NEW YORK: As the debate over a $700 billion bank bailout rages on in Washington, one of the nation's largest banks - Washington Mutual Inc - has collapsed under the weight of its bad bets on the mortgage market.

The US Federal Deposit Insurance Corp seized WaMu on Thursday, and then sold its banking assets to JPMorgan Chase & Co for $1.9 billion.

Seattle-based WaMu, which was founded in 1889, is the largest bank to fail by far in the country's history. Its $307 billion in assets eclipse the $40 billion of Continental Illinois National Bank, which failed in 1984, and the $32 billion of IndyMac, which the government seized in July.