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WaMu gets funds from private group

Wed., April 9, 2008

Washington Mutual Inc. secured $7 billion in new capital Tuesday, an injection that is aimed at reviving the company despite ballooning loan losses but which may also push it to rethink its strategy, slim down and revamp the management.

The country’s largest savings and loan has been badly hurt by rising delinquencies and defaults on mortgages, and efforts last year to rehabilitate its finances fell short despite assurances from management that slashing its dividend, raising nearly $3 billion in a stock sale and leaving the subprime mortgage business would be sufficient.

Washington Mutual said it would get the new capital from an investment group led by private equity group TPG, but will cut its dividend again and post both a wider loss and set aside more in loan loss provisions for the first quarter than had been expected. TPG founding partner David Bonderman, a former WaMu director, will also rejoin the board.

Separately, the thrift said it will get out of the wholesale lending business, close all remaining standalone home loan centers and lay off about 3,000 workers.

American Airlines said it was canceling up to 500 flights Tuesday, potentially more than one-fifth of its schedule, to check the bundling of wires in some planes, the same issue that caused the airline to scrap more than 400 flights last month.

American, the nation’s largest carrier, said the cancellations could spill into today and beyond.

The airline said the Federal Aviation Administration raised more concerns about the recent inspections of the wiring in its approximately 300 MD-80 aircraft.

The company said they were not safety-of-flight issues.

Tim Wagner, a spokesman for the airline, said an FAA inspector checked several planes Monday and found that some of the work performed last month didn’t meet the agency’s standards.

•Personal information that may have included Social Security numbers and pharmacy or medical data for about 128,000 WellPoint Inc. customers in several states was exposed online over the past year, the health insurer said Tuesday.

WellPoint, which has had other data security issues in the past, recently learned about the problem, fixed it and is notifying customers, spokeswoman Shannon Troughton said. The nation’s largest health insurer by membership is offering free credit-monitoring services for those customers, but has received no reports of identity theft or credit fraud.

The latest security lapse stems from two servers maintained by an outside vendor that Troughton declined to identify. The vendor specializes in data management.


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