Washington Mutual - U.S. largest bank fails

A man leaves a branch of Washington Mutual in the financial district of New York September 19, 2008. (Lucas Jackson/Reuters)

Thursday's seizure and sale is the latest historic step in U.S. government attempts to clean up a banking industry littered with toxic mortgage debt. Negotiations over a $700 billion bailout of the entire financial system stalled in Washington on Thursday.

Democrats claim Wall St. bailout breakthrough

"We now have between House and Senate Democrats an agreement on what we think should be in the bill, and we have a meeting scheduled at 10 a.m. tomorrow to meet with the Republicans," said Frank, chairman of the House of Representatives Financial Services Committee.

China banks told to halt lending to US banks

Chinese regulators have told domestic banks to stop interbank lending to U.S. financial institutions to prevent possible losses during the financial crisis, the South China Morning Post reported on Thursday.

Merrill Lynch gets fresh $6.6bn injection

"Merrill Lynch on Tuesday said it had raised $6.6bn by selling preferred shares to investors from the Middle East and Asia, as part of a second injection of funds to help shore up the US investment bank’s capital base."

Citigroup Could Write Down Up to $24 Billion

"Citigroup could write down as much as $24 billion due to subprime and credit-related losses, CNBC has learned. In addition, the company could lay off as many as 20,000 workers as part of a comprehensive plan to slash costs and raise capital."

Top economist says America could plunge into recession

"Professor Shiller, co-founder of the respected S&P Case/Shiller house-price index, said: “American real estate values have already lost around $1 trillion [£503 billion]. That could easily increase threefold over the next few years. This is a much bigger issue than sub-prime. We are talking trillions of dollars’ worth of losses.”"

Citigroup to sell $7.5 billion stake to Abu Dhabi

"Citigroup Inc (NYSE:C - News) is selling up to 4.9 percent of itself for $7.5 billion to the Gulf Arab emirate of Abu Dhabi, giving the largest U.S. bank fresh capital as it wrestles with the subprime mortgage crisis and the resignation of its chief executive."