?

Washington Mutual's failure, seizure by the government, and subsequent $1.9 billion fire sale to JPMorgan Chase & Co. could hardly come at a worse time.

As Congress, the White House, and regulators continue to dither over the proposed $700 billion bailout, the decline and fall of another of America's most storied lenders is a road map for how this crisis will continue to unfold until some sort of relief is offered up (though a bailout still won't stop the damage in its tracks).

Meanwhile, JPMorgan is fast becoming America's bank, for good or ill. After its first government-backed buyout of Bear Stearns, the Washington Mutual deal makes JPMorgan the nation's largest holder of deposits.

Financial stocks are slumping again today.

WaMu shares dropped 90 percent to about $1.60. Wachovia shares opened down 27 percent, and National City is off 22 percent.