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Ahead of the Bell: Washington Mutual falls

Associated Press
Ahead of the Bell: Washington Mutual falls
Associated Press 09.23.08, 7:28 AM ET

NEW YORK -

Washington Mutual Inc. shares fell in premarket trading Tuesday after ratings agency Moody's Investors Service cut the bank's ratings a day earlier and amid a report at least five banks are considering purchasing the embattled company.

Shares of Seattle-based Washington Mutual fell 40 cents, or 12 percent, to $2.93 in premarket trading. Washington Mutual shares closed Monday at $3.33.

On Monday, Moody's cut the financial strength rating of Washington Mutual Inc.'s main bank subsidiary to "E," its lowest rating, saying the thrift's capital is insufficient to absorb its mortgage losses.

Washington Mutual has been among the hardest hit banks by a sharp rise in mortgage defaults since the middle of 2007. The bank has set aside billions of dollars to cover potential losses, yet Moody's expects the capital cushion to still be short of what is necessary. The "E" rating signals an increased likelihood the bank will need outside financial support.

Bloomberg, citing unnamed sources, said at least five banks are considering purchasing Washington Mutual. Among them are Toronto-Dominion Bank, JPMorgan Chase & Co., Wells Fargo & Co. and Citigroup Inc., according to the report.

Moody's also cut its rating on WaMu's preferred stock further into junk status to "Ca" from "B2."

SOURCE :: Associated Press
Ahead of the Bell: Washington Mutual falls
Associated Press 09.23.08, 7:28 AM ET

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