WASHINGTON–Washington Mutual Inc., announced it would close its wholesale mortgage unit and shutter its home loan retail centers across the country, signaling a major retreat from the mortgage business.
It's predicted that as many as 10,000 employees may lose jobs in the move.
The largest thrift in the country is also set to receive $5 billion in cash from private equity groups including TPG, in return for nearly 25% of outstanding shares and a seat on the board of directors.
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WaMu's earlier interventions to pare down operations by eliminating some of its riskiest subprime mortgages to borrowers with poor credit or heavy debt were not enough to stem continuing losses in the mortgage market, as it posted a fourth-quarter loss of $1.87 billion. Last summer, it closed nearly half its home loan centers, shut down its call centers, and did away with over 3,000 jobs. The thrift also closed WaMu Capital Corp., and ceased selling mortgage-backed securities.
WaMu will be the first retail bank in the country to take in outside investors. Until now, it's only been investment banks like Merrill Lynch & Company, Morgan Stanley, and Citigroup Inc. that have tapped equity firms or sovereign wealth funds for needed cash to save the business.
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