Washington Mutual’s shares dropped by 14 percent after Eric Wasserstrom, an analyst of UBS AG said that the lender was underestimating losses on home loans.
WaMu will lose about $21.7 billion from mortgages through 2011. It will be more than the $12 billion to $19 billion the company forecasted.
Lehman Brothers Holdings Inc., once the biggest underwriter of mortgage securities, reported a loss three times worse than the most pessimistic estimate. WaMu, the biggest U.S. savings and loan by assets, had ranked among the largest U.S. lenders to home buyers with the weakest credit.
The shares of WaMu dropped to $12.62 in the NYSE composite trading after earlier dropping as low as $6.51.
Washington Mutual (or WaMu) is the United States' largest savings and loan association. Despite its name, it is not a credit union, and ceased being a mutual company in 1983. It is publicly traded on the New York Stock Exchange.
Washington Mutual's principal activities are to provide financial services to consumers and small businesses such as retail banking, mortgage lending, consumer lending, business banking, business lending, insurance services, credit card services, commercial real estate mortgage and consumer investment services.
Washington Mutual is the sole surviving major Seattle-based bank after the flurry of mergers in the 1980s and 1990s ended the independence of Rainier Bank, Seafirst Bank, and Peoples National Bank, among others.
Washington Mutual operates more than 2,600 retail banking, mortgage lending, commercial banking, and financial services offices, as of June 30, 2006.
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