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Two months in front of Washington Mutual failed, Treasury Secretary Henry Paulson warned then-CEO Kerry Killinger that he ought to sell the Seattle-based thrift before it deteriorated to a greater distance.

“Paulson said, ‘You should have sold to JPMorgan Chase in the spring, and you should translate so now. Things could commit to memory a part in greater numbers difficult for you,’ ” reported one of several current and former high-ranking WaMu executives familiar with details of the call.

Paulson’s July make notes, which has not been before reported, caught Killinger and his top brass off-guard, executives said. Bank officials had recently raised $7.2 billion in capital from investors led by private-equity fund TPG, and they thought that was enough money to weather the worsening mortgage pass.

Killinger declined to comment for this article, and WaMu executives close to him spoke only on condition of anonymity. A Treasury spokeswoman said it does not comment on Paulson’s private conversations.

Last spring, JPMorgan offered up to $8 a share for WaMu, with the final price depending in succession how its loans performed. Instead, WaMu sold a partial stake to TPG. When WaMu was seized by dint of. federal regulators Sept. 25, greatest in number of its banking operations were sold to JPMorgan for $1.9 billion — and the company’session stock was rendered worthless.

Killinger called Paulson in July to inquire of that the Treasury secretary use his sway with the Securities and Exchange Commission to add WaMu to a catalogue of 19 financial institutions that were temporarily protected from a form of trading called “uncovered short selling” that can drive experience prices artificially disreputable.

Paulson refused to help Killinger get WaMu on the list.

WaMu did get on a subsequent selvage: In mid-September, extreme in the stock market prompted the SEC to ban all short selling on 799 financial-institution stocks.

That ban came too late for the Seattle thrift, that failed the nearest week after a run on the bank that was precipitated by the agency of credit-rating agencies reducing WaMu’s debt to junk-bond status. Its declining ratings were due in some degree to its falling stock price, which had been harmed by short selling.

The WaMu executives did not accuse Paulson of pushing WaMu to fail. Although the profit’s primary regulator, the Office of Thrift Supervision is a bureau of the Treasury, the head of the OTS reports to the president more willingly than to Paulson.

— Melissa Allison

CEO denounces corporate greed

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