Washington Mutual Inc. announced it has eliminated 1,200 jobs, following mortgage losses that some analysts believe will keep the largest U.S. savings and loan from turning a profit before 2010.
Company officials say they are cutting jobs that support the home lending unit. The job cuts affect an estimated 3% of the company's employee base. Washington Mutual ended March with 45,883 employees, down from 49,403 at year-end. At the end of 2005, well before the housing crisis began to take hold, the thrift had employed more than 60,000 people.
Washington Mutual lost about $3 billion in the six months ended March 31, after failing to cut back risky lending fast enough and keeping too many loans on the books that went sour or which investors stopped buying. Company officials have said $12 billion to $19 billion may need to be charged off of its $187 billion one-family residential home loan portfolio within four years.
Mounting losses caused the thrift this year to slash its dividend and raise $7 billion of capital that diluted existing shareholders.
The thrift this month stripped Chief Executive Kerry Killinger of his role as chairman, after a majority of shareholders voted to name an independent director to the role.