WaMu is latest bank to show CEO the door

NEW YORK - Washington Mutual Inc., ravaged by losses from sour mortgages, yesterday replaced Kerry Killinger as chief executive, adding him to the growing list of banking bosses ousted by their boards. Shares of the company, the nation's largest savings-and-loan association, fell 3.5 percent.

Killinger, 59, is being replaced by Alan H. Fishman, 62, a former president and chief operating officer of Philadelphia's Sovereign Bancorp Inc.

Also yesterday, WaMu said it has entered into a memorandum of understanding with the federal Office of Thrift Supervision to provide the agency with an updated, multiyear business plan and forecast for its earnings, asset quality, capital, and business segment performance. The plan will not require the company to raise capital or increase liquidity, WaMu said.

WaMu shares dropped 15 cents to $4.12 on the New York Stock Exchange. Shares have fallen 90 percent since July 2007, right before the rapid erosion in the credit markets began.

Battered by rising mortgage delinquencies and defaults, and by the sinking value of its mortgage portfolio, WaMu has lost nearly 70 percent of its market value this year.

Killinger, who was stripped of his chairman title in June, became chief executive of the Seattle thrift in 1990 and built WaMu into one of the country's largest banks. But with a heavy focus on subprime and option adjustable-rate mortgages - the types of mortgages at the heart of the housing bust - WaMu's losses began to mount and its shares plummeted, sparking an outcry from shareholders.

The board's splitting of the CEO and chairman roles in June was an effort, at the urging of shareholders, to improve corporate governance. At WaMu's shareholder meeting in April, a nonbinding resolution urging the installation of a non-employee as board chairman passed with 51.5 percent of the votes.

But Killinger - who received compensation valued at $14.4 million in 2007 - held onto his post as chief executive, even as the list of other top banking executives shown the door continued to grow.

Killinger's exit follows that of Wachovia Corp. chief executive Ken Thompson, Merrill Lynch & Co. Inc.'s Stanley O'Neal, and Citigroup Inc.'s Charles Prince.

The 62-year-old Fishman became president and CEO of Brooklyn, N.Y.-based Independence in 2001. He later served as president and chief operating officer of Sovereign Bank after the Philadelphia-based bank bought Independence for $3.6 billion in cash in 2006.

"The board has great confidence in Alan's ability to lead WaMu," said Chairman Stephen E. Frank in a conference call with analysts, "and to return the company to profitability as quickly as possible."

Most recently, Fishman has served as chairman of commercial mortgage brokerage Meridian Capital Group.