Washington Mutual (WMI) - Attachments/Exhibits To The Final Report of The Examiner (Part 7/10)

DO 85 12 08 00
Endorsement No 3
Effective
September 26
2008
Named Insured Washington Mutual Inc 1201 AM Standard Time
Policy
No ELU10834608
Insurer XL
Specialty
Insurance Company
WASHINGTON AMENDATORY
ENDORSEMENT
1 Section VI GENERAL CONDITIONS F
OPTIONAL EXTENSION PERIOD 1 i
s deleted and replaced
by the following
I
f either the Parent Company or the Insurer does not renew this Policy of i
f the Parent Company cancels
this Policy
the Parent Company shall have the right upon payment
of an additional premium
set forth
i
n
ITEM 5 of the Declarations to an extension of the coverage provided by this Policy
with respect only
to
any Claim first made during
the
period
of time set forth
i
n ITEM 5 of the Declarations after the Policy
Expiration
Date but only
with
respect
to a Wrongful Act Company Wrongful Act or Employment
Practices
Wrongful Act occurring prior to the Policy Expiration
Date
2 Section VI GENERAL CONDITIONS G ASSISTANCE COOPERATION AND SUBROGATION 2 i
s
amended by deleting the words in the event and replacing
them with the words To the extent and
deleting
the words all of
i
n the first sentence
3 Section VI GENERAL CONDITIONS I REPRESENTATION CLAUSE
i
s amended
b
y addition of the
following
Provided however the Policy
will not be void unless such particulars or statements were made with the
intent to deceive
All other provisions remain unchanged
DO 85 12 08 00
Page
1 of I
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMI_PC_701361021.00020
Return
DO 80 142 10 01
Endorsement No 4 Effective September 26 2008
Named Insured Washington Mutual
Inc 1201 AM Standard Time
Policy No ELU10834508 Insurer XL
Specialty
Insurance Company
AMEND SECTION IV ENDORSEMENT
I
n consideration of the
premium charged
Section IV Limit of Liability Indemnification and Retentions
F
of the
Policy i
s deleted
i
n its entirety
Al other terms conditions and limitations of this
Policy
shall remain unchanged
D 80 142 10 01 Page 1 of 1
CONFIDENTIAL
Return
DO 80 189 08 02
Policy No ELU10834508 Insurer XL Specialty
Insurance
Company
AMEND DEFINITION OF LOSS ENDORSEMENT
I
n consideration of the premium charged
Section
I
l Definitions M
of the Policy i
s amended to read
i
n its
entirety
as follows
M
Loss means damages judgments settlements or other amounts including punitive
or exemplary
damages
where insurable
b
y
law and Defense Expenses i
n excess of the Retention that the
Insured
i
s legally obligated to pay
Loss will not include
1
the multiplied portion of any damage award
2 fines penalties or taxes imposed by law
3 wages
or
4
matters which are uninsurable under the law pursuant to which this Policy i
s construed
NOTE With respect
to
judgments i
n which punitive damage are awarded the
coverage provided
b
y this
Policy
shall apply to the broadest extent permitted by law
I
f based on the written opinion
of
counsel for the Insured punitive damages
are insurable under applicable law the Insurer will not
dispute the written opinion of the counsel for the Insured
All other terms conditions and limitations of this Policy
DO 80 189 08 02 Page 9
o
f
9
CONFIDENTIAL
Return
DO 80 29 06 00
Policy
No ELU10834608
Insurer XL Specialty
Insurance Company
DELETE INSURING AGREEMENT
C
I
1 Section I Insuring Agreement C i
s deleted
i
n its entirety
and all references
i
n the Policy
to
Insuring Agreement Care deleted
2
Section H Definitions E i
s deleted and all references
i
n the Policy
to Company Wrongful
Acr
are deleted
3
item 4
o
f
the Declarations Page i
s deleted and replaced by the following
Item 4 Retentions
$0 each Insured Person under INSURING AGREEMENT IA
$5000000
each Claim under INSURING AGREEMENT lB
All other terms
conditions and limitations of this Policy remain unchanged
DO 80 29 06 00
Page
1 of I
CONFIDENTIAL
Return
DO 83 59 09 02
Endorsement No 7 Effective
September 26 2008
Policy
No ELU10834608 Insurer XL Specialty Insurance Company
PRIOR ACTS EXCLUSION
I
n consideration of the premium charged no coverage will be available under this
Policy
for claims based
upon
arising
out of directly or indirectly resulting from i
n
consequence of or
i
n
any way involving any act error
omission misstatement misleading statement neglect breach of duty Wrongful Act Company Wrongful Act or
Employment Wrongful Act committed or allegedly committed prior to September 26 2008
All other terms conditions and limitations of this Policy shall remain unchanged
DO 83 59 09 02 Page 1 of I
CONFIDENTIAL
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DO 83320801
Endorsement No 8
Effective September 26 2008
Named Insured Washington Mutual
Inc 1201 AM Standard Time
Policy No ELU10834608
Insurer XL Specialty Insurance Company
SUBSIDIARY EXCLUSION
I
n consideration of the premium charged the term Subsidiary as defined
i
n Section l
l Definitions R of the
Policy shall not include any entity
listed below
Washington
Mutual Bank and Its Banking Subsidiaries Including Washington Mutual Bank FSB
Accordingly no coverage shall be
provided
to such entitys or its directors officers members of the
Board of Managers employees or the functional equivalent of such positions
All other terms
conditions and limitations of this Policy shall remain unchanged
D0 83 32 08 01
Pagel
oft
CONFIDENTIAL
Return
DO 90 01 01 00
Endorsement No 9
Effective September 26
2008
Named Insured Washington
Mutual Inc 1201 AM Standard Time
Policy
No ELU10834608 Insurer XL Specialty Insurance Company
RUNOFF ENDORSEMENT
I
n consideration of the
premium charged immediately upon
the happening of any
event described
i
n Section VI
General Conditions D5 the following
shall apply
a Coverage
under this Policy will cease with
respect
to Claims for Wrongful
Acts committed or
allegedly
committed after the date of such event
b After such event the Policy
shall not be cancelable by either the Parent
Corporation
or the
insurer regardless
of Section VI General Conditions E
Cancellation and Renewal of Coverage
item 1 The entire premium
for this Policy shall be deemed to be fully
earned as of the date of
such event
and Section VI General Conditions E Cancellation and Renewal of Coverage shall
be deemed amended accordingly
c
The Policy Expiration
Date as set forth
i
n item 2 of the Declarations shall be amended to be the
date that
i
s exactly one 1 year
after the date of such happening
d Section VI General Conditions F Optional
Extension Period
and ITEM 5 of the Declarations
shall be deemed deleted i
n their entirety All other references i
n the Policy to the Optional
Extension Period shall also be deemed deleted
e
Section VI General Conditions A2
of the Policy i
s deleted
All other terms conditions and limitations of this Policy
D0 90 01 01 00
Page 1 of 1
CONFIDENTIAL
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DO 83 01 01 00
Named insured Washington Mutual inc 1201 AM Standard Time
Policy
No ELU10834508 Insurer XL Specialty
Insurance Company
INSURED V INSURED EXCLUSION
I
Section 111 Exclusions G i
s deleted and replacedwith the following
G by on behalf of or i
n the name or right of the Company or any
insured Person except and to the extent
such Claim
1 i
s
brought derivatively by a security holder of the Company who when such Claim
i
s made
and maintained
i
s acting independently of and without the active solicitation assistance
participation or intervention of an insured Person or the Company
2 i
s
i
n the form of a crossclaim third party
claim or other claim for contribution or indemnity
b
y
an insured Person which i
s
part
of or results directly
from a Claim which
i
s not otherwise
excluded by
the terms of this Policy
3 i
s an Employment
Practices Claim
All other terms conditions and limitations of this Policy remain unchanged
D830101 00 Pagel
ofl
CONFIDENTIAL
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9M
M
1776 K STREET NW
WASHINGTON DC 20006
PHONE 2027197000
FAX 2027197049
7925 JONES BRANCH DRIVE
MCLEAN VA 22102
PHONE 7039052800
FAX 7039052820
wwwwi teyrei n corn
May 26 2009
BY CERTIFIED MAIL
RETURN RECEIPT REQUESTED
Ronald L Berenstain Esquire
Perkins Coie
1201 Third Avenue Suite 4800
Seattle WA 981013099
Charles C
Lemley
2027197354
clemleywileyreincom
Re Insured
Washington Mutual Inc
Policy
Nos ELU10438008 the 0809 Policy
ELU09768707
the 0708
Policy
and
ELU09768507
the 0708 ASide
Policy
Reference No
ELU006726
ELU009637
Matter Letter Dated
April 29
2009
Dear Mr Berenstain
This firmhas been retained to
represent
XL
Specialty
Insurance
Company XL
Specialty
in connection with
your
letter dated
April 29 2009 This letter
provides
XL
Specialtys
current views
concerning
the
availability
of
coverage
for the matters
identified in the
April
29 letter Please direct
any
future communications
regarding
these matters intended for XL Specialty to our attention
The
April
29 letter tenders a number of matters referred to in the letter both as
notices of circumstances and notices of claims We address these matters in turn
A The 0809 Policy
XL
Specialty
issued the 0809
Policy to Washington Mutual Inc
WMI
for the
period
from
May 1 2008 to
May 1 2009
Subject
to all of its terms and
conditions
the 0809 Policy has a limit of liability of $25 million excess of the applicable
retention The 0809
Policy i
s
a claimsmade
policy
that
only applies to Claims first
made
during
the 0809
Policy
Period 0809
Policy Insuring
Clause
IA We
highlight here several salient 0809 Policy provisions
that bear on the
coverage
analysis
that follows
The 0809 Policy provides as follows with
respect
to notices of
potential
Claims
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Ronald L Berenstain
May 26 2009
Page
2
2
I
f
during
the
Policy Period the Insured shall become aware of
any
circumstances which
may reasonably
be
expected
to
give
rise to a
Claim
being
made
against an Insured and shall give written notice to
the Insurer of the
circumstances the
Wrongful Act Company
Wrongful Act or Employment Practices
Wrongful
Act
allegations
anticipated and the reasons for
anticipating
such a Claimwith full
particulars as to dates
persons
and entities involved then a Claim
which
i
s
subsequently made
against
such Insured and
reported
to the
Insurer
alleging arising out of based
upon
or attributable to such
circumstances or alleging any Wrongful Act Company Wrongful
Act or Employment Practices
Wrongful Act which
i
s the same or
related to
any Wrongful Act Company Wrongful
Act or
Employment Practices
Wrongful
Act
alleged or contained in such
circumstances
shall be considered made at the time such notice of
such circumstances was given
Id
Section
IVA2 as amended
by
Endorsement No 14
The 0809
Policy
defines Claimas follows
a written demand for
monetary
or
nonmonetary relief
any
civil
proceeding i
n a court of law or
equity
or arbitration
any
criminal
proceeding
which
i
s commenced
by the return
of an indictment and
4 a formal
civil criminal administrative
regulatory proceeding
or formal
investigation of
any
Insured Person or the
Company but
with
respect to the Company only for a
Company Wrongful Act
which
i
s commenced
by
the
filing
or issuance of a notice of
charges
formal
investigative
order
or similar document
