As of Sept. 21, regulators started taking things into their own hands. It quickly became clear that an open-bank sale was not viable.

"As the bank became illiquid" that hurt "the ability of an open-market buyer to take the holding company and assume all of the debt. ... The open-bank transaction is much, much more expensive in the first place for the buyer," said Walter G. Moeling 4th, a lawyer at Powell Goldstein LLP.

Instead, the FDIC began soliciting bids for an auction Wednesday night. It was largely the same process the agency uses for every failed institution, but the stakes were higher. Wamu's collapse could have stuck the Deposit Insurance Fund with a huge tab.

By Tuesday, regulators were confident Wamu could be sold without cost to the government.

"With the massive withdrawals they had, the fear of a genuine meltdown undoubtedly convinced OTS they couldn't wait any longer," Mr. Moeling said.