WaMu: We have $50 billion in liquidity
The troubled savings and loan shoots down rumors of capital problems and says that it has beefed up liquidity by $10 billion in recent weeks.
NEW YORK (CNNMoney.com) -- Washington Mutual's stock dove more than 13% Friday morning but recovered after the battered savings and loan confirmed that it had beefed up its liquidity.
WaMu spokesman Derek Aney said in an email to CNNMoney.com that the company had "increased our available liquidity to more than $50 billion." The company previously had said that its liquidity was $40 billion as of the end of the second quarter.
WaMu's (WM, Fortune 500) stock closed at $3.84 or 4.7% lower for the day, after falling more than 30% this week. The banking firm has been haunted by bad loans, bad news and negative analyst reports.
On Tuesday, WaMu reported a $3.3 billion quarterly loss, or a net loss of $6.58 a share. Excluding a charge, the company lost $3.34 a share, much worse than Wall Street forecasts of a $1.05 per share loss. Much of the bank's financial woes stem from bad loans related to the collapsed housing market.
Earlier on Friday, WaMu fell more than 13%. But the stock recovered after CNBC first reported the increase in the firm's liquidity.
The firm could use some good news. On Thursday, GimmeCredit analyst Kathleen Shanley reported that "unsecured creditors are reducing their exposure to the bank, presenting an increasing funding challenge." That report sent shares of WaMu down 13%.
And after WaMu announced its earnings Tuesday, a Moody's analyst put the company under review for possible downgrade.
This follows a July 14 report from a Lehman Brothers analyst who said the bank may need to "substantially" increase its reserves to cover losses from home loans.
WaMu has been trying to reassure investors and customers that it is not in any imminent danger. The company's chief enterprise risk officer said on Tuesday that delinquencies related to subprime and home equity portfolios were starting to stabilize.
Also, the company said executives would forgo their annual bonuses. This is in addition to other changes the company has made over the past three money-losing quarters, including cutting the dividend twice, shutting down certain business units and reducing the payroll.
Investor concerns over WaMu's financial health have escalated following the July 11 failure of IndyMac, and the near-collapse earlier this year of Bear Stearns, which was acquired by JPMorgan Chase (JPM, Fortune 500).
Frederick Cannon, analyst for Keefe, Bruyette & Woods, said in an email to CNNMoney.com that WaMu "has a solid liquidity position at this point in time." He said the firm is "in the process of shrinking their balance sheet and funding needs" to reduce its need to refinance debt.
Nonetheless, WaMu still faces "rapid decay in the loan quality of their portfolio that is putting pressure on capital," said Cannon. "That is an issue, however, that will need to be addressed over the coming months and quarters and does not create a near term liquidity issue." 
