A Treasury official and the leader of the Federal Deposit Insurance Corp. disagree on how the Washington Mutual seizure was handled, while a banker questions whether he paid too much for the thrift, according to a new report on the causes of the 2008 financial crisis. Jaime Dimon, CEO of JPMorgan Chase (JPM), said he would have only bid $1 for the failing Seattle-based thrift instead of nearly $2 billion had he known no one else was bidding. About a page is devoted to the thrift's seizure and the decisions surrounding it, but issues involving WaMu’s option adjusted-rate mortgages, loose lending standards and questionable appraisal practices, get mention elsewhere in the report. Neel Kashkari is the U.S. Treasury official quoted on second-guessing how the seizure was handled. WaMu, with $307 billion in assets, was the largest bank failure in U.S. history. It followed the summer failure of IndyMac and preceded the fall buyout of Wachovia by Wells Fargo (WFC). In the eight days after Lehman’s bankruptcy, depositors pulled $16.7 billion out of Washington Mutual, according to the report. WaMu had been the subject of concern for some time because of its poor mortgage-underwriting standards and exposures to payment-option adjustable-rate mortgages, according to the report. Moody’s rated its senior unsecured debt junk on Sept. 11, 2008. The government seized the bank on Sept. 25, 2008. FDIC officials told the FCIC that they had known in advance of WaMu’s troubles and thus had time to arrange the transaction with JPMorgan. Dimon said that his bank was already examining WaMu’s assets when FDIC Chairman Sheila Bair called and asked, “Would you be prepared to bid on WaMu?” “I said yes we would,” Dimon told the FCIC. “She called me up literally the next day and said — ‘It’s yours.’ … I thought there was another bidder, by the way, the whole time, otherwise I would have bid a dollar—not ($1.9 billion), but we wanted to win,” according to a recount of the conversation in the FCIC report. “The FDIC insurance fund came out of the WaMu bankruptcy whole. So did the uninsured depositors, and (of course) the insured depositors. But the FDIC never contemplated using FDIC funds to protect unsecured creditors, which it could have done by invoking the 'systemic risk exception' under the FDIC Improvement Act,” the report said. WaMu’s failure created panic among the unsecured creditors of other struggling banks, particularly Wachovia. But Bair stood behind the decision not to invoke the “systemic risk exception,” according to the report, as did the Federal Reserve. “I absolutely do think that was the right decision,” she said, according to the report. “WaMu was not a well-run institution.” She also said she thought the resolution of the thrift was “successful.” But Treasury officials felt differently when interviewed by the FCIC, according to the report. “We were saying that’s great, we can all be tough, and we can be so tough that we plunge the financial system into the Great Depression,” Treasury’s Neel Kashkari told the FCIC. “And so, I think, in my judgment that was a mistake. . . . [A]t that time, the economy was in such a perilous state, it was like playing with fire.” Write to Kerry Curry. Follow her @communicatorKLC.