Alan H. Fishman, the new chief executive at Washington Mutual Inc., refused to be pinned down Monday on his strategy for reviving the nation's largest thrift but most observers said there are few strings left for the veteran banker to pull.
Mr. Fishman, 62, was named to succeed Kerry Killinger the same day the $310 billion-asset Seattle thrift company revealed that it had entered a memorandum of understanding with the Office of Thrift Supervision governing its risk management and compliance.
During a brief call with analysts Monday, Mr. Fishman said it was "way too early" to address specific steps he will take.
"Like everyone else in this business, Wamu is facing very significant pressures, and I know I need to hit the ground running."
But analysts who cover the company said Mr. Killinger has already taken all the obvious steps.
Wamu "has scaled back on mortgages, cut jobs, raised capital," Gary Gordon, an analyst at Portales Partners LLC, said in an interview Monday. "What is Fishman going to do now, really, that Killinger wasn't doing last week? From this point on, it's really a simple matter of which direction the economy takes."
Mr. Fishman was the CEO of Independence Community Bancorp, a Brooklyn, N.Y., thrift company, until Sovereign Bancorp Inc. of Philadelphia acquired it in June 2006. He became Sovereign's president and chief operating officer after the purchase but resigned that year after failing to secure the CEO job following Jay Sidhu's ouster.
Until Monday, Mr. Fishman had been chairman of the New York commercial mortgage broker Meridian Capital Group LLC.
Mr. Fishman said Wamu's cost-cutting moves, coupled with the $7 billion of capital it raised in April, give the company a foundation for a rebound. He did not say when it would return to profitability.
Given Mr. Fishman's age, analysts and investors figure he was hired to revamp Wamu's executive ranks and bring in a lieutenant who could be prepped for the top job in a few years. They also said Mr. Fishman might guide Wamu to an eventual sale.
John Kanas, the former chairman and chief executive of North Fork Bancorp and now a senior adviser to W.L. Ross & Co. LLC, said Mr. Fishman will "almost assuredly" shake up Wamu's executive team.
When asked in an interview Monday if he thought Wamu may be preparing itself for a sale, Mr. Kanas said, "Of course."
Richard Clayton, research director at CtW Investment Group, which owns Wamu shares, said more leaders should be replaced, including CFO Thomas Casey and president Steve Rotella.
"I think it's important that there be a genuine new management team in place," Mr. Clayton said. "There is legitimate reason to clean house."
Wamu spokesmen did not return calls seeking interviews with executives Monday.
Howard Shapiro, an analyst at Fox-Pitt Kelton Cochran Caronia Waller, said in an interview Monday that it is also "highly possible" that Wamu will take a look at selling off assets, potentially even bank branches.
But both Mr. Shapiro and Mr. Kanas cautioned against putting too much weight into the change in the executive suite, given the economic tumult that surrounds the banking sector.
"Alan is a perfectly capable executive, but the market has to be very careful not to overestimate the possibilities here," Mr. Kanas said. "I'm not sure to what extent one person can really make a difference" with a company whose financial problems are so entrenched and directly tied to the economy's fate.
Mr. Kanas said: "Any time a new CEO comes in, there is a great tendency to dig deep into the organization, to be truly objective, and to try to get to the bottom of the problems. So over the next couple months we are likely to see a clearer picture of what Wamu's prospects really are."
The major hurdle for the new CEO is an economy still teetering on the brink of recession. If housing markets and broader conditions further deteriorate this year and next, analysts say, Wamu's badly bruised loan portfolio could weaken beyond repair. A report last week that showed the unemployment rose to 6.1% last month, from 5.7% in July, added weight to the concern.
Mr. Killinger, 59, had been with Wamu for 25 years, the last 18 at the helm. He led its evolution over the past decade from a regional thrift company into a national retail bank and mortgage lender. But rapid growth, particularly in high-risk subprime mortgages, has stung Wamu over the past year and elicited widespread criticism about his oversight of risk management.
Wamu posted a second-quarter loss of $3.3 billion, the largest of its three straight quarterly losses, and its reserve for loan losses mushroomed nearly 80% from the first quarter, to $8.5 billion. It is shedding more than 4,000 jobs. It has closed its stand-alone home loan centers and ceased high-risk adjustable-rate mortgage lending. As a result, its balance sheet has steadily shrunk. Its total assets have declined 5% this year, to $310 billion, and it has said it expects that figure to be $285 billion to $295 billion by yearend.
Some investors had been calling for Mr. Killinger to step down for most of this year. He relinquished the chairman's role in June, and Wamu formally parted ways with him Monday morning, when it said he had retired.
The departure was "long overdue," Mr. Clayton said.
"Killinger really failed to do what he was supposed to do with risk management," he said in an interview Monday. "He failed to dial back when it was clear that the housing markets were overheated. He didn't respond fast enough."
In its agreement with the OTS, Wamu said it had "committed to provide the OTS an updated, multiyear business plan and forecast for its earnings, asset quality, capital and business segment performance." The details of the enforcement order were not made public, and the agency would not say when that plan must be submitted.
Wamu said the agreement will not force it to raise more capital or make changes to the products and services it provides.