identifying i
n
writing
such Insured
Person or the
Company
as a
person
or entity against
whom a
proceeding as described in C2or 3 abovemay be
commenced including any proceeding
before the
Equal
Employment Opportunity Commission or
any
similar
federal state or local
governmental body having jurisdiction
over any Employment Practices
Wrongful
Act
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Ronald L Berenstain
May 26 2009
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0809
Policy
Section IIC
The 0809
Policys
Interrelated Claims
provision
states that
ajll
Claims
arising
from the same Interrelated Wrongful Acts shall be deemed to constitute a single
Claimand shall be deemed to have been made at the earliest of the time at which the
earliest such Claim
i
s made or deemed to have been made
pursuant to GENERAL
CONDITIONS A1
above or GENERAL CONDITIONS A2
if
applicable
0809 Policy Section VIB
The 0809 Policy
defines Interrelated
Wrongful
Acts as any Wrongful Act Company Wrongful Act or Employment Practices
Wrongful
Act based
on arising
out of directly or indirectly resulting from i
n
consequence of or in
any way involving any
of the same or related facts
series of
related facts circumstances situations
transactions or events 0809
Policy
Section IIK
Moreover the 0809 Policy
includes a Specified
Claims Exclusion which
provides
In consideration of the
premium charged no coverage
will be
available under this Policy for Loss including
Defense
Expenses
in
connection with
any proceeding
set forth
below or in connection
with
any
Claim based
on arising
out of directly or indirectly
resulting from
in
any way involving any
such
proceeding or
any fact
circumstance or situation
underlying or
alleged
therein
0809
Policy
Endorsement No 19 The
proceedings
set forth in the endorsement
include the securities and derivative lawsuits now consolidated as In re
Washington
Mutual Inc Securities Derivative and ERISA
Litigation
No 208MDL01919
MJP WD Wa the
Consolidated
Litigation
and other lawsuits first tendered
for
coverage
under
prior Policy
Periods collectively
the Excluded
Litigation
B Notices of Circumstances
The April
29 letters
purported
notices of circumstances are addressed below in the
order presented
and
using
the same headings used in the letter The
April 29 letter
states that
i
t
supplements your
letter of November 12 2008
to which XL
Specialty
responded by letter dated
January 16
2009 XL
Specialty incorporates by
reference
its letter of
January 16 2009 as i
f
fully
set forth herein
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Ronald L Berenstain
May 26 2009
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4
1
Alleged Wrongful
Acts in Connection with the Investment
by
TPG Capital and Others
The first
purported
notice of circumstances
i
s based
upon allegations
of the
Consolidated Derivative
Complaint
in the Consolidated
Litigation the Derivative
CACregarding alleged wrongful
acts in connection with an investment
by
TPG
Capital
in WMI The Derivative CAC
alleges
that WMI announced the TPG
Capital
investment on April 8 2008 and includes
allegations regarding alleged
Wrongful
Acts
i
n
connection with that investment Derivative
CAC 17179
The Derivative CAC was previously tendered and
acknowledged as a Claim first
made
during the 0708
Policy
Period In that regard XL
reference its letter of November
11 2008
which addressed
coverage
for the
Derivative CACas if
fully set forth herein
Consequently
XL
Specialty reserves
the
right to treat
any
future Claims
asserting
the same or Interrelated
Wrongful
Acts
as Claims deemed to have been first made
during
the 0708
Policy Period
Moreover any
future Claim based
on arising out of directly or indirectly resulting
from in
any way involving the Excluded
Litigation or
any
fact circumstance or situation
alleged
in the Excluded Litigation would be excluded
from
coverage
under the 0809
Policy
due to the
Specified Claims Exclusion
2 Other
Alleged Wrongful
Acts
by
the Directors and Officers
Asserted in the Derivative
Litigation
and Other Sources
To the extent the second
purported
notice
i
s based
upon
the
allegations of the
Derivative CAC the
analysis set forth above
applies
This
purported notice also
attaches two articles from the
Puget Sound Business
Journal
which are included
as
Exhibits 4 and 5 to the
April
29 letter These articles discuss several
alleged
omissions
by unnamed members of the WMI board of directors including
Failure to realize risks involved in connection with WMIs
expansion
into
subprime mortgage
loans
Failure to oust
Kerry Killinger despite
WMIs
poor
financial
performance
Approving a bonus
plan
for
top executives which was announced in March
2008 notwithstanding WMIs
poor
financial performance
Failure to question WMIs
strategy regarding capital
infusions in the
spring
of 2008 and further
expansion
into
subprime
loans
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Ronald L Berenstain
May 26 2009
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%
Receiving and relying on outdated financial information
provided by WMIs
officers
beginning
in the
spring
of 2007
While certain of these
allegations are not specific regarding timing many
of them
clearly
involve facts that were known to the insureds
prior
to the
inception
of the
0809
Policy
Period For
example the bonus
plan
for
top
executives
allegedly was
announced to the
public
in March
2008 and WMIs
expansion into subprime loans
was the
subject of substantial
litigation long before
May 1 2008 As a result these
allegations
do not satisfy the terms of Section
IVA2 as amended which
requires
notice in the
Policy Period
i
n which an Insured becomes aware of the relevant facts
and circumstances
These articles discuss
allegations
taken
largely
from
pleadings
in the Consolidated
Litigation Like the Derivative
CACthe Securities CAC was previously tendered
and
acknowledged as a Claim first made or deemed first made
during the 0708
Policy Period XL
reference its letter of November
11
2008 which addressed
coverage
for the Securities
CAC as i
f
fully set forth herein
XL
Specialty
therefore reserves the
right to treat
any
future Claims
asserting
the
same or Interrelated
Wrongful Acts as Claims deemed to have been first made
during
the 0708
Policy
Period
Moreover any
Claim based
on arising out of
directly or indirectly resulting from
in
any way involving the
Excluded
Litigation or
any fact circumstance or situation
alleged in the Excluded
Litigation would be excluded from
coverage
under the 0809
Policy due to the
3
Alleged Wrongful
Acts
by the Directors and Officers in
Connection with Service to WMB andor WMI and the Sale
of WMBs Assets
The third
purported notice relies
upon
the
allegations of two lawsuits
Washington
Mutual Inc et al v Federal Deposit Insurance
Corp No 09cv00533
D DC
and
JPMorgan
Chase Bank NA et al v Washington Mutual Inc et
al
No
0812229
Bankr D
Del
These lawsuits involve
disputes between and
among WMI
the Federal
Deposit Insurance
Corporation FDIC
and JP
Morgan
Chase
Bank
NA
JPMC regarding the
ownership
of certain assets in the aftermath of the
FDICs takeover of
Washington Mutual Bank
WMB and its sale of
substantially
all of WMBs assets to JPMC Neither
complaint mentions
any
officer or director
of WMI or alleges any action wrongful or otherwise taken
by any
officer or
director Neither the
complaints nor the
April 29 Letter provide
any particulars
regarding
the
persons against whom a Claim
might
be
made the reasons for
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Ronald L Berenstain
May 26 2009
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anticipating
such a Claim or
any particulars
as to dates persons
and entities
involved in
any alleged Wrongful
Act As a result this notice does not satisfy
the
terms of Section IVA2 as amended
which
requires
such particulars
This
purported
notice also attaches a letter from counsel to the Official Committee
of Unsecured Creditors the Committee
in the WMI bankruptcy
which
i
s
attached as Exhibit 8 to the letter The Committees letter relies
primarily upon
the
allegations
of the two lawsuits identified above but also
alleges
that between
December 1
2007 and
September 10 2008
WMIs officers with the
acquiescence
of its directors
caused WMl to make four capital contributions in the
aggregate
amount of $6500000 to WMB The Committees letter attaches a schedule of
WMIs current or former officers and directors but does not
identify specific
officers and directors
allegedly
involved in
any Wrongful
Acts and does not
provide
any particulars regarding why
the
alleged capital
contributions or the
allegations
of
the two lawsuits
might
lead to a claim
against any
Insured As a result this notice
does not satisfy the terms of Section IVA2 as amended which requires such
particulars
4 Alleged Wrongful
Acts Being Investigated by
the Task Force
of Federal
Agencies Including the Department
of Justice
The fourth
purported
notice attaches a
copy
of a March 18 2009 article from the
Seattle Times
regarding
an alleged ongoing investigation
of WMI
by
a federal task
force The article states that a grand jury
has been convened to investigate possible
fraud in connection with the
collapse
of WMB The article does not identify any
specific Wrongful
Act or
any particular
insured who
i
s
alleged
to have
engaged
in
any
such act Rather i
t identifies an investigation involving literally hundreds of
seniorlevel
employees
and which the article states
may
last for
years
and
may
not
result
i
n
any
criminal
prosecutions Thus
the article does not satisfy
the
requirements
of Section IVA2
Moreover
the article states that a crucial
part
of the investigation
arises from the
allegations
of the Consolidated
Litigation
and the New York Attorney
Generals
2007 lawsuit against eAppraiselT
which
i
s discussed at
length
in the Securities
CAC and other lawsuits first filed during
the 0708
Policy
Period As defendants in
the Consolidated Litigation
the Insureds were aware of these facts and
circumstances
prior
to the
inception
of the 0809
Policy
As a result
these
allegations
do not satisfy
the terms of Section lVA2 as amended which
requires
notice in the Policy Period in which an Insured first becomes aware of the relevant
facts and circumstances that
might give
rise to a Claim Moreover
XL
Specialty
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Ronald L Berenstain
May 26 2009
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reserves the
right
to treat
any
future Claims
asserting the same or Interrelated
Wrongful Acts as Claims deemed first made
during
the 0708
Policy
Period
Likewise
any
Claim based
on arising out of directly or indirectly resulting from
in
consequence of or
i
n
any way involving
the Excluded
Litigation or
any fact
circumstance or situation
alleged
in the Excluded
Litigation
would be excluded
from
coverage
under the 0809
Policy
due to the
Specified
Claims Exclusion
5 FDIC Formal Orders of
Investigation
The FDICs orders of
investigation are addressed below
C Notices of Claims
The
April 29 Letter
purportedly provides notices of Claims in connection with a
formal
investigation by
the FDIC and the letter from the Creditors Committee
