The bank recently experienced its biggest ever losses - $3.3 billion - in the second quarter of 2008 and shares have fallen around 85% over the past year. Chairman Stephen Franks said in a conference call this morning that the board felt new leadership would be the best way to return the bank to profitability.
Killinger will be replaced by Alan Fishman, chairman of New York-based commercial mortgage brokerage Meridian Capital Group since 2007. Before his appointment with Meridian, Fishman was chief executive officer of Independence Community Bank, and became chief operating officer of Pennsylvania-based Sovereign Bank when it purchased Independence Security Bank for $3.6 billion in June 2006.
Killinger, who has headed the bank since 1990, is the latest in a series of chief executives to fall victim to the credit crisis: the heads of Fannie Mae and Freddie Mac were replaced on Sunday as part of a government takeover, and the chief executives of Citigroup, Merrill Lynch and Wachovia have all stepped down within the past 12 months. Killinger was replaced as chairman in June by Franks, but remained chief executive.
Washington Mutual’s problems stem in part from its large portfolio of option adjustable-rate mortgages, many of which are in areas hit hardest by falling house prices.