As the debate over a $700 billion bank bailout rages on in Washington, one of the nation’s largest banks — Washington Mutual Inc. — has collapsed under the weight of its enormous bad bets on the mortgage market.

Warned of a possible financial panic, key Republicans and Democrats reported agreement in principle Thursday on a $700 billion bailout of the financial industry and said they would present it to the Bush administration in hopes of a vote within days.

The Federal Reserve said Sunday it had granted a request by the country’s last two major investment banks — Goldman Sachs and Morgan Stanley — to change their status to bank holding companies.

The Bush administration is asking Congress to let the government buy $700 billion in toxic mortgages in the largest financial bailout since the Great Depression.

Wall Street rallied in a stunning late-session turnaround Thursday, shooting higher and hurtling the Dow Jones industrials up 400 points following a report that the federal government might create an entity to absorb banks’ bad debt. The report also cooled investors’ fervor for the safest types of investments like government debt.

For the second time this month, the U.S. government put taxpayer money on the hook to rescue a private financial company, saying the failure of the huge insurer American International Group Inc. would further disrupt markets and threaten the already fragile economy.

When Wall Street woke up Monday morning, two more of its storied firms had vanished.

The Federal Reserve announced late Sunday several steps to cope with the worst U.S. credit crisis in decades, including broadening the types of assets that investment banks can put up to get emergency loans from the Fed.

A top House Democrat confirmed Saturday that the government is planning to intervene to stabilize troubled mortgage finance companies Fannie Mae and Freddie Mac.

Get ready for another hike in copays and deductibles.

A national survey shows gas prices have dropped 15 cents a gallon in the last two weeks.