attached as Exhibit 8 The Creditors Committee letter
i
s
analyzed
above
I
t does
not constitute a Claim as defined in the 0809
Policy because
i
t
i
s
not a civil
criminal or administrative
proceeding and does not demand
monetary or
nonmonetary relief from
any
Insured
1 FDIC
Investigation
Each of the FDIC orders of
investigation states that the FDIC
i
s
investigating the
acts of former
officers directors and others who
provided
services to
Washington
Mutual Bank
WaMu
of
Henderson Nevada to determine whether
they have
engaged
in
gross negligence
breach of
duty or other
culpable conduct for
failing to
employ adequate
due
diligence
standards and other controls in connection
Each order identifies
persons
under
investigation as
including
but not limited to
specific individuals identified in the order The individuals identified in certain
order include
among others each of the Directors and Officers as defined in the
first
paragraph
of the April 29 letter The FDICs
investigation
therefore
appears to
constitute a Claim
against any
Insured Person
specifically identified
i
n one of the
orders 0809
Policy
Section
IIC
The 0809
Policy defines Insured Person to include
I any past present or future director or officer or member of the
Board of
Managers of the
Company and those
persons serving
in a
functionally equivalent role for the Parent
Company or any
Subsidiary operating or
incorporated
outside the United
States
CONFIDENTIAL
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Ronald L Berenstain
May 26 2009
Page 8
2
any past present or future
employee of the
Company to the extent
any
Claim
i
s
a Securities Claim
0809
Policy Section
IIJ2
The orders do not
identify whether certain named
individuals were officers directors or
employees of the
Company To the extent the
FDICs
investigation
targets employees rather than
past present or future officers or
directors of the
Company XL
Specialty reserves the
right
to determine that no
Claim has been made
against an Insured Person
While reflected in 18
separate orders
the FDICs
investigation
appears
to be a
single investigation of WaMu officers and directors to determine whether and to
what extent their actions contributed to the
companys collapse All of the orders
i
were signed on the same day by
the same individual at FDIC ii identify the same
five individuals as authorized to conduct the
investigation iii identify the former
officers and directors of WaMu
as targets
of the
investigation and
iv
seek to
determine whether the
targets
of the
investigation engaged
in
gross negligence
breach of
duty or other
culpable conduct
i
n
connection with the
companys
operations Ten of the orders
specifically identify all or nearly all of the Officers
and Directors as defined
i
n the
April 29
letter ten
identify
failure to
prevent losses
or fraud in connection with home
equity
lines of credit
HELOCS eight are
essentially identical
except
for the identification of
specific bank branches
involved
seven
specifically identify the failure to
implement sufficient internal controls and
risk
management
six
identify
failure to heed
regulatory warnings and four
specifically identify
failure to maintain
adequate loan documentation The orders
are clearly all
part
of the same
investigation and therefore constitute a single
Claim under 0809
Policy Section
IIC4
The FDIC
investigation hereafter the
Investigation involves the same
or
Interrelated
Wrongful Acts as the Consolidated
Litigation and other Claims first
made
during
the 0708
Policy
Period The Securities CAC
alleges that the officers
and directors of WMI and WaMu are culpable in connection with
allegations that
WMI lacked
adequate internal risk
management and controls artificially inflated
home
appraisals and
manipulated the
appraisal process
relied
upon dangerously
permissive underwriting standards including subprime stated income no doe
low doe and
option ARM loans incentived underwriters to focus on loan
quantity
rather than
quality and failed to heed
regulatory warnings regarding these issues
The Securities CAC
alleges that these errors and omissions occurred
primarily in
two WMI business
segments
the Home Loans
Group and the Retail
Banking
Group Securities CAC 116 The Retail
Banking Group included small business
banking i
n
addition to the
companys portfolio of home loans and the
majority of its
CONFIDENTIAL
Return
FUN
Ronald L Berenstain
May 26 2009
Page
9
HELOCs Id
118
The Securities CAC alleges that the failure to
manage
risks and
to implement appropriate internal controls fell under the
auspices of the Risk
Analytics Group which included risk
analyses on credit card
portfolios as well as
home loans Securities CAC
TJ 362 500 The Securities CAC also
alleges
that the
directors
approved and the officers received unreasonable bonuses
despite the
companys poor
financial
performance Securities CAC
1153738
Similarly
the
Investigation targets
WaMus lack of
adequate internal risk
management policies and
practices in connection with home
mortgages HELOCs
small business
lending and credit card
portfolios The
Investigation includes inter
alia WaMus
i inflated home
appraisals and
manipulation
of the
appraisal
process ii dangerously permissive underwriting standards including stated
income
loans no doe and low doe
loans instant title automated loan
approvals option ARMs and
subprime mortgages iii manipulation
of the
compensation system for WaMus sales force including greater
incentives for
higherrisk loans and a focus on loan
quantity over quality iv failure to heed
regulatory warnings v failure
adequately to
manage
risk associated with
mortgages HELOCs and credit card
losses and vi payment
of unreasonable
bonuses
paid
to officers and underwriters
despite
the
companys poor financial
performance
Because the
Investigation involves the same or Interrelated
Wrongful Acts as the
Securities
CAC i
t
i
s deemed to be a Claim first made
during
the 0708
Policy
Period Moreover the
Investigation i
s based
on
arises out of directly or
indirectly
results
from i
s
i
n
any way
involves
facts circumstances
or
situations
alleged
in the Excluded
Litigation and therefore would be excluded from
coverage
under the 0809
Policy
due to the
As
you know XL
Specialty issued the 0708
Policy to WMI for the
period from
May 1 2007 to May 1
2008
Subject to all of its terms and
conditions the 0708
Policy
has a limit of
liability
of $15 million that
i
s
excess of the retention and a
$25 million limit of a
primary policy Primary Policy
issued
by National Union
Fire Insurance
Company of
Pittsburgh PA
Except as set forth in the 0708
Policy the 0708
Policy generally
follows the form
of the
Primary Policy
The 0708
Policy does not attach unless and until the
Primary Policy i
s exhausted
by the actual
payment of Loss The FDIC
Investigation
implicates
several
provisions in the 0708
Primary Policy that
may
limit or
preclude
coverage First the
Primary Policys
definition of
Loss carves out
1civil or
criminal fi ne s or
penalties 4 the
multiplied portion of
multiplied damages 5
CONFIDENTIAL
Return
UM
IM
Ronald L Berenstain
May 26 2009
Page
10
any amounts for which an Insured
i
s not
financially
liable or which are without
legal
recourse to an Insured and 6 matters which
may
be deemed uninsurable under the
law
pursuant
to which this
policy
shall be construed
Primary Policy
Section
2q
as amended
by Endorsement No 25 XL reserves the
right
to
deny coverage
for
matters that fall outside of the
Primary Policys definition of Loss
The
Primary Policy excludes
coverage
for
any
Claim
arising
out
of
based
upon
or
attributable to the
gaining
of
any profit or
advantage
to which
any
final
adjudication
establishes the Insured was not
legally
entitled
Primary Policy Exclusion
4a as
amended by Endorsement No 22
I
t also bars
coverage
for
any
Claim
arising out
of based
upon
or attributable to
payments
to an Insured of
any
remuneration
without the
previous approval
of the stockholders or members of
any Organization
once
any
such
unapproved payments
shall be established
by any
final
adjudication
to have been
illegal Primary Policy
Exclusion
4b as amended
by Endorsement
No 22 The
Primary Policy
further bars
coverage
for
any
Claim arising out of
based
upon or attributable to the
committing of
any
deliberate criminal or deliberate
fraudulent act
by
the Insured if
any
final
adjudication establishes that such
deliberate criminal or deliberate fraudulent act was committed
Primary Policy
Exclusion
4c as amended
by Endorsement No 22 XL
Specialty reserves the
right to deny coverage
based on one or more of the
subparagraphs
in Exclusion 4 of
the
Primary Policy as amended
To the extent that
you
receive a
copy
of the
coverage opinion issued
by
the
primary
insurer for these
matters please send us a
copy
at
your
earliest convenience
XL
Specialty issued the 0708 ASide
Policy
for the period from
May 1 2007 to
May 1 2008 Subject to all of its terms and
conditions
the 0708 ASide
Policy has
a limit of
liability of $25 million As set forth more
fully
in the 0708 ASide
Policy i
t
i
s
excess of all indemnification to which an Insured Person
may
be
entitled and
any
Insurance
Program
maintained
by
the
Company or any
Outside
Entity
0708 ASide
Policy Section
IVB1 as amended by Endorsement No
19 The Insureds have other
existing insurance that
i
s
applicable to the
Investigation so the 0708 ASide
Policy i
s not
yet implicated If that
understanding i
s not correct please let us know
We also
request
clarification of the
availability
of indemnification for the individual
defendants with
respect to the
Investigation
Please advise us at
your earliest
convenience the extent of
any indemnification
rights they may
have and
provide all
related documents In the interim XL
Specialty reserves all
rights under the 0708
CONFIDENTIAL
Return
I
IM
Ronald L Berenstain
May 26 2009
Page
11
ASide
Policy
and at law
pending a determination whether the 0708 ASide
Policy
may
be
implicated
Please
keep us informed of all
developments i
n connection with the
Investigation
defense counsels assessment of the
Investigation any damages analyses performed
and
any
settlement overtures or discussions that occur
In
closing we note that the information
currently available to XL
Specialty i
s
preliminary
and
may
be
incomplete As additional information becomes available
to XL
Specialty or new developments occur
other
terms
conditions or exclusions
may
be
implicated Accordingly
this
letter as well as all
past present
and future
communications i
s sent
pursuant
to a complete reservation of all of XL Specialtys
rights
under the 0809
Policy
the
Primary Policy the 0708 and 0708 ASide
Policies at law and in
equity
Charles C
Lemley
cc Charles Edward Smith
Senior Vice President and General Counsel
Washington
Mutual Inc
13012n
Avenue WMC3601
Seattle WA 98101
Kelly Allison Global
Operations Manager
Amy Jeter Senior Vice President
Willis Executive Risks
One Bush
Street
9`h Floor
San Francisco CA 94104
Steven W Fogg Esquire
Corr Cronin Michelson
Baumgardner Preece LLP
1001 Fourth Avenue Suite 3900
Michael Morabito
XL Professional
CONFIDENTIAL
Return
Ronald L Berenstain
May 26 2009
Page
12
Daniel J Standish
CONFIDENTIAL
Return
CONFIDENTIAL
Ironshore
Insurance Services, LLC.
