When WaMu (WM) poleaxed ex-CEO Kerry Killinger earlier this week, WaMu shareholders no doubt hoped that a new CEO could save the Seattle-based lender. But new CEO Alan Fishman is already being declared irrelevant.
Because WaMu’s board also just approved a memorandum of understanding with the Office of Thrift Supervision which gives the federal regulator a great deal of oversight and puts limits what Fishman can do. WSJ:
The confidential document forces WaMu to provide the federal agency with what the company called “an updated, multi-year business plan and forecast for its earnings, asset quality, capital and business segment performance.” WaMu said it isn’t being required to raise additional capital or change any products or services.
Mr. Fishman promised to build “a winning model for the future” based on WaMu’s 2,300- branch franchise, but he offered few details on how he would limit the company’s credit exposure. He played down the need for additional capital and told analysts that it was too early to comment about possible asset sales. If the U.S. returns to a “more normalized credit environment,” he said, the bank could free up an additional $4 billion to $6 billion a year.
Sounds great, but analysts aren’t buying it. Ladenburg Thalmann guru Dick Bove, among others, thinks the bottom line is that WaMu just made too many bad loans:
The problem is very simple: They made a lot of bad loans. The solution for their problem is to find some mechanism for reducing the bad loans. That can’t be done by a new CEO.
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