The nation's largest thrift will be put under special regulatory supervision following skyrocketing losses from mortgages (many of them originating in California). Washington Mutual said the warning concerns risk management and compliance, and it comes just as the board is giving the boot to CEO Kerry Killinger. From the WSJ:
The board recently got new blood in key posts and concluded WaMu needed an outsider to signal a fresh start, according to people familiar with the matter. Board leaders conducted a discreet search for Mr. Killinger's replacement and told the CEO Thursday that they wanted him to retire, these people said. Succeeding Mr. Killinger will be Alan Fishman, currently chairman of New York commercial mortgage broker Meridian Capital Group. Before joining Meridian in 2007, Mr. Fishman was president and chief operating officer of Philadelphia-based Sovereign Bank, the nation's second-largest thrift.
[CUT]
The bank said Monday it will provide regulators an updated multiyear business plan and forecast for earnings, asset quality, capital and business-segment performance. In a bid to reassure investors, WaMu said the plan "will not require the company to raise capital, increase liquidity or make changes to the products and services it provides to customers."
More than $50 billion of WaMu's holdings are option adjustable-rate mortgages, where borrowers can make minimum payments that may not even cover the interest due. The company has been offering interest rates for CDs of up to 5 percent, a worrisome sign that deposits need to be shored up.