A subsidiary of Ironshore Holdings, (US), Inc.
One State Street Plaza
8th Floor
New York, NY 10004
William Kroupa
Aon Risk Services, Inc. of Colorado
4100 E. Mississippi Ave., Suite 1300
Denver, CO 80246
RE: Washingt on Mut ual, Inc.
EXCESS D & 0 SLoE A - DIC
IN SU R AN CE B IN DER
Dear William: September 24, 2010
We are pleased to bind coverage pursuant to our indication. This Binder is subject to our receipt, review and acceptance
of the following information:
1. Copy of Underlying Binder and Policy
LIMIT OF LIAB ILITY EACH Loss & AGGR EGATE:
Defense Costs are Included in the Limit Of Liability
AlTACHMEN T POIN T:
R ETEN TION EACH Loss:
(Per Policy Terms)
PR EMIU M:
(*) INCLUSIVE OF SIX YEAR RUN-OFF COVERAGE
$10,000,000
$15,000,000
$0
IN SU R ED:
IN SU R ER :
Washingt on Mut ual, Inc.
9 2 5 Fourt h Ave
Suit e 2 5 0 0
Seat t le, WA 9 810 4
Ironshore Indemnit y, Inc.
Is an admitted carrier with an A.M.Best rating of A-.
POLICY N U MB ER : 0 0 0 70 49 0 0
EXPIR IN G POLICY N U MB ER :N/ A
POLICY FOR M: SA 003; Edited (02.08) A-Side DIC Insurance Policy Form
POLICY PER IOD: Sept ember 2 6, 2 0 10 To: Sept ember 2 6, 2 0 11
FOLLOW ED POLICY IN SU R ER :XL Insurance Company
FOLLOW ED POLICY N U MB ER : N/ A
PEN DIN G AN D PR IOR DATE: Sept ember 2 6, 2 0 0 8
COMMISSION PAYAB LE:
THE FOLLOW IN G EN DOR SEMEN TS W ILL B E ADDED TO THE B ASIC POLICY:
Document Locator: 03 8N D W ashington _Mutual Inc- 000704900 1336,DOC [88rennan] Page 1of 4Pages
Restricted For Use in Connection with Plan Confirmation OnlyWMI PC 701361025.00001
William
Aon Risk """'Ji('"C Inc. of Colorado
Ave., SUite 1300
80246
4100 E.
CO
RE: Walshi'na1tan Inc.
Dear William:
A subsidiary of Ironshore
8th Floor
New York, NY 10004
EXCESS 0 0 SIDE A Ole
INSURANCE """""<:'0
bind coverage pursuant to our indication. This Binder is
information:
to our review and
1.
Inrtod",;,v, Binder and
ELlCH loss & AGGREGA TE:
Defense Costs are Included the Limit Of
ATTACHMENT POINT:
RETENTION EACH loss:
INCLUSIVE OF SIX YEAR RUN-OFF COVERAGE
INSURER:
FOLLOWED
FOLLOWED POllCY NUMBER:
PENDING AND PRIOR DATE:
COMMISSION
in
Mutuall, Inc.
925 Fourth Ave
Suite 2S00
WA 98104
Ironshore Inc.
Is admitted carrier with an A.M.Best
000704900
SA Edited A-Side DIC Insurance
XL Insurance
2008
TorHEBASIC
of A-.
Form
2011
Page 1
2010
Pages
1
Return
REDACTED
REDACTED
CONFIDENTIAL
Re: Washington Mutual, Inc.
To: Aon Risk Services, Inc. of Colorado
Excess D & 0 Side A - DIC
Insurance Binder
; September 21,2010
1. Prior Acts Exclusion
2. Manuscript amending first paragraph to read as follows:
"In consideration of the payment of premium and in reliance upon all information furnished to the Insurer and
subject to all terms, conditions and limitations of this Policy, the Insured Person and Insurer agree..."
3. Amend Insuring Clause to delete "and without prejudice" and change Insurance Program to Underlying Insurance
Program Definition to be agreed upon.
4. Amend definition of application to twelve months of information furnished to the carrier.
5. Amend definition of Employment Practices Claim to delete "past, present or future employee ... for employment
with the Company or Outside Entity" and replace with "Natural Person"
6. Amend definition of Insurance Program to Underlying Insurance Program listed on the Dec page.
7. Amend definition of Loss to include FCPA fines and penalties.
8. Amend definition of Subsidiary
9. Amend lead in language to the exclusions to add "that part of between "for" and "Loss."
10. Amend Exclusion A to provide for Section 15 claims
11. Delete Exclusion E.
12. Amend Section IV .A. by deleting "or from any other source and excess of any other Insurance Program" and
replace with Underlying Insurance Program.
13. Amend Section V.D. to "60 days".
14. Amend the notice provision to 90 days post policy reporting period.
15. Amend Section VI.B. by deleting the words "shall become" and replace with "is" also delete the word
"reasonably."
16. Policy will be non-cancelable by both parties except for non-payment of premium.
17. Section VIIIB: Delete the second sentence starting with "it is further agreed..."
18. Section VIIIB: Delete the sentence starting "Each Insured Person represents that..."Section VIIIB: Delete "in
reliance"
19. Section VIIIB: Delete the Knowledge Exclusion
20. Section VIIIC: Delete "and until the obligation of the Insured Person ... claimant and the Insurer."
21. Amend defintion of Securities Claim to add Section 15 claims.
22. Amend conduct exclusions by adding "in the underlying action."
23. Premium is full earned at inception
Page: 2 of 4
to read as follows:
to Insurer and
for
listed on the Dec page,
and "Loss,
and excess of any other
"is" also delete the word
16, non-cancelable both parties except for non-payment of
17. Section VIIIB: Delete the second sentence with "it is further
18. Section VIIIS: Delete the sentence "Each Insured Person represents thaL"Section VIIIS: Delete "in
reliance"
19. Section vms: Delete the
20. Section Delete "and until the of the Insured claimant and the Insurer."
21. Amend defintion of Securities Claim to add Section 15 claims.
Amend conduct exclusions the action."
23. Premium full earned at inception
Page: 2
Return
C O N F I D E N T I A L
Insurance Binder
L if t /`' ''r
September 24, 2010
This Binder supersedes any prior Binder or indication issued by us.
If additional materials and/or information is requested above then this binder shall be considered a temporary and
conditional binder and is expressly contingent upon receipt, review and acceptance of the such additional information.
We must receive all of the items requested above within thirty (30) days of the date of this binder. If all of the
requested items are not received and approved by us prior to such date, this temporary and conditional Binder will
automatically expire and shall be deemed void ab initio ("from the beginning') without further action or notice. Payment
of premium shall not operate to extend the binding period or nullify the automatic voiding as described above.
Please note that if between the date of this Binder and the effective date of the policy there is any material change in
the condition of the proposed insured or any event or occurrence which may be deemed to be a material change in
underwriting exposure by us, the proposed insured shall provide us with the particulars of such change as soon as
possible. If there is any such material change, we may at our option withdraw or modify this Binder by giving you
written notice of such.
