With financial markets reeling over the recent crisis on Wall Street, the

collapse of Seattle-based Washington Mutual could not have come at a worse

time.

Federal regulators moved quickly, seizing the troubled mortgage lender late

Thursday and selling the thrift's banking assets to U.S. investment bank

J.P. Morgan for nearly $2 billion.

The Federal Deposit Insurance Company, FDIC, insures Americans' bank

deposits of up to $100,000. But it says because of the deal it will not have

to use its assets to cover Washington Mutual's deposits.

The FDIC had already spent billions of dollars in its takeover of IndyMac,

which collapsed in July. Some analysts say a Washington Mutual failure could

have used up half the money in the government insurance fund.

J.P. Morgan Chase said it plans to close less than 10 percent of the two

companies' branches. The bank has not yet decided which to close. Kelsey

Wesley, a Washington Mutual employee says employees are nervous. But adds

the company, commonly known as WaMu, has been good to them in the past.

"I'm not gonna say that is not gonna happen but no matter what WaMu has a

really impressive severance package and I think that's going to be carried

on even if there is a merger," he said.

ohn Graybill, another Washington Mutual employee said he is optimistic.

"Of course we are going to have some uncertainties and some questioning

about what's going on. Have I been nervous? Sure. That's the nature of the

whole beast," he said. "When a large company gets bought out you wonder

about your job. Are heads gonna roll? You just don't know but we have faith

in our bosses and the people upstairs."

FDIC Chairwoman Sheila Bair says this will be a seamless transition for the

bank's customers. She says there will be no interruption in services and

bankers can expect business as usual.

Washington Mutual has been saddled with billions of dollars of debt because

it heavily invested in selling risky subprime mortgages to customers who

later defaulted on them.

This is J.P. Morgan's second purchase of a financial institution left

vulnerable by the subprime mortgage crisis. It bought Bear Stearns for more

than two-billion dollars earlier this year.