The shareholder lawsuit, filed last year in federal court in Seattle, alleges improper conduct by company officers and directors, who failed to manage risk by allowing out-of-control home lending.

The WaMu employees named in the suit are former chief executive Kerry Killinger, former president Steve Rotella, and several board members. Accounting firm Deloitte and Touche was also named as a defendant.

Seattle Judge Marsha J. Pechman said in her ruling that the “plaintiffs make no effort to connect a particular statement made by any defendant with allegations as to why that statement was false or misleading.”

Washington Mutual, the largest savings and loan, was seized by federal regulators on Thursday night, in what is by far the largest bank failure in American history. Regulators simultaneously brokered an emergency sale of virtually all of Washington Mutual to JP Morgan Chase for $1.9 billion, according to The New York Times.

The transaction was completed as lawmakers were unable to reach an agreement over the passage of a $700 billion bailout fund designed to help the ailing banks.

Customers of WaMu, based in Seattle, are unlikely to be affected, although shareholders and some bondholders will be wiped out. WaMu account holders are guaranteed by the Federal Deposit Insurance Corporation up to $100,000, and any additional deposits will be backed by JPMorgan Chase.

JPMorgan will absorb at least $31 billion in losses that would normally have fallen to the F.D.I.C., according to NYT.

JPMorgan acquired Bear Stearns only six months ago in a similar expedited deal brokered by the government. JPMorgan’s expanded franchise will rival only Bank of America. JPMorgan will also take on WaMu’s large portfolio of troubled assets, and plans to shut down at least 10 percent of the combined company’s 5,400 branches in markets like New York and Chicago, where they compete. The bank also plans to raise an additional $8 billion by issuing common stock on Friday to pay for the deal, according to NYT.

“This institution was a big question mark about the health of the deposit fund,” Sheila C. Bair, the chairperson of the F.D.I.C., said on a conference call with NYT on Thursday. “It was unique in its size and exposure to higher risk mortgages and the distressed housing market. This is the big one that everybody was worried about.” She said that the bank’s rapidly deteriorating condition prompted regulators to seize it Thursday, and not on a Friday as is typical for bank closures.

Despite the workings of the bank bailout now in full-swing on Capitol Hill, WaMu has continued to slide deeper into financial distress. Standard & Poors yesterday downgraded WaMu’s debt further into junk territory, citing the increased chance that the company may have to be split up to allow for a sale.

WaMu insists that the downgrades do not affect the safety of customer deposits, which are “insured up to the limits allowed” by the federal government. Brad Russell, a WaMu spokesperson, declined to comment to NYT on rumors regarding a possible sale. Shares fell 24 percent to $2.26/share yesterday, down 83 percent this year.

Citigroup, JPMorgan Chase, HSBC, Banco Santander, and Wells Fargo have all expressed interest in buying all or part of WaMu. Citigroup had considered an offer but will not proceed unless there is some form of government support, according to NYT.

JPMorgan and Wells Fargo are reportedly still pursuing the deal while interest from HSBC and Banco Santander has cooled. It is unknown what form of federal assistance regulators will offer at this point.

Analysts project that WaMu will accumulate losses of up to $30 billion or more because of the worsening housing crisis.

Harry Pearce, chairman of Nortel Networks, is the founding chair of the forum. Spencer Stuart, the director and executive search consulting firm, will co-sponsor the event aimed at allowing U.S. and Canadian chairmen to share experiences, test opportunities for collective action on market issues, and form the core of a global network of chairmen organizations.

An estimated 35 percent of S&P 500 corporations have moved to implement a separate chairman rather than combining the job with that of CEO. The Millstein Center predicts that upswing will continue. Washington Mutual and Citigroup recently elected to separate the two positions. Last week, shareholders at ExxonMobil voted strongly in favor of adopting the independent chair model.

Pearce said the inaugural forum will consider endorsing policy guidance on the role of an independent chair in North America. The statement is being drafted by Pearce and Ira M. Millstein, senior associate dean for corporate governance at the Yale School of Management and senior partner at Weil, Gotshal & Manges.

The Conference of Fund Leaders is a permanent body dedicated to peer collaboration among independent chairmen and lead directors of mutual funds. Stephen Davis, the project director, is also the editor of Global Proxy Watch, which is owned by Directorship.