It is your agency's/brokerage's responsibility to conform with the Laws & Regulations of the applicable jurisdiction,
including, but not limited to, payment of premium taxes, procuring of affidavits and compliance with surplus lines laws if
applicable.
Premium is payable within 30 days of the effective date and should be remitted to:
Ironshore Insurance Services, LLC
8th Floor
New York, NY 10004
Att: Finance Department
Thank you for your consideration. If you have any questions or concerns, please feel free to give me a call.
Sincerely,
Bill Brennan
Chief Underwriting Officer, Financial Institution
Ironshore Insurance Services, LLC
Office: (646) 826-6792
Cell: (212) 203-3131
Fax: 646-826-6601
Email: Bill.Brennan@ironshore.com
Page: 3 of 4
Restricted F or Use in C onnection with Plan C onfirmation O nly WMI PC 701361025.00003
To: Aon Inc. of Colorado
Insurance Binder
Binder indication issued us.
If additional materials above then this binder shall be considered a and
conditional and is py,,",,,,,,,,,v rnrltinnpr1t
review and acceptance of the such additional information.
We must receive all of the items of the date of this binder. If all of the
this tprrmfl"rilV
Payment
Please note that if between the of this Binder effective date of the there is any material in
the condition of the insured or any event or occurrence which may be deemed to be a material
nrl'::'nM,-,tlr'fl exposure us, the insured shall us with the of such
fJV""'U''''' If there is any such material this Binder
written notice of such.
rifl'::'nn,,'<:Itlrnlrpr;>np!<: r,"",nn'''nl''nt to conform with tile Laws & ''''YtU,<jC,V'
taxes, of affidavits and
Premium is within 30 of tile effective date and should be remitted to:
Ironshore Insurance LLC
8th Floor
New NY 10004
Att: Finance f)""nrirtm"mt
Thank you for your consideration. If you have any questions concerns, feel free to mea
Bill Brennan
Chief
Ironshore Insurance __ 'V".'"
826-6792
Cell: 203-3131
Fax: 646-826-6601
Email: BiII.Brennan@ironshore.com
3 of 4
Return
CONFIDENTIAL
Excess D& 0 Side A - DIC
Insurance Binder
. September 24, 2010
OFFEREE DISCLOSURE NOTICE OF
TERRORISM INSURANCE COVERAGE
(new policies and renewals with no terrorism
exclusion or sublimit and no premium charge)
You are hereby notified that, under the Terrorism Risk Insurance Act of 2002 (the "Act") effective
November 26, 2002, we are making available to you insurance for losses arising out of certain acts of
international terrorism The policy you are purchasing already includes insurance for such acts.
Terrorism is defined as any act certified by the Secretary of the Treasury, in concurrence with the
Secretary of State and Attorney General of the United States, to be an act of terrorism; to be a violent act
or an act that is dangerous to human life, property or infrastructure; to have resulted in damage within the
United States, or outside the United States in the case of an air carrier or vessel or the premises of a
United States Mission; and to have been committed by an individual or individuals acting on behalf of
any foreign person or foreign interest, as part of an effort to coerce the civilian population of the United
States or to influence the policy or affect the conduct of the United States Government by coercion.
You should know that the insurance provided by your policy for losses caused by acts of terrorism is
partially reimbursed by the United States under the formula set forth in the Act. Under this formula, the
United States pays 85% of covered terrorism losses that exceed the statutorily established deductible to be
paid by the insurance company providing the coverage. The portion of the offered policy's annual
premium that is attributable to insurance for acts of terrorism is: S' 0'
If you have any questions about this notice, please contact your agent or broker.
Page: 4 of 4
international
States or to
You
United
the
notified
the
the
Rei:: W''!Jsl''Il.at.:,n 1"'UUJdl,
To: Aon Inc. of Colorado
Excess 0 & 0 Side A - OIC
Insurance Binder
l''''''''';;'' llnd renewnls with no telrorism
exclusion or suhlimit no
the Terrorism Risk Insurance Act of 2002
certain acts of
acts.
In concurrence
n r r u ~ " r r " or
to
States in the case
coerce the civilian
States Government
caused
States under the in the Act. Under
of
act
of
the
be
that is attributable to insurance IS: $' O'
you contact your or
Page: 4 of
Return
viLINSURANCE
XL Professional
1 0 0 C onst it u t ion Plaz a
1 7 ' h F loor
H art ford , C T 0 6 1 0 3
Ph one 8 6 0 - 2 4 6 - 1 8 6 3
F ax 8 6 0 - 2 4 6 - 1 8 9 9
C ONF IDENT IAL
Dat e . Sept ember 2 7, 2 0 1 0 revised
NameEric Boyu m
C ompanyAon
F rom:Mark Vand evant er Direct : 8 6 0 - 9 4 8 - 1 8 0 7mark. vand evant erx lgrou p. com
Name:Wash ingt on Mu t u al, I nc.
Ad d ress:925 Fourth Avenue, Suite 2500
Seattle, WA 98104
Attn: General Counsel
Policy Nu mber: ELU 108345- 08
C arrier:XL Specialt y Insu rance C ompany
POLICY FORM EXTENSION PERIOD
DO 71 0 0 0 9 9 9 Management Liabilit y and C ompany Reimbu rsement Sept ember 2 6 , 2 0 1 0 t o Sept ember 2 6 , 2 0 1 1
EXTENDED LIMIT of LIABILITY PENDING & PRIOR PROCEEDING DATE
$1 5, 0 0 0 , 0 0 0 Aggregat e each Policy Period (inclu d ing d efense ex penses) Sept ember 2 6 , 2 0 0 8
RETENTIONS OPTIONAL EXTENSION PERIOD
$0 Each Insu red Person u nd er Insu ring Agreement 1 (A)
One year at REDAC T ED t h e annu al premiu m
$5, 0 0 0 , 0 0 0 Each C laimu nd er Insu ring Agreement 1 (6 )
N/A Each C laimu nd er Insu ring Agreement 1 (C )
T h e port ion of you r annu al premiu mt h at is at t ribu t able t o coverage for act s of t errorismis: $ waived .
C ommission:
Premiu mDu e Dat e: Oct ober 2 6 , 2 0 1 0
T errorismInsu rance Disclosu re
In Wit ness End orsement
Office of F oreign Asset C ont rol Not ice
XL Privacy Not ice
C h ange of Ad d ress/Preamble C orrect ion End orsement (XL 8 2 0 0 0 70 7)
T errorismPremiu mEnd orsement (XL 8 0 2 4 0 3 0 3 )
WA St at e Amend at ory End orsement (DO 8 5 1 2 0 8 0 0 )
Delet e Sect ion IV(F ) waiver of ret ent ion for SEC claims (no liabilit y) (DO 8 0 1 4 2 1 0 0 1 )
Amend Definit ion of Loss End orsement (DO 8 0 1 8 9 0 8 0 2 )
Delet e Insu ring Agreement (C ) (DO 8 0 2 9 0 6 0 0 )
Prior Act s Ex clu sion (DO 8 3 59 0 9 0 2 ) 9 /2 6 /0 8
Su bsid iary Ex clu sion (DO 8 3 3 2 0 8 0 1 ) Wash ingt on Mu t u al Bank and It s Banking Su bsid iaries, Inclu d ing
Wash ingt on Mu t u al Bank F SB
Rest rict ed F or Use in C onnect ion wit h Plan C onfirmat ion Only WMI PC 70 1 3 6 1 0 2 6 . 0 0 0 0 1
From:
Aon
Mark Vandevanter
Seattle, WA 98104
Attn: General Counsel
ELU 1 08345-08
860-948-1807
Carrier XL
POLICY FORM
and Company Reimbursement
EXTENDED LIMIT of LIABILITY
515,000,000 Aggregate each Policy Period (including defense expenses)
RETENTIONS
so
$5,000,000 Each
under Insuring Agreement 1
XL Professional
100 Plaza
17'"
Hartford, CT 06103
8602461863
EXTENSION PERIOD
September 26, 2010 September 26, 2011
PENDING & PRIOR PROCEEDING DATE
OPTIONAL EXTENSION PERIOD
year REIlACT"" annual premium
The portion of your annual premium that is attributable to coverage for acts of terrorism is: $
Terrorism Insurance
In Witness Endorsement
Office of Asset Control Notice
XL Notice
Change of Address/Preamble Correction Endorsement 820007
Terrorism Premium Endorsement 802403
WA State Endorsement 85 12 08

80142 0

Mutual Bank and Its
in
Return
REDACTED
REDACTED
Itaz INSURANCE
XL Professional
100 Constitution Plaza
1r Floor
Hartford, CT 06103
Phone860-246-1863
Fax860-246-1899
CONFIDENTIAL
Amend Definition of Change in Control Endorsement ( DO 80 218 04 03)
Amend Representations Clause (severability) No rescind Side A (DO 80 311 04 05)
Run-Off Endorsement automatic conversion to six years (DO 80 155 12 01) - manuscript
Insured v. Insured Exclusion (DO 83 27 07 01)
Amend Insured v. Insured Exclusion creditors committee (DO 83 133 12 06)
Policy Period Extension Endorsement (DO 80 14 04 00)
Amend Retention Endorsement (DO 82 11 10 00)
Amend Definition of IP (include specific positions occupied by A&M reps) (DO 80 02 03 00)
None
Restricted For Use in Connection with Plan Confirmation Only WMI PC 701361026.00002
Xl Professional
III in Control Endorsement ( DO 80 218 04
III Amend Clause No rescind Side A 80 311 04
Run-Off Endorsement automatic conversion to six years 80 155 12 01) - m::>nllc:r"int
III Insured v. Insured Exclusion 83 27 07 01)
III Amend Insured v.lnsured Exclusion creditors committee 8313312
Period Extension Endorsement 801404
III Amend Retention Endorsement 82 11 10
III Amend Definition of IP 80 02 03
.. None
Return
L INSURANCE
XL Professional
100 Constitution Plaza
17'" Floor
Hartford, CT 06103
Phone860-246-1863
Fax860-246-1899
CONFIDENTIAL
Washington Mutual, Inc.
