Nov. 9 (Bloomberg) -- U.S. Treasury Secretary Henry Paulson warned former Washington Mutual Inc. Chief Executive Officer Kerry Killinger to sell the thrift to JPMorgan Chase & Co. two months before WaMu failed, the Seattle Times reported.

``Paulson said, `You should have sold to JPMorgan Chase in the spring, and you should do so now. Things could get a lot more difficult for you,''' the Times reported, citing a WaMu executive familiar with Paulson's call that it didn't identify.

Earlier this year, JP Morgan offered $8 per share for WaMu, the Times said. JPMorgan acquired WaMu's branch network Sept. 25 for $1.9 billion after the Seattle-based thrift was seized by regulators, the newspaper reported.

Killinger was surprised by Paulson's call because Washington Mutual had raised $7.2 billion from private equity investors, which WaMu executives believed was enough to survive the mortgage crisis, according to the Times.

To contact the reporter on this story: Joel Rosenblatt in San Francisco at at jrosenblatt@bloomberg.net

Last Updated: November 9, 2008 12:22 EST