Letters have been sent to executives at the failed Washington Mutual Bank warning of legal actions and potential damages of over $1bn (£616.3m). The letters, sent by the Federal Deposit Insurance Corporation, are intended to encourage the executives to reach a settlement under directors’ and officers’ liability insurance. They are seen as a precursor to a potential lawsuit, which could be brought within the next 30 days, according to reports. Washington Mutual collapsed in September 2008. Its assets were sold to JP Morgan by the FDIC acting as receiver for $1.8bn.