Project Restart and the Wamulians

Posted by: Chris Palmeri on June 20, 2008

wamu

It’s been another tough week for Washington Mutual, the nation’s largest and perhaps most troubled thrift. The company announced a major new restructuring called Project Restart. Some 1,200 employees were let go. Offices have been closed and major personnel changes made at the top, including the promotion of Arlene Hyde to head the home loan operations.

Wamu eliminated two mortgage products—the infamous option ARM loans which lets borrowers forgo interest payments by adding them to their principal and another product that was a combination home equity loan and mortgage. The Seattle-based company also increased its commitment to a fund to help troubled homeowners stay in their homes by $1 billion.

Meanwhile, David Dreman, an influential money manager, called for Wamu chief Kerry Killinger to get fired. This comes as opposition builds for private equity firm TPG’s $7 billion Wamu investment, which shareholders need to approve at a special meeting on June 24. In a note to employees on June 19, obtained by BusinessWeek, Killinger said:

“Quite a while ago, I told you that every day, each of us at WaMu has a choice to make. We can choose to be distracted and disheartened by the challenges we face. Or we can choose to take the actions needed and to fight to turn this company around. For the last year—day after day—I’ve seen WaMulians choose to move forward and fight. Thank you for all you are giving and doing to ensure a WaMu comeback.”

-Kerry

Reader Comments

P

June 20, 2008 10:01 PM

I have worked at Wamu for 5 yrs and the truth is that Killinger and his team are an absolute joke! Project Restart is another one in the long line of fancy named initiatives that have flunked and now this is just a sinking Titanic. These people were hiring new sales guys at recently as beginning of April - right before announcing layoffs of the same people! And now they have reshuffled some of the incompetent executives in a game of musical chairs to give a semblence of change....

bill s.

June 22, 2008 10:22 AM

in 2004, wamu had a $1B loss from not hedging the mtg pipeline properly and protecting from higher interest rates. Killinger's response was to eliminate the commercial banking group.(stock was in the 40's) $6B in assets and $3B in deposits. the majority was floating rate debt. they fired 1,200+/- people on a conference call. killinger wanted to concentrate on the mtg business incl. option arms. the results hae been more billions in losses (stk below $8).QUESTION: how do u make a small fortune? give Killinger a large one"

bill s.

June 22, 2008 10:24 AM

in 2004, wamu had a $1B loss from not hedging the mtg pipeline properly and protecting from higher interest rates. Killinger's response was to eliminate the commercial banking group.(stock was in the 40's) $6B in assets and $3B in deposits. the majority was floating rate debt. they fired 1,200+/- people on a conference call. killinger wanted to concentrate on the mtg business incl. option arms. the results hae been more billions in losses (stk below $8).QUESTION: how do u make a small fortune? give Killinger a large one"

Jaques

June 23, 2008 1:29 PM

Kerry Killinger is a blithering idiot, but the board is 10x as stupid for retaining him. How can you still have faith in someone who was at the helm when your stock went from $40+ to less than $6 a share? Plus, wanted to slip some heavy bonuses to themselves for doing a crappy job! And now the kicker, they are going to dillute the shareholder's value even more.
Killinger is a typical Baby Boomer style CEO: refuses to be realistic(truthful), and doesn't really care about anything but himself.

Al

June 27, 2008 5:06 PM

I was one of those employees let go in April. I can tell you one thing, I seen it coming. Kerry was going across the county last late last summe trying to put everyone at ease. He didnt because "talk is cheap", but what the ehck, is sitting on a couple of mil. what does he care about us Indians?

Dee

July 9, 2008 4:36 PM

I was an employee for 8 and a half years and I left for the final time on my own last December. I saw how the market was starting to fade.

It also amazed me how WAMU got so greedy and rich but would not raise employee salaries or bonuses.

I just see that as reaping what they sowed. I have seen so many of my fellow "Wamulians" leave, get laid off, or just be pushed to the side in regards to the WAMU way.

I am sad to see this happening. It looks as if WAMU is drowning and if someone doesn't come help them soon they will no longer be in existence.

I also hope they get rid of Kerry Killinger plus these days I hear he does nothing with the day to day it's Steve Rotella running the show.

Post a comment

 

About

BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.

BW Mall - Sponsored Links

Buy a link now!