US mortgage lender Washington Mutual (WaMu) has been closed and sold by The Office of Thrift Supervision (OTS).
The OTS closed the mortgage lender before selling its assets to JPMorgan Chase for $1.9bn (£1.0bn).
The OTS said it was concerned that WaMu would run out of cash as $16.7bn of deposits had been withdrawn since 15 September.
WaMu was one of the mortgage lenders worst-hit by the collapse of the US housing market and soaring number of mortgage defaults.
OTS Statement:
"With insufficient liquidity to meet its obligations, WaMu was in an unsafe and unsound condition to transact business," the OTS said.
The bank had about $307bn of assets but only about $188bn of deposits.
WaMu raised an extra $7bn of capital from a consortium led by the private equity group TPG in April.
Sacked CEO
WaMu dismissed its chief executive Kerry Killinger less than three weeks ago. The bank blamed Killinger for the bank's expansion into sub-prime and other comparatively risky lending.
Sub-prime mortgages are offered to borrowers with inferior credit records or unpredictable incomes.
JP Morgan
WaMu is JPMorgan's second large fire-sale acquisition since the start of the credit crunch. It bought Bear Stearns in March.
The transaction means it is now the second largest US bank, with 5,410 branches in 23 states.