Effective July 1, independent director Stephen E. Frank will assume the role of Board Chair while Kerry Killinger will continue to lead the company as Chief Executive Officer and serve as a Director. The Board also adopted a majority voting standard and made several changes to the composition and leadership of certain of its Board Committees.

“The actions taken today by the Board are the result of a deliberate review of how best to enhance WaMu’s corporate governance policies and practices. They also reflect the Board’s commitment to listening to feedback from our shareholders,” said Frank. “My fellow directors and I look forward to working with Kerry and his management team as they return WaMu to profitability.”

Frank, 66, has served on WaMu’s Board of Directors since 1997, most recently as the company’s Lead Independent Director. He is the retired chairman, president and CEO of Southern California Edison.

“The actions taken today by the Board are the result of a deliberatereview of how best to enhance WaMu’s corporate governance policies andpractices. They also reflect the Board’s commitment to listening tofeedback from our shareholders.” –Stephen Frank

“We’re very fortunate to have in Steve Frank a Board Chair who has broad business experience and a deep knowledge of our company,” said Killinger. “These actions underscore the Board’s longstanding commitment to good corporate governance and my personal commitment to improving the company’s financial performance and delivering value to our shareholders.”

Killinger added, “These steps are just a few among many we are taking this year to make this a positive turning point for WaMu. In addition to these actions, we are, of course, aggressively implementing our plans for operational and financial recovery — including maintaining ample capital and a high level of liquidity, significantly reducing our operating expenses, and continuing to grow our profitable, core retail bank.”

Under WaMu’s new majority voting standard, in uncontested director elections, nominees must receive a majority of votes cast to be re-elected.The Board also made the following changes to the composition and leadership of certain of its Board committees:

• The Board appointed Orin C. Smith, retired Starbucks CEO, to serve as Chair of the Finance Committee. Smith has been a Director since 2005 and will continue to serve on the Board’s Audit and Governance Committees. Recently elected director David Bonderman will serve as Vice Chair of the Finance Committee, in addition to being a member of the Corporate Development committee. Bonderman is Managing Director of the global private investment firm TPG.

• The Board appointed Thomas C. Leppert, Dallas Mayor and former chairman and CEO of The Turner Corporation, to serve as Chair of the Governance Committee. Leppert has served as a member of the Governance Committee and will continue to serve as a member of the Audit and Corporate Relations Committees. Leppert joined WaMu’s Board in 2005.

• The Board appointed Regina T. Montoya to serve as Chair of the Corporate Relations committee. She will also continue in her role as a member of the Finance Committee. Montoya, CEO of Dallas-based New America Alliance, joined WaMu’s Board in 2006.

In addition, the company has launched a search for individuals with extensive financial services and strong leadership experience to further fortify WaMu’s Board of Directors as new independent directors.

The group has said that the banks’ risk committees – Bankof America’s asset quality committee and WaMu’s finance committee – failed tomanage mortgage-related risks, which cost shareholders $71 billion last year.

CtW made its request for the banks to describe how theyprotected shareholders in letters to Bank of America directors Jackie M. Ward,Frank P. Bramble, Sr., and Robert Tillman, and WaMu directors Mary Pugh,Stephen E. Frank and William G. Reed. All six directors sit on the boardcommittee of each company that oversees risk.

If the banks do not provide information on what they did tomitigate risk, CtW, which stands for “Change to Win,” said it will ask shareholders to withhold their support atthe banks’ annual meetings this spring.

The addition of the banks’ directors also completes CtW’s “subprimedirector list” for the coming proxy season. The group previously said it willwork to hold accountable those directors most culpable for the risk oversightfailures at Citigroup, Merrill Lynch, Morgan Stanley and Wachovia. All sixFocus List banks are expected to hold annual meetings in April, the first beingMorgan Stanley.

The focus list banks account for 88 percent of the $87billion in total subprime-related write-downs and credit losses announced bylarge U.S.banks since the beginning of 2007.

“The directors bear ultimate responsibility for thesefailures,” Bill Patterson, CtW executive director, said in a statement. “Moreover,unlike at the vast majority of public companies, oversight and credit risk atboth Bank of America and Washington Mutual is entrusted to a committee that isnot wholly independent. Director conflicts of interest may have compromised thecommittees’ ability to rein in excessive risk taking by management.”