Investors Scrutinizing WaMu

InvestmentNews.com (08/18/08); Morrissey, Janet
Despite the fact that its shares have lost more than 85 percent of their value over the last year, Washington Mutual Inc. believes it can ride out the current credit crisis. That optimism did not stop Ladenburg Thalmann & Co. Inc.'s Richard Bove from putting WaMu on his list of the top dozen banks and thrifts most at risk, however, or analyst Brian Foran from recently writing: "WaMu's credit challenges remain severe." Equity and fixed-income analysts alike, though, concur that WaMu is not in any immediate danger and appears to be able cover its projected loan losses after recently raising $7.2 billion in new capital from a group of investors led by TPG Capital LP. In addition, it has slashed its dividend to 1 cent from 15 cents, boosted its reserves to more than $8 billion and bolstered its retail operations with a flurry of new checking accounts and cost-cutting initiatives.