In a move to raise $3.7 billion, Washington Mutual (WM) announced Tuesday it will slash its dividend, cut its workforce, and sell preferred stock. America's largest savings and loan, WaMu has been hit hard by the residential mortgage crisis. It plans to exit the supbrime market completely and cut more than 3,000 jobs. The company's quarterly dividend will also drop to $0.15/share from $0.56/share.
CEO Kerry Killinger created 
a growth plan last year that relied heavily on loans to borrowers with tarnished credit histories, and now the company has the largest exposure to risky loans of the top five mortgage lenders. Killinger's leadership has come under question: "You just might say now's the time to take the golden parachute and walk away," said analyst Richard Bove of Punk Ziegel. The company will also take a $1.6 billion writedown related to home loan losses, and said it will suffer a loss in the fourth quarter. "Credit losses from WaMu's mortgage operations will be noticeably higher than previously estimated," and the bank's profitability will not "begin to recover" until 2010, Moody's said. The company also announced it will shutdown its broker-dealer unit. Shares of Washington Mutual were down 8.4% to $18.21 in early action Tuesday.
Additional Reading: Washington Mutual Is Headed Lower
Earnings call transcript: Washington Mutual Q3 2007
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