Depositors rushed to branches of Washington Mutual Bank here yesterday to check on their accounts, only to find business as usual after the largest US savings and loan bank were taken over by federal regulators and sold to its rival.

Hundreds of branches of Washington Mutual across California, where the bank has the biggest presence in the country, were still open and customers have full access to their accounts, witnesses said.

In the largest-ever bank failure in US history, the government late Thursday seized the Seattle-based Washington Mutual's assets and sold them to JP Morgan Chase for US$1.9 billion in an auction, as political leaders were negotiating a US$700-billion bailout plan for the country's battered financial industry.

The collapse of Washington Mutual, or WaMu, indicates that the current US financial crisis is going beyond Wall Street, where major investment banks have gone bankruptcy or been acquired one by one due to their exposures to bad mortgage loans.

Washington Mutual, which had more than US$180 billion in deposits as of the end of June, became unsound after customers withdrew US$16.7 billion since last week, as its stock price kept plummeting. The stock closed at 15 cents Friday, down from about US$35 a share one year ago.

The 119-year-old bank has been struggling to turn itself around for the past year, after falling housing prices and the collapsed mortgage market had left it holding billions of dollars worth of bad loans.

Rob Dillon, a retired teacher, withdrew several thousands of dollars Friday afternoon from his checking account at a WaMu branch in Pasadena, northeast of downtown Los Angeles, and decided to leave the remaining amount in the account.

"In such a crisis time that even a trusted financial institution like WaMu could go bankruptcy, no banks are safe. America is in recession," Dillon told Xinhua.

"This is the big one that everybody was worried about," said Sheila Bair, chairwoman of the Federal Deposit Insurance Corp., which provides a US$100,000 limit insurance for each deposit account and made Thursday's seizure of Washington Mutual operations.

New York-based JP Morgan Chase will take over WaMu's 2207 branches in 15 states across the country and the bank said the transfer will be smooth and have little impact on customers.

Chase Bank, JP Morgan Chase's retailing banking arm, currently has no branches in the Los Angeles area, and sees the acquisition of Washington Mutual as a gateway to the local market.

"One of the big attractions of this purchase was WaMu's California bank branches," said JP Morgan Chase spokesman Tom Kelly.

The purchase will also make JP Morgan the No. 1 U.S. bank by deposits, with more than US$900 billion, followed by Bank of America with US$785 billion.