Washington Mutual Inc. is deploying a capital management strategy using its gargantuan portfolio of adjustable-rate mortgages, but the plan has created confusion among investors and sent analysts scrambling to figure how it will affect earnings.

The Seattle thrift company, the nation's largest, unveiled this new direction in a second-quarter earnings release Wednesday. Like other banks and thrifts, it reported net interest income that was squeezed by the effects of higher interest rates.

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