E LU 1 0 8 3 4 5 - 0 8
PREM IUM
AM OUNT
COM M ISSION
%
i COM M ISSION ,* TAX ES!
AM OUNTSURCHARGES
NET PREM IUM PREM IUM DUE
DUEDATE
1
1
$000 1October 26, 2010
* Taxes/Surcharges if applicable.
Formal Invoi ce wi ll be sent vi a the U.S. Mai l to:
Eri c Boyum
Aon
4100 East Mi ssi ssi ppi Avenue, Sui te 1300
Denver, CO 80246
Restricted For Use in Connection with Plan Confirmation Only WM I PC 701361026.00003
Inc.
ELU 108345-08
Formal Invoice will be sent via the U,S. Mail to:
Eric
Aon
4100 East
CO 80246
in
Suite 300
XL Professional
Plaza
Hartford, CT 06103
860-246-1863
Fax
Return
REDACTED REDACTED REDACTED
REDACTED
Return
CONFIDENTIAL
Washington Mutual Data Room Access
Potential Purchasers and Co-Investors during March/April and September 2008 due diligence periods
Organization
i
n original format) Earliest Data Room Access Date
Akin Gump 11/7/08
Alvarez Marsal 10/17/08
BAS 9/20/08
BBVA 3/28/08
Bear Stearns 3/24/08
Blackstone 3/18/08
Blum Capital Partners 4/5/08
BOA 9/20/08
Ceberus 3/19/08
Ceberus Affiliate 3/20/08
Cerberus 3/18/08
Cerberus Affiliate 3/20/08
Cerberus Operations 3/18/08
Cerberus Real Estate 3/18/08
China Construction Bank 3/29/08
Citi 9/17/08
Citicorp 9/17/08
Citigroup 9/17/08
Cleary 3/18/08
Commerce Bank 9/19/08
Cravath 9/20/08
Credit Suisse 3/20/08
Davis Wright Tremaine 10/29/08
Deloitte 3/18/08
Deutsche Bank 3/20/08
Drive 9/20/08
Drive Financial 9/20/08
Duff Phelps 4/3/08
FCMG 9/19/08
FDIC 9/18/08
fmcg 9/19/08
FortressInvestment Group LLC 9/20/08
F
T
I
11/10/08
Goldman Sachs 3/4/08
IntraLinks 2/28/08
JPMorgan 3/16/08
JW Wolfe Law 12/17/08
KPMG 4/24/08
Lazard 4/5/08
Restricted For Use
i
n Connection with Plan Confirmation Only
Highly Confidential Attorneys Eyes Only
HIGHLY CONFIDENTIAL
Return
CONFIDENTIAL
Lehman 3/4/08
Merrill Lynch 9/20/08
Morgan Stanley 3/19/08
Mortgage Decision Tech 3/18/08
Mortgage Industry Advisory Corporation 3/24/08
Navigant Consulting 9/25/08
NexSpring 3/18/08
NexSpring Group 3/18/08
None 10/3/08
Novantas 9/19/08
Oak Hill 3/19/08
Paul Hastings 9/17/08
Paul Weiss 3/31/08
Phoenix Capital 3/21/08
Phoenix Capital
I
n
c
3/24/08
Phoenix Capital Servicing 3/24/08
PWC 3/19/08
S
&
C
9/18/08
Santander 9/17/08
Santander Madrid 9/17/08
Schulte Roth Zabel 3/18/08
Shearman Sterling LLP 9/17/08
Simpson Thacher 4/5/08
Skadden Arps 9/18/08
Sumitomo Mitsui Banking Corp. 3/27/08
T
D
9/18/08
T
D
Banknorth 9/19/08
Texas Pacific 3/18/08
TPG 3/18/08
TPG Axon 3/19/08
TPG-Axon Capital 3/19/08
UBS 9/17/08
WaMu 3/4/08
Washington Mutual 2/28/08
washinton mutual 9/17/08
Weil Gotshal 9/18/08
Wells Fargo 9/17/08
Restricted For Use
i
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HIGHLY CONFIDENTIAL
Return
PERSONAL AND CONFIDENTIAL
March 30 2008
Mr Todd H Baker
Executive Vice President of Corporate Strategy Development
1301 Second Avenue
Seattle
WA 98101
Dear Mr Baker
We are pleased
to confirm the arrangements under which Goldman Sachs Co Goldman
Sachs i
s exclusively engaged
b
y
the Company as financial
advisor
i
n
connection with the possible
sale of all or a portion o
f
the Company and to explore
capital raising alternatives This engagement i
s exclusive to GoldmanSachs except that
i
t
i
s
understood and agreed that the
Company may
also
engage
Lehman Brothers
i
n connection
with this transaction pursuant to a separate engagement
letter with comparable fee
arrangements
During
the term of our engagement we will provide you
with financial advice and assistance
i
n connection with this potential transaction which may include performing financial
analyses searching
for a purchaser
or investors acceptable to you coordinating
visits
o
f
potential purchasers
and investors and assisting you i
n
negotiating
the financial aspects o
f
the transaction
At
your request we also will undertake a study t
o enable us to render our opinion as to the
fairness from a financial point
of view
o
f
the financial consideration to be received by
stockholders of the Company i
n connection with the sale of 50 or more ofthe outstanding
common stock of the Company The nature and
scope
of our investigation as well as the
scope
form and substance of our opinion shall be such as we consider
appropriate I
f
requested our opinion will be i
n
written form
The fees for our engagement
will
depend on the outcome of this assignment Upon
announcement of or execution of a definitive agreement with respect to a sale
o
f
5060 or
more
o
f
the outstanding common stock or assets based on the book value thereof
of the
Company
the Company agrees to pay us a fee of $4000000 the
initial Fee I
f the
0974710433100334Y0226 5271 73 O33U208 451 PM
HIGHLY CONFIDENTIAL
Return
March 30 2008
Page
Two
purchase
of 50 or more of the outstanding common stock or the assets based on the book
value thereof
of the Company i
s accomplished i
n
one or a series of transactions including
but not limited to private or open
market purchases o
f
stock a tender offer
an
exchange
offer a merger
or a sale by
the Company of its stock or assets we will charge a transaction
fee the
Sale Completion Fee equal to the
greater
of i 18750000
and
ii
01875
o
f
the aggregate
consideration paid i
n such transactions less to the extent paid
the Initial Fee
subject to a maximum transaction fee of $500
million
I
f less than 50
of the
outstanding
common stock or the assets based on the book value thereof
i
s acquired i
n the manner set
forth
i
n the preceding sentence will charge
a transaction fee to be mutually agreed upon by
Goldman Sachs and the Company provided
however i
n the event such transaction takes
the form of a private placement o
f
the Companys
common stock preferred
securities or
other capital
securities to one or more financial sponsors o
r
investors who were contacted in
connection with the transactions referenced
i
n the
preceding
sentence we will charge a
transaction fee the
Investor Completion Fee equal
to 1375 of the gross proceeds
received
by
the Company
from a sale of such securities provided however that Goldman
Sachs entitlement to the
Investor Completion Fee shall be suspended following the
execution of a definitive agreement
for a transaction i
n
respect
of which a Sale Completion
Fee would be payable upon
consummation thereof and shall terminate upon
consummation
of such transaction Except as provided herein a transaction fee will be paid to us i
n
cash
upon
consummationof each transaction
The
aggregate
consideration for
purposes o
f
calculating a Sale Completion
Fee shall be
i
in the case
o
f
the sale exchange or purchase o
f
the companys equity
securities the
total consideration paid for such securities including
amounts paid
distributed or issued
to holders of
options
warrants and convertible securities provided that
for
purposes o
f
calculating aggregate
consideration pursuant
to this clause i the consideration paid for
options
and warrants shall be deemed to equal
the spread
value
o
f
such
options
or
warrants the difference between the exercise price and the amount paid
for the
underlying
shares as calculated i
n accordance with this letter and
i
n the case
o
f
a sale or disposition by the Company o
f
assets
the total consideration paid
for such net assets
Amounts paid
into escrow and contingent payments i
n connection
with
any
transaction will be
included as part
of the aggregate
consideration Fees on amounts paid into escrow will be
payable upon
the establishment
o
f
such escrow I
f the consideration i
n connection with
any
transaction may
be increased by payments related to future events the portion
of our fee
relating to such contingent payments
will be calculated and paid i
f
and when such contingent
payments are made Aggregate
consideration for purposes o
f
calculating
the Sale
Completion
Fee also shall include the aggregate amount o
f
any i dividends or other
distributions declared by
the Company
with respect t
o its stock after the date hereof other
0974710033 10033NY0226527173
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Washington Mutual I
t
March 30 2008
Page Three
than normal recurring
cash dividends
i
n amounts not materially greater than currently paid
and
i
i
amounts paid by
the Company
to repurchase any
securities
o
f
the Company
outstanding on the date hereof
I
f
any portion
of the aggregate
consideration i
s
paid i
n the form of securities the value of
such securities for
purposes
of calculating the transaction fee well be determined by the
average
of the last sales prices
for such securities on the five trading days ending
five trading
days prior
to the date of the consummation of the transaction I
f such securities do not have
an existing public trading market the value of the securities shall be the mutually agreed
upon
fair market value on the day prior t
o the consummation o
f
the transaction
I
f the Company or any
of its affiliates enters into an agreement
with respect
to a transaction
i
n
respect o
f
which a Sale Completion Fee would be payable upon
consummation thereof
the Agreement
and the Agreement provides
for a payment
at any
time to the Company i
n
the event the transaction contemplated thereby i
s terminated or otherwise not consummated
the Payment
the Company agrees
to
pay
to Goldman Sachs a transaction fee i
n cash i
f
and when such Payment i
s made to the Company equal to the lesser of i
10 of such
Payment
and ii the amount that would otherwise have been payable by
the Company
to
Goldman Sachs i
f
such transaction had been consummated
i
n accordance with its terms
i
n
each case less to the extent paid
the Initial Fee
In the event that the Company
determines to undertake a public
or private offering o
f
i
t
s
common stock preferred
securities or any securities linked to the Companys
common stock
or preferred
stock other than
any
transaction for which a
fee
i
s
payable pursuant t
o
paragraph four of this letter
an Offering
the Company
shall offer Goldman Sachs the
right
to act i as the joint with
other investment banks
lead bookrunning manager and ii as the
joint
with other investment banks lead agent
in such offering i
n each case with a fee of not
less than 275 of the amount
o
f
the
aggregate offering price
of such securities and at least
40
o
f
the total economics I
f Goldman Sachs agrees
to act
i
n such capacity the Company
and Goldman Sachs
will enter into an appropriate
farm of underwriting or other applicable
agreement containing customary terms and conditions including customary
