Washington Mutual to cut dividend, jobs

SEATTLE, Dec. 10 (UPI) -- Washington Mutual Inc., the largest U.S. savings and loan association, said Monday it would stop subprime lending, slash its dividend and cut 3,150 jobs.

The Seattle company said it was acting in the face of an "unprecedented challenge in the mortgage and credit markets," which it expected to continue through next year.

To regain liquidity, the company also plans to raise $2.5 billion by selling stock.

It will reduce its dividend to 15 cents a share from 53 cents, it said.

The company also said it expected to record a fourth-quarter loss on a $1.6 billion goodwill write-down on the value of its home-loans business.

WaMu predicted a prolonged period of reduced lending and said its national mortgage originations would shrink by 40 percent next year to $1.5 trillion from $2.4 trillion this year.

The bank -- founded in 1889 to help save Seattle's economy after a fire nearly destroyed the city -- said it would close 190 of its 336 home-loan centers and sales offices. It will also cut 2,600 positions, or 22 percent of its home-loan staff, and 550 corporate and other support positions, it said.

In addition, it plans to close its WaMu Capital Corp. institutional broker-dealer business.

The bank said the stock sale and restructuring would generate $3.7 billion in equity.