by Calculated Risk on 9/08/2008 09:41:00 PM

"The problem is very simple. They made a lot of bad loans and they are absorbing high levels of loan losses. The solution for their problem is to find some mechanism for reducing the bad loans. That can't be done by a new CEO."
Richard Bove, banking analyst with Ladenburg Thalmann & Co. Inc.

From the WSJ: WaMu Placed on Probation Amid Management Shakeup (the "probation" headline refers to the Memorandum of Understanding with the OTS)

WaMu has $53 billion in option adjustable-rate mortgages ... Of the $53 billion in option ARMs, $14 billion of these are to the riskiest segment in mortgage lending, subprime borrowers.

WaMu also has $62 billion in home-equity loans ...

Mr. Bove predicts that WaMu will lose $40 billion over the next three years on its loan portfolio. If the economy weakens further and losses are even higher, he said, "the future of the company is questionable."

Bove's comments remind me of former IMF chief economist Ken Rogoff's comment last month (see the BBC: US bank 'to fail within months' )

"We're not just going to see mid-sized banks go under in the next few months," said Mr Rogoff, who held the IMF role between 2001 and 2004.

"We're going to see a whopper, we're going to see a big one, one of the big investment banks or big banks."