Monday, December 10, 2007

WaMu Write Down $1.6 Billion, cuts 3,150 jobs, & closes 190 home loan centers

Washington Mutual Inc., the largest U.S. savings and loan, will write down the value of its home lending unit by $1.6 billion in the fourth quarter and cut 3,150 jobs as losses in the mortgage market increase.

Washington Mutual also will cut its quarterly dividend to 15 cents a share from 56 cents and close 190 of 336 home loan centers, the Seattle-based bank said in a statement today. The company said provisions for loan losses in the quarter will be $1.5 billion to $1.6 billion, about twice as much as it previously expected.

Fitch Ratings downgraded the firm's rating to ``A-'' from ``A,'' citing ``worsening asset quality,'' and ``extremely challenging conditions in the U.S. residential mortgage market.'' Washington Mutual said it plans to raise $2.5 billion to shore up its capital by selling convertible stock.

Industry-wide mortgage originations will probably shrink 40 percent in 2008 to $1.5 trillion, down from about $2.4 trillion this year, Washington Mutual said in the statement. The firm plans to cease lending through its subprime mortgage channel.