WASHINGTON — Washington Mutual, the nation's largest thrift, was seized by federal regulators Thursday night and sold immediately to JP Morgan Chase for $1.9 billion, avoiding the need for a government bailout of depositors in the troubled company.

WASHINGTON — Washington Mutual, the nation's largest thrift, was seized by federal regulators Thursday night and sold immediately to JP Morgan Chase for $1.9 billion, avoiding the need for a government bailout of depositors in the troubled company.

The deal was facilitated by the Federal Deposit Insurance Corp., which said there would be no payment from its insurance fund.

Washington Mutual, based in Seattle, made thousands of mortgage loans that its borrowers cannot repay. That has left it saddled with billions of dollars in bad debts. It has been unable to raise the money it needs to survive.

Last week, the company placed itself on the auction block, but bidders failed to materialize. That forced federal regulators to encourage a deal for the company.

The deal narrowly averts a massive hit on the Federal Deposit Insurance Corp., which guarantees most bank deposits.

Washington Mutual held far more deposits than any bank that has ever failed. Analysts estimated that a Washington Mutual failure could have soaked up half the money in the insurance fund, forcing a huge increase in the premiums paid to the fund by other banks.

Washington Mutual held more than $200 billion in deposits at the end of June, sixth among U.S. financial institutions. The company's 2,200 branches are concentrated in California, with large clusters in New York, Florida, Texas, Oregon and the company's home state of Washington. It has at least a dozen branches in the Rogue Valley.

With the acquisition, New York-based commercial bank JP Morgan will rival Bank of America as the nation's largest commercial bank. The company currently ranks second with about $440 billion in deposits as of June.

The two companies are emerging as the great winners in the current crisis. Funded by deposits, and less involved in the business of securitizing loans, they are strong at a moment of weakness for erstwhile rivals. JP Morgan already has carried off the remnants of investment bank Bear Stearns, which collapsed in March. Bank of America has picked up Countrywide Financial and Merrill Lynch.

This is the biggest deal for JP Morgan under chief executive Jamie Dimon. Dimon was hired in 2005 to hammer together a series of acquisitions that had produced a sprawling, ungainly company.

Three years later, he appears ready to take on a new challenge.