Washington Mutual Inc. is entering the latest phase in its struggle to survive the housing downturn and credit crunch with a new chief executive officer and is under scrutiny by federal banking regulators.
After nearly 20 years as Washington Mutual Inc.’s chief executive officer, Kerry Killinger has joined the ranks of more than 6,000 other WaMu employees who have lost their jobs in the downturn, company officials announced Monday. Former Sovereign Bank President Alan Fishman will replace Killinger in the top management spot at WaMu, which lost $3.33 billion in the second quarter.
WaMu also announced that it had entered into a memorandum of understanding with the Office of Thrift Supervision, which concerns aspects of the bank’s operations including risk management and compliance. WaMu said the agreement commits it to submitting a multiyear business plan and earnings forecast, but does not require the company to raise capital.
WaMu has estimated its mortgage-related losses could total $12 billion to $19 billion this year, and the company obtained $7 billion in capital from a private equity firm, TPG, in April. Citing unnamed sources, the Wall Street Journal reported that some investors may be open to a merger or sale of the bank next year if its share price does not improve. WaMu shares closed at $4.12 Monday, down nearly 90 percent from a 52-week high of $39.52.
WaMu announced in April that it was laying off 3,000 employees, closing its remaining 186 freestanding home loan centers, and halting funding of loans through mortgage brokers (see Inman News story). The layoffs followed an announcement of 3,150 layoffs in December, including 2,600 employees in home loans.
In its most recent quarterly earnings report, WaMu said it employed 43,198 workers at the end of June, or 6,791 less than the same time a year ago. The company said its downsizing moves would initially cost $450 million but result in $1 billion a year in savings.
The Journal said Fishman will receive a $10 million signing bonus and that Killinger could walk away with $23.6 million in deferred compensation, stock and pension benefits.
***
What’s your opinion? Leave your comments below or send a letter to the editor.
