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Originally published Friday, September 26, 2008 at 12:00 AM

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New WaMu CEO could get millions

The CEO of failed Washington Mutual, on the job only a few weeks before the nation's largest thrift was seized by the government and sold...

The Associated Press

WASHINGTON — The CEO of failed Washington Mutual, on the job only a few weeks before the nation's largest thrift was seized by the government and sold to JPMorgan Chase, is entitled to more than $13 million in severance and bonus pay.

Alan Fishman signed an agreement that provides around $6 million in cash severance and retention of his signing bonus of $7.5 million if he were to leave his job, according to a company filing with the Securities and Exchange Commission.

The board of WaMu reached out to Fishman to replace Kerry Killinger as CEO as the Seattle-based bank was in a downward financial spiral, struggling with cascading losses from soured mortgages. On Sept. 8, the same day WaMu announced Fishman's appointment as chief executive, the bank signed an agreement with federal regulators to provide an updated business plan and forecast for its financial performance.

As with most bank takeovers, WaMu senior executives could be expected to be replaced by new owners at investment bank JPMorgan Chase, which paid $1.9 billion for Washington Mutual's banking assets in a deal brokered by federal regulators who shut down the thrift.

Fishman retains his position as CEO of Washington Mutual's holding company, a JPMorgan Chase spokeswoman in New York said today.

It's too early to say whether Fishman and other top executives would be replaced, the spokeswoman said.

Spokesmen for the Office of Thrift Supervision, the federal agency that oversaw WaMu and closed it, and the Federal Deposit Insurance Corp. (FDIC), which brokered the sale to JPMorgan Chase, said Friday those agencies no longer have jurisdiction over WaMu.

When Fishman was appointed CEO, WaMu already had lost nearly 70 percent of its market value since the start of the year. It had reported a $3 billion second-quarter loss — the biggest in its history — as it boosted its reserves to more than $8 billion to cover loan losses.

Killinger had headed WaMu since 1990 and built it into one of the country's largest banks. But with a heavy focus on subprime and option adjustable-rate mortgages — the types of loans at the heart of the housing bust — WaMu's losses began to mount and its shares plummeted, sparking an outcry from shareholders.

"The board has great confidence in Alan's ability to lead WaMu and to return the company to profitability as quickly as possible," Chairman Stephen Frank said in a conference call with analysts on Sept. 8.

Fishman stressed his belief in the value of the thrift's franchise. "I share the board's confidence in WaMu's underlying strength," he said during the conference call. "I know that we can and will manage the issues we face today."

Fishman previously was president and chief operating officer of Sovereign Bank, and president and CEO of Independence Community Bank.

Copyright © 2008 The Seattle Times Company

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