Written off by Wall Street investors, Washington Mutual Inc. put itself on the auction block Wednesday, looking for a buyer strong enough to absorb the huge mortgage loan and credit card losses racked up by the nation's largest savings and loan.
Federal regulators were working to help broker a deal, concerned about the effect a failure could have on the bank insurance fund overseen by the Federal Deposit Insurance Corp., said people who were briefed on the effort but not authorized to speak publicly.
The Seattle-based thrift had about $143 billion in insured deposits as of June 30, about three times the size of the insurance fund.
"If it can be sold to someone, that would provide assurance to the depositors and also keep from depleting the FDIC insurance fund," one person familiar with the talks said.
Potential bidders included megabanks Wells Fargo & Co. of San Francisco, JPMorgan Chase & Co. of New York and HSBC Holdings of London. None returned calls for comment, nor did WaMu.
At a WaMu branch in downtown Los Angeles, several customers expressed anxiety about the bank's financial health.
"I'm going to watch what happens and, if I have to, take my money out of this bank," said Javier Sanchez, who works as a valet in West Hollywood.
Jean Yen said she had an account for her import business at giant Bank of America and was prepared to move her personal account there from WaMu.
"It's just a couple of thousand dollars, so I'm not too worried, but with all that's going on, I'm thinking of switching," she said.
The thrift has 700 branches in California and 2,300 nationwide.
The search for a buyer for the nation's sixth-largest banking concern added to the monumental events transforming the U.S. financial system, including the Federal Reserve's $85-billion rescue of insurer American International Group Inc. and Bank of America Corp.'s takeover of Merrill Lynch & Co.
Late Wednesday, Wall Street securities firm Morgan Stanley was reportedly in merger talks with Wachovia Corp. of Charlotte, N.C., the fourth-largest U.S. bank by assets.
But Wachovia's battered share price -- $9.12 a share Wednesday, compared with $51.80 in October -- made it a potential takeover target as well in an atmosphere of rapid consolidation.
Analyst Fred Cannon of Keefe, Bruyette & Woods Inc. in San Francisco said WaMu "probably had enough capital to work its way through its immediate financial challenges."
