As if lawmakers squabbling in Washington needed a harsh reminder of how bad the financial crisis is, the United States has just had its biggest bank failure ever.

Washington Mutual, the nation's largest savings and loan, was seized by regulators on Thursday and most of its deposits and bank branches sold to J.P. Morgan Chase for $1.9 billion.

WaMu, hobbled by a huge exposure to subprime mortgages, had come under increased pressure as its stock tumbled and ratings agencies cut it to junk. Its collapse tops the 1984 failure of Continental Illinois National Bank and Trust. The previous biggest bank bust this year, IndyMac, was a tenth of WaMu's size.

And this is what a bank failure looks like today: The shareholders and the debt holders are pretty much stripped of everything.

A Royal Bank of Scotland note this morning says of the deal: "Here is now a precedent set which is taxpayer friendly and 100 percent risk asset hostile," according to the Financial Times' Alphaville blog.

At the same time, one big bank gets the benefits and the risks (in J.P. Morgan's case, some $31 million of losses on bad loans), while the taxpayer doesn't have to pony up more funds for an insurance fund. (The taxpayer, as Treasury Secretary Hank Paulson noted the other day, is already on the hook for hundreds of billions of dollars.)

"This is the way bank rescues ought to operate," says Antony Currie on Breakingviews.com.

But the Prudent Speculations blog warns that the series of rescues this year (J.P. Morgan's takeover of Bear Stearns and Bank of America's acquisition of Merrill Lynch among them) should be seen as very troubling.

"In concentrating the financial risk of our system in J.P. Morgan, Citigroup, and Bank of America, there is the acute chance that we will inadvertently kill our rescuers, leaving us no choice but to rely on a federal assumption of banks that are truly to big to fail."

Many, however, are seeing the rescue as the crowning moment in Jamie Dimon's ascendancy on Wall Street.

The J.P. Morgan C.E.O. is "starting to look a little more like this century's incarnation of John Pierpont Morgan," says Elinor Comlay of Reuters.

The original J.P. led a rescue of the U.S. banking system during the Panic of 1907.

The WaMu deal fulfills a long ambition by Dimon to increase his bank's presence in the South. The Wall Street Journal notes that it "will give J.P. Morgan an instant presence in two states where it is now virtually nonexistent: California and Florida."

Dimon has been able to do this through what he has called J.P. Morgan's "fortress balance sheet."

But Prudent Speculations argues that the WaMu acquisition "should put to an end this belief in the impenetrability of J.P. Morgan's balance sheet, especially if the economy were to worsen." The blog notes that the bank's Tier 1 capital ratio will fall to 8.3 percent this month, from 9.2 percent in June.

"Such a rapid decline in this key metric is appalling, as it would suggest that J.P. Morgan is now nothing but a mere mortal."

Whether J.P. Morgan emerges a winner in all this is still to be determined.

But it is clear who is a big loser: The private equity giant TPG, formerly Texas-Pacific Group, took a stake of $2 billion in Washington Mutual, which has now been wiped out. And the financial impact may even be greater.

Dan Primack on PEHub.com notes that there has been speculation "that some of TPG's limited partners may have doubled down via co-investments."

Primack calls this "the worst deal in private equity history."