fee provisions
and provisions
relating to our indemnity However unless specifically covered by a separate
agreement setting
forth such arrangement the provisions i
n the attached Annex A shall apply
to each such transaction The Company acknowledges
that this letter
i
s neither an
expressed nor an implied
commitment by Goldman Sachs to act i
n
any capacity i
n any
such
transaction t
o
provide
financing or to purchase
or place any
securities which commitment
shall
only
be set forth i
n
a separate agreement
You also agree
to reimburse us periodically upon request and upon
consummation
of the
transaction or transactions
contemplated hereby
or upon
termination
o
f
our services pursuant
to this agreement
for our reasonable expenses
excluding expenses
incurred i
n connection
with a public offer that i
s consummated including the reasonable fees and disbursements
o
f
097471003310733NY6226527173
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HIGHLY CONFIDENTIAL
Return
March 30 2008
Page
Four
our attorneys plus any
sales use or similar
taxes including
additions to such taxes i
t any
arising i
n connection
with
any
matter referred to
i
n this letter
I
n order to coordinate most effectively our efforts together to effect a transaction satisfactory
to you during
the term of our engagement
the Company
and its management
will promptly
inform us
o
f
any discussions they may
have or
of
inquiry they may
receive concerning the
availability o
f
all or a portion o
f
the stock or assets
o
f
the Company
for purchase
Please note that any
written or oral opinion
or advice provided by
Goldman Sachs
i
n
connection with our engagement i
s exclusively
for the information of the Board of Directors
and senior management o
f
the Company
and such opinion
such advice and the terms of
this letter may
not be disclosed to any
third parity other than Simpson
Thacher Bartlett LLP
and Deloltte Touche LLP or another
o
f
the Companys
outside legal
counsel or
independent
accountants specified by you i
n writing who have been Informed by you o
f
the
confidential nature of such opinion
such advice and the terms of this letter and have agreed
to treat such information confidentially
or circulated or
referred to
publicly
without our prior
written consent I
f
reference
to our opinion
and our firm i
s required
to be made i
n a
proxy
statement
o
f
the Company
required to be filed under the federal securities laws we will not
unreasonably withhold our consent thereto so long as the full text
o
f
our opinion I
s
reproduced
therein and we have approved i
n advance the text of
any accompanying
disclosure
In connection with engagements
such as this I
t
i
s our firm
policy
to receive indemnification
The Company agrees
to the provisions
with respect t
o our indemnity
and other matters set
forth
i
n Annex A which i
s
incorporated by
reference into this letter
As
you
know Goldman Sachs i
s a full service
securities firm engaged
either directly
or
through
its affiliates i
n various activities including
securities trading
investment banking
and
financial advisory investment management
principal
investment hedging
financing and
brokerage
activities and
financial planning
and benefits counseling
for both companies
and
individuals In the ordinary
course of these activities
Goldman Sachs and its affiliates may
make or hold a broad array
of investments and actively trade debt and equity
securities or
related derivative securities
and financial instruments including
bank loans
for their own
account and for the accounts of their customers and may
at any
time hold long
and short
positions i
n such securities and instruments Such investment
and securities activities may
involve securities and
instruments of the
Company
as well as of other entities and persons
and their affiliates which may i
be involved
i
n transactions arising from or relating to the
engagement
contemplated by this letter ii
be customers or competitors o
f
the Company
or
iiI
have other relationships
with the
Company I
n addition Goldman Sachs and its affiliates
may provide
investment banking underwriting
and financial advisory
services to such other
entities and persons
Goldman Sachs and its affiliates may
also coinvest with make direct
investments in and invest or coinvest
client monies i
n or with funds or other investment
047471003370033NY0226527173
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HIGHLY CONFIDENTIAL
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Washington Mutual
Inc
March 30
2008
Page Five
vehicles managed by
other parties
and such funds or other investment vehicles may
trade or
make investments i
n securities o
f
the Company
or such other entities The engagement
contemplated by
this letter
may
have a direct or indirect impact
on the
investments securities
or instruments referred to i
n this paragraph
Our services may be
terminated by you
or us a
t
any
time with or without cause
effective upon
receipt
of written notice to that effect We will be entitled
to the applicable
transaction fee set
forth above
i
n the event that at any
time prior to the expiration
of twelve months after such
termination i an agreement i
s entered into with respect
to a sale of all or a portion o
f
the
Company excluding
an Offering
which
i
s eventually
consummated or ii an Agreement i
s
entered into pursuant
to which a Payment i
s eventually made provided
howeverthat i
n
the
event that Goldman Sachs terminates its services hereunder without cause the foregoing
provisions
of this sentence shall not
apply
The Companys obligations
to offer Goldman
Sachs the right
to act i
n
the capacities
set forth above i
n connection with an Offering shall
survive any
such termination
for a
period
of twelve months from the date of such termination
provided
however that
i
n
the event that Goldman Sachs terminates its services hereunder
without cause
the foregoing provisions
of this sentence shall not apply
The Company
recognizes that i
n
providing our services pursuant
to this letter we will rely
upon
and assume the accuracy
and completeness o
f
all
o
f
the financial accounting
tax and
other information
discussed with or reviewed by
us for such purposes
and we do not
assume responsibility
for the accuracy
or completeness
thereof Goldman Sachs will have
no obligation
to conduct any independent
evaluation or appraisal
of the assets or liabilities o
f
the Company or any other party
or to advise or opine on any
related solvency issues
I
t
i
s
understood and agreed
that Goldman Sachs will act under this letter as an independent
contractor with duties solely
to the Company
and nothing i
n this letter or the nature
of our
services i
n connection with this engagement
or otherwise shall be deemed
t
o create a
fiduciary duty
or fiduciary or agency
relationship
between us and
the Company
or its
stockholders employees
or creditors
and the Company agrees
that i
t shall not make
and
hereby
waives any claim based on an assertion of such a fiduciary duty
or relationship
Except as set
forth in Annex A hereto nothing i
n this letter i
s intended to confer upon any
other person
including
stockholders employees
or creditors
o
f
the Company any rights or
remedies hereunder or by reason hereof
I
n accordance with the requirements
of the USA Patriot Act Title 1
1
1
of Pub L 10756
signed
into law October 26 2001 Goldman
Sachs
i
s required to obtain verify
and record
information that identifies its clients including
the Company
which information may include
the name and address
o
f
its clients
as well as other information that will allow Goldman
Sachs to properly identify its clients
Goldman Sachs does not provide
accounting tax or legal
advice Notwithstanding anything
herein to the contrary you
are authorized to disclose to any person
the US federal and state
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Washington
Mutual Inc
March 30 2008
Page Six
income tax treatment and tax structure
o
f
the potential
transaction and all materials
o
f
any
kind including
tax opinions
and other tax analyses provided
to
you relating
to that treatment
and structure without Goldman
Sachs imposing any
limitation of
any
kind However any
information relating to the tax treatment and tax structure shall
remain confidential and the
foregoing
sentence shall not apply
to the extent necessary
to enable any person
to comply
with securities laws For this purpose
tax structure i
s limited to any
facts that may
be
relevant to that treatment
0974710033I00033NY0226527k73
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Washington Mutual
I
n
March 30 2008
Page Seven
Please confirm that the foregoing i
s
i
n accordance with
your
understanding
b
y
signing
and
returning
to us the enclosed copy
of this letter
which shall become a binding agreement
upon
our receipt We are delighted
to accept
this engagement and
look forward to working
with vcu on this assignment
Very truly yours
Confirmed
097471W3310433NY0326527173
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March 30
2008
Page Eight
Annex A
In the event that Goldman Sachs becomes involved i
n
any capacity i
n
any action proceeding
or
investigation brought by or against any person
including stockholders of the Company i
n connection
with or as a result of either our engagement or any
matter referred to in this letter the Company
periodically
willreimburse Goldman Sachs for
its legal and other expenses including
the cost of any
investigation and preparation
incurred in connection therewith provided however that i
f
i
t
i
s found
i
n
any such action proceeding or investigation
that any loss claim damage
or liability to any
such
person
has resulted from the gross negligence
or bad faith of Goldman Sachs in performing the
services which are the subject
this letter Goldman Sachs shall repay such portion
of the reimbursed
amounts that
i
s attributable to expenses
incurred
i
n relation to the act or omissionof Goldman Sachs
which i
s the subject
of such finding The Company also will indemnify and hold Goldman Sachs
harmless against any
and all losses claims damages or liabilities
t
o
any
such person i
n connection
with or as a result of either our engagement or any
matter referred
t
o
i
n this letter except to the extent
that
any
such loss claim damage or liability
results from the
gross negligence or had faith
o
f
Goldman
Sachs
i
n
performing the services that are the subject
