As we continue our retrospective of the past year's massive financial meltdown, we must note that it was a year ago today that JPMorgan Chase (NYSE:JPM) bought Washington Mutual. With $307 billion in assets, WaMu was (and still is, at least so far) the largest bank failure in history by far.

My favorite part: Just five months before the deal went down, JPMorgan offered to buy WaMu for $8 a share, or about $8 billion. WaMu refused, opting to raise capital and go it alone. No one knows for sure, but plenty speculated that WaMu walked away because then-CEO Kerry Killinger couldn't face the thought of being unemployed.

Fast-forward to last fall, and Killinger was not only canned, but became the poster child for moral hazard, while JPMorgan was able to buy WaMu from the FDIC for a mere $1.9 billion. It's one more example of greed, irony, and stupidity at their finest.

One sweet deal
The most important thing about this deal is that because WaMu failed and was seized by the FDIC, JPMorgan didn't have to buy the entire company -- just the parts it wanted. All it bought were WaMu's banking assets and deposit base, while most of its debt and preferred securities were, as my Foolish colleague Chuck Saletta put it, "left to rot in bankruptcy court."

That dramatically reduced the potential risk JPMorgan assumed, and makes the deal much different from Bank of America's (NYSE:BAC) acquisitions of Countrywide and Merrill Lynch, Wells Fargo's (NYSE:WFC) buyout of Wachovia, and even JPMorgan's own purchase of Bear Stearns.

With the biggest risks hacked away, JPMorgan's upsides are WaMu's deposit base and geographic presence. JPMorgan's commercial banking segment, Chase, gained roughly $188 billion in deposits after the deal, and got entry into new territories in the West and Southeast. In California, Chase went from three branches before the acquisition to 691 after. Similarly, its branch count rose from 13 to 274 in Florida and from 1 to 188 in WaMu's home state of Washington.

Chase cheaply and efficiently expanded its footprint into areas it was previously nearly excluded from, giving it a leg-up on not just big competitors, but regional niche banks like SunTrust (NYSE:STI) and Fifth Third (NASDAQ:FITB). The new deposits also cemented JPMorgan's source of stable, cheap capital at a time when investment banks like Goldman Sachs (NYSE:GS) and Morgan Stanley (NYSE:MS) could only dream of the stuff.

No doubt about it: Gaining deposits and geographic turf, combined with the debtless way the deal was structured, made the acquisition a near no-brainer.

Now the bad news
Less exciting for shareholders is what to make of the $176 billion in mortgage assets that JPMorgan inherited. When the deal was first struck, JPMorgan said it would be writing down the value of WaMu's mortgage book by $31 billion, or more than 17%, to counteract what it thought were probable losses.

Seventeen percent, of course, is a massive haircut in an industry that survives on margins in the low single digits, so the writedown was seen by most as more than adequate.

But a lot has changed since then, and none of it for the better. JPMorgan's original loss estimates rested on assumptions that now look terribly optimistic. Although the company based its loss estimates on the assumption that home prices nationwide would fall only another 8% after September 2008, the S&P Case-Shiller National Home Price Index has plunged around 12%, and despite recent monthly price gains, any sensible estimate will tell you the bottom hasn't been hit.

JPMorgan also expected unemployment to top out at 7%, yet it's now pushing the 10% mark. Both statistics are hugely important to WaMu's loan book, which was stuffed full of option ARM loans set to recast, which in turn would result in ballooning monthly payments for homeowners who either can't or choose not to stay in the game.

All of this means that JPMorgan won't see the kind of profit it originally expected from the deal. WaMu's book, like many others', is a total mess and is bound to deteriorate for a good while longer, eating into potential earnings and chipping away at capital.

Moving on
Bottom line: Was WaMu a good deal for JPMorgan Chase? Like nearly every deal struck last fall, it hasn't turned out nearly as well as expected. In fact, you could argue WaMu's assets were among the worst in the nation. But the way JPMorgan structured the deal -- bought for practically nothing, only acquiring assets and deposits -- set it apart from the other chaotic deals we saw during the crisis.

So while the deal hasn't been great, it hasn't been terrible, either. And in this economy, that's all it takes to stay on top.

What's your assessment? Scroll down and let me know in the comments box.

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Fool contributor Morgan Housel doesn't own shares in any of the companies mentioned in this article. The Fool has a disclosure policy.