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WaMu Reverses Course, Drops Before Hours

CNBC.com
Friday, 25 Jul 2008 | 6:06 AM ET

Shares of savings and loan Washington Mutual fell 1 percent in before-hours trading Friday as investors continued to fret about the stability of the company.

The stock had been up more than 8 percent in German trading after the company responded to an analyst note that said creditors are pulling funds from the company, but gains disappeared closer to the opening bell.

Shares sank 13 percent on Thursday following a note from Gimme Credit analyst Kathleen Shanley, who wrote that "many creditors have quietly been pulling funds" from the Seattle-based thrift.

Washington Mutual , in a response to Shanley's report, said late Thursday that, as it had stated months ago, "WaMu funds all of its business through its banking operations and does not rely on commercial paper."

On Tuesday, Washington Mutual said residential mortgage losses through 2011 would likely be toward the high end of the $12 billion to $19 billion range it forecast.

Chief Executive Kerry Killinger said, however, that the thrift had enough capital to get through the housing downturn, after raising $7.2 billion this year from private equity firm TPG Inc and others.

Many other lenders have also raised capital in the past year, but their share prices have still been depressed.

-- Reuters contributed to this report

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