JPMorgan Chase & Co., the third-biggest American bank by assets, agreed to acquire the deposits of Washington Mutual Inc. as the thrift was seized by regulators in the biggest bank failure in American history.

JPMorgan will pay $1.9 billion, the Federal Deposit Insurance Corp. said in a statement yesterday. It won’t acquire liabilities including claims by equity, subordinated, and senior debt holders, the FDIC said.

WaMu, based in Seattle, collapsed after its credit rating was slashed to junk and potential suitors passed on making a bid. Facing $19 billion of losses on soured mortgage loans, the lender put itself up for sale last week. WaMu in March rebuffed a takeover offer from JPMorgan that WaMu valued at $4 a share.

“JPMorgan is getting a steal compared with what they were going to pay,” a pension and investment analyst at the American Federation of State, County, and Municipal Employees in Oakland, California, which owns WaMu shares, Scott Adams, said. “It’s very tragic.”

The lender is the latest victim of a credit crunch that forced Lehman Brothers Holdings Inc. into bankruptcy, drove Merrill Lynch & Co. to sell itself to Bank of America Corp., and brought about the Federal Reserve-financed purchase of Bear Stearns Cos. by JPMorgan. Treasury Secretary Paulson’s $700 billion plan to prop up the American banking industry by buying distressed mortgages wasn’t enough to save the company.

WaMu had about 2,300 branches and $182 billion of customer deposits at the end of June. Its $310 billion of assets dwarf those of Continental Illinois Corp., previously the largest failed bank, which had $40 billion ($83 billion in 2008 dollars) when it was taken over in 1984.

WaMu has fallen 95% in 12 months on losses tied to subprime lending and lost $6.3 billion in the past three quarters. It kept skidding even after joining a list of financial companies the U.S. Securities and Exchange Commission protected from short selling in an effort to stabilize stock markets.

WaMu was the second-biggest provider of option ARMs, behind Wachovia, with $54 billion held in its portfolio in the first quarter, according to Inside Mortgage Finance. Of the $230 billion in loans secured by real estate at the end of the second quarter, $16.9 billion were subprime mortgages. WaMu, which ranked sixth among American mortgage companies last year, was the 11th-biggest subprime lender in 2006, according to Inside Mortgage Finance.

JPMorgan, Citigroup Inc., Wells Fargo & Co., Banco Santander SA, and Toronto-Dominion Bank had all expressed interest in buying all or parts of WaMu, according to a person familiar with the matter. WaMu also approached Carlyle Group and Blackstone Group LP, two people briefed on the matter said.

WaMu estimated losses of as much as $19 billion in the next 2-1/2 years. Standard & Poor’s cut the bank’s credit rating twice in nine days as chances decreased that any deal wouldn’t be a buyout of the whole company, leaving creditors of the holding company to face substantial losses.