WaMu's Killinger: How Did He Last So Long?

The news isn't that nearly bankrupt Washington Mutual (WM) fired CEO Kerry Killinger. What is of interest is how he inexplicably lasted so long.

In July, Washington Mutual posted a quarterly loss of $3.33 billion and said losses through 2011 in its one-family residential mortgage portfolio would probably be toward the high end of its prior forecast of $12 billion to $19 billion. Shares have fallen roughly 70% this year.

Earlier this year, the bank set plans to raise $7.2 billion from outside investors led by private equity firm TPG. It took that deal over a $7 billion takeover offer from JPMorgan (JPM). As part of Killinger's exit, the bank has been placed on probation by regulators.

With fellow CEO like Citi's (C) Chuck Prince, Merrill's (MER) Stan O'Neil, Wachovia's (WB) Ken Thompson, Bear Sterns' (BSC) Jimmy Cayne all seeing the exit door months ago, one can only wonder what those at WAMU were thinking?

Did they think Killinger could "pull it out" despite dramatically worsening results quarter after quarter? Did they really? Or, were they waiting for an assumed Fannie (FNM) / Freddie (FRE) action to coincide with their news? Who knows. Anything is just a guess and nothing is too crazy because the craziest thing is the fact Killinger is still even there to begin with.

No matter what the reason, at least it finally happened.

Disclosure: Long C, WB.

Comments

[kurt walter:]

Killinger should have been fired in September 2007. What took so long? The board of directors is inept. But Killinger will get his golden parachute, a reward for driving the company into the dirt.

2008 Sep 09 01:14 PM

[Kinabalu:]

"What is of interest is how he inexplicably lasted so long"

1) Occupy both CEO & Chairman of the board positions.
2) Appoint cronies as Directors.
3) Pay Directors more than they are worth.

2008 Sep 09 01:20 PM

[jimsep:]

Why not?

Plenty of bank managements that caused or presided over vast destructions of company wealth are still there. Soveriegn and Zion are two examples.

2008 Sep 09 02:34 PM

[Chancer:]

I had the misfortune to have WAMU accounts when they acquired Home Savings. WAMU downgraded my former "grand-fathered" checking account. They also broke into my safety deposit box, inventoried, and plastic-bagged my property, and combined all in one large box with others property; all because they desired to change the box size in my area of vault. They mis-addressed 2 mailed notifications which were not certified and never attempted to call me by phone. I complained to Killinger in 1998. He delegated to subordinates who told me that WAMU did nothing wrong. I closed all my accounts. I am really glad to see Killinger get the axe. There is some justice.

2008 Sep 10 03:48 PM