Washington Mutual customers checking their failed bank’s Web site this morning were greeted with a welcome from the thrift’s new owner, JPMorgan Chase, which assured customers that their deposits were safe and banks would operate as usual today. It was another twist in the ongoing financial soap opera playing out in Washington, D.C., and across America as WaMu customers learned the 119-year-old, Seattle-based bank had been seized by the federal Office of Thrift Supervision and sold to JPMorgan Chase Thursday for the fire-sale price of $1.9 billion. With $307 billion in assets, it was the largest bank failure in history, dwarfing the $40 billion failure of Continental Illinois National Bank in 1984 and the $32 billion failure of IndyMac, which was seized by the government in July. Although it had $188 billion in deposits, Washington Mutual was facing $19 billion in bad mortgage loans. In July, the bank reported that it had posted $3.3 billion in losses for the second quarter. Its stock price began tumbling. On Sept. 7, its CEO Kerry Killinger, who had led the company through a massive expansion in the 1990s, was forced out and replaced by Alan Fishman. During mid-September when Lehman Brothers filed for bankruptcy and was quickly bought out by Bank of America and the federal government bailed out insurance giant American International Group, Washington Mutual was also in the bulls-eye as its shares hit $2.01. This week, after $16.7 billion in deposits were withdrawn, the OTS stepped in and appointed the Federal Deposit Insurance. Corp. as receiver. “With insufficient liquidity20to meet its obligations, WaMu was in an unsafe and unsound condition to transact business,” the OTS stated in a release. With over 5,400 branches and 14,000 ATMs in 23 states, JPMorgan Chase becomes the nation’s second largest bank behind Bank of America, which earlier this month stepped bought Merrill Lynch. As of June 30, WaMu had more than 43,000 employees, more than 2,200 branch offices in 15 states and $188.3 billion in deposits, according to the OTS. JP Morgan Chase had more than 3,100 branches in 17 states before acquiring Washington Mutual. This deal gives the bank presence in California and Florida, where it had previously had very limited operations, as well as an expanded footprint in Washington, New York, Connecticut, Texas, Illinois, Arizona, New Jersey, Colorado and Utah . JPMorgan Chase said in a statement that this deal also allows it to expand its financial services businesses, like wealth management and commercial banking, in those states. For JPMorgan Chase, the sale this week is a bargain compared to the $7 billion it had offered earlier this year for the bank and its assets that was rejected by Killinger. The company chose to get a $7.2 billion infusion from TPG Inc. instead. The investor group led by David Bonderman lost most of its $2 billion investment . JPMorgan Chase was the high bidder in an auction for WaMu conducted Wednesday by the FDIC. Other banks reportedly expressing interest were Wells Fargo & Co., Banco Santander SA and Toronto-based Dominion Bank. CPN reported today that HSBC and Citigroup were also potential bidders. The quick sale meant the FDIC did not have to step in and cover deposits. “For all depositors and other customers of Washington Mutual Bank, this is simply a combination of two banks,” FDIC chairman Sheila Bair said in a statement. “For bank customers, it will be a seamless transition. There will be no interruption in services and bank customers should expect business as usual come Friday morning.” But for Washington Mutual employees, customers and Seattle residents, there are still worries over what the demise of the bank means to the city. “It’s a blow to our economy and our ego,” Dan Flinn, a principal in the tenant representation firm Flinn Ferguson Corporate Real Estate told CPN today. Flinn said commercial real estate experts in the city had been expecting the bank’s office leasing space would be coming back onto the market at some point because of the company’s deepening financial condition. “We have all seen this coming for the last 60 days or longer. We had anticipated all the space they leased will be on the market,” he said. “We anticipate it will come now immediately.” Flinn said the bank had leased about 543,000 square feet in buildings around Seattle, other than at the 43-story WaMu Center headquarters that it co-owns with the Seattle Art Museum. The WaMu Center, built in 2006, is located in the 1300 block of Second Avenue in Downtown Seattle. WaMu owns 944,000 square feet of space and has been leasing about 244,000 square feet of additional space from the museum, Flinn said. The total construction cost of the skyscraper was estimated at $350 million but could be worth as much as $425 million, according to the Puget Sound Business Journal. Flinn noted that Seattle has been one of the top cities in the United States for investment in commercial high-grade office buildings, but isn’t sure what the building could be sold for in the current credit crunch. Although Seattle has a very diverse economy with high-growth companies like Microsoft, the Washington Mutual office space that would likely get put back into the market could flood it with additional vacancies at a time when 2.2 million square feet of space is under construction and other companies like Starbucks are downsizing, Flinn said. He said there could be close to 3 million square feet of office space available, including new construction, and over 4 million if the WaMu Center gets emptied out by JPMorgan Chase. “Are they going to keep 20 percent of that building occupied? Thirty percent? Even if it’s half a million (square feet) that’s still a lot for our market to absorb,” he said.