of this letter
I
f for any reason the foregoing
indemnification i
s unavailable
t
o Goldman Sachs or insufficient to hold i
t harmless then the Company
shall contribute
t
o the amount paid or payable by
Goldman Sachs as a result of such loss claim
damage
or liability i
n such proportion as i
s
appropriate
to reflect the relative economic interests of the
Company and its stockholders on the one hand and Goldman Sachs on the other hand
i
n the matters
contemplated
b
y this letter as well as the relative fault of the Company
and Goldman Sachs with
respect
to such loss claim damage or liability and any other relevant equitable
considerations The
reimbursement indemnity
and contribution obligations of the Company under this paragraph shall be
i
n addition to any liability
which the Company may
otherwise have shall extend upon
the same terms
and conditions to any
affiliate of Goldman Sachs and the partners directors agents employees and
controlling persons f any as the case maybe of Goldman Sachs and any
such affiliate and shall be
binding upon
and inure to the benefit of
any successors assigns heirs
and
personal representatives
of the Company
Goldman Sachs any such affiliate
and
any
such person
The Company shall not be
required
to indemnify Goldman Sachs for any
amount paid or payable by Goldman Sachs
i
n the
settlement of any action proceeding
or investigation without the written consent of the Companyy
which consent shall not be unreasonably withheld The Company
also
agrees
that neither Goldman
Sachs nor
any
of such affiliates partners directors agents employees or controlling persons shall
have any liability
to the
Company
or
any person asserting claims on behalf of or in
right
of the
Company I
n connection with or as a result
o
f
either our engagement
or
any
matter referred to
i
n this
letter
except t
o the extent that
any
lasses claims damages
liabilities or expenses
incurred
by
the
Company result from the gross negligence or bad faith of Goldman Sachs
i
n performing the services
that are the subject
of this letter Prior to entering into any agreement or arrangement
with respect to
or effecting any proposed safe exchange
dividend or other distribution or liquidation
of all or a
significant portion
of its assets i
n one or a series of transactions or any significant recapitalization or
reclassification of its outstanding securities that does
not directly or indirectly provide
for the
assumption
of the obligations of the Company set forth
i
n this Annex A the Company
will
notify
Goldman Sachs in writing
thereof if not previously
so notified and i
f requested by Goldman Sachs
shall arrange
in connection therewith alternative means of providing for the obligations of the
Company
set forth i
n this paragraph including the assumption
of such obligations by another party
insurance surety bonds or the creation of an escrow i
n each case
i
n an amount and upon terms and
09747100310035NY0226527173
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HIGHLY CONFIDENTIAL
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March 30 2008
Page Nine
conditions satisfactory to Goldman Sachs Promptly
after receipt by Goldman Sachs of notice of its
involvement
i
n
any action proceeding or investigation
Goldman Sachs shall I
f a claim for
indemnification i
n respect
thereof
i
s to be made against the Company
under this Annex A notify the
Company
of such involvement Failure by Goldman
Sachs
t
o so notify the Company
shall relieve the
Company from the obligation t
o indemnify
Goldman Sachs under this Annex A
only
to the extent that
the Company
suffers actual prejudice as a result
o
f
such failure but shall not relieve the Company
from its obligation to provide
reimbursement
and contribution to Goldman Sachs
I
f
any person i
s
entitled to indemnification under this Annex A the Indemnified Person
with respect to any action or
proceeding brought by a third party
that
i
s also brought against the Company
the Company
shall be
entitled to assume the defense of
any
such action or proceeding
with counsel reasonably satisfactory
t
o the Indemnified Person Upon assumption by
the
Company
of the defense of any such action or
proceeding the indemnifiedPerson
shall have the right to participate i
n such action or proceeding
and
to retain Its own counsel but the Company shall not be liable for any legal expenses
of other counsel
subsequently
incurred by
such indemnified Person
i
n connection with the defense thereof unless t
the Company has agreed
to
pay
such fees and expenses ii the Company shall have failed to employ
counsel reasonably satisfactory
to the Indemnified Person
i
n a timely manner or iii
the Indemnified
Person shall have been advised by
counsel that there are actual or potential conflicting interests
between the Company
and the Indemnified Person including
situations in which there are one or more
legal defenses available to the Indemnified Person that are different from or additional to those
available to the Company provided however that the Company shall not
i
n connection with any one
such action or
proceeding
or separate
but substantially similar actions or proceedings arising out of
the same general allegations
be liable for the fees and expenses of more than one separate firm of
attorneys
at any
time for all Indemnified Persons including
Goldman Sachs except to the extent that
local counsel i
n addition to its regular counsel i
s required i
n order to effectively defend against such
action or proceeding
The
Company
shall not consent to the terms of
any compromise or settlement
of
any
action defended by the Company I
n accordance with the foregoing
without the
prior
written
consent of the Indemnified Person unless
such
compromise
or settlement 1 includes an unconditional
release of the Indemnified Person from all liability arising
out of such action and ii
does not include a
statement as to or an admission of fault culpability or a failure to act by
or on behalf
of
any
indemnified Person Any right
to trial byjurywith respect
to any action or proceeding arising in
connection with or as a result of either our engagement or any
matter referred to In this letter is
hereby
waived by the parties
hereto The Company agrees
that any
suit or proceeding arising
i
n respect to this letter or our engagement will be tried exclusively in the US District Court for
the Southern District of New York or i
f that court does not have subject
matter
jurisdiction
in
any
state court located in the City of New York
and the Company agrees
to submit to the
jurisdiction of and to venue in
such courts
The
provisions
of this Annex A shall survive any
termination or completion of the engagement provided by this letter agreement and this letter
agreement
shall be governed by
and construed
i
n
accordance with the laws of the State of New
York without regard
to principles
of conflicts of laws
09747100334433 WO226527173
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HIGHLY CONFIDENTIAL
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Page
1 of 2
From
Logan
Doreen <doreen
loganwamu net>
Sent
Wednesday September 24 2008 440 PM
To
Scholl Jacob A <Jacob
Schollhellerehrmancom> Smith Chad <charles esmithwamu net>
Cc
Russell Bernard L
<BernardRussellhellerehrmancom>
Subject RE ACTION
REQ
WMB
pledge of assets to WMB fsb
Attach
20080924143020583pdf
Unsigned original and signed Amendment 1
Doreen Logan
Treasury Structured Finance
Washington Mutual
2063024168
From
Scholl Jacob A
mailtoJacobSchollhellerehrmancom
Sent
Wednesday September 24
2008 121 PM
To Smith Chad Logan
Doreen
Cc Russell Bernard L
Subject RE ACTION
REQ WMB pledge of assets to WMB fsb
Importance High
Chad and Doreen
We will draft
up
the
necessary
documents ASAP One
question I have a copy
of the Securities
Lending
Agreement i
n front of
me
but I am not which
agreement i
s the Master Note
Pledging Agreement
I can look
through our system to
try
to
identify
the
document but both
i
n order to save time and to
prevent me from
barking up
the
wrong tree
could one of
you
send
my a copy
of the Note
Pledging Agreement Thanks
Jacob
From
Russell Bernard L
Sent
To Scholl Jacob A
Subject FW ACTION
REQ
WMB
pledge of assets to WMB fsb
From Smith Chad
mailtocharlesesmithwamunet
Sent Wednesday September 24 2008 1244 PM
To Russell Bernard L
Subject FW ACTION REQ WMB pledge of assets to WMB fsb
See below
Kindest
regards
had Smith First Vice President
Assistant General Counsel
Team LeadCapital Markets Structured Finance
Legal
httpsmattersamicillccomjpmc 16webcontentgetpage135087native1isViewer=1 8192009
HIGHLY CONFIDENTIAL - ATTORNEYS' EYES ONLY INFORMATION RESTRICTED TO EC.
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Page
2 of 2
Washington Mutual
Legal Department
1301 Second
Avenue WMC 3501
Seattle Washington 98101
Telephone 2065004347
Facsimile 2063772236
Email
charlesesmthwamunet
This cornmunication may contain privileged or other confidential information I
f
you have received i
t in error please advise the sender by reply email
immediately delete the message and any attachments without copying or disclosing the contents Thank you
rid
IRS Circular 230 Disclr rue To ensure compliance with requirements imposed by the IRS I inform you that any US federal tax advice contained in this
urninnrnic<ation ncicioing any attachments i
s not intended or written to be used and cannot be used for the
purpose
of i avoiding penalties under the
Internal Revenue Code or ii promoting marketing or recommending to another party any transaction or matter addressed herein
From
Logan
Doreen
Sent
To
Freilinger
Peter
Cc
Smith Chad Stearns Steve
Subject ACTION REQ WMB pledge of assets to WMB fsb
Peter
Please
approve
the modification of both the Securities Lending Agreement
and the Master Note
Pledging agreement to cease the
pledge
of assets from WMB to WMB fsb
i
n
support
of these two arrangements
The pledge of assets andor the treatment of these arrangements at armslength are not required from a regulatory perspective per
Bill
Lynch The armslength requirement i
s
specific
for affiliates other banks i
n the
group
are carved out of the term affiliate so 3rd
party
treatment
i
s not
required
Upon your approval Chad will ask that Heller
modify the agreements Let me know
i
f
you
have
any questions
Thanks
Doreen
Logan
Treasury Structured Finance
Washington Mutual
2063024168
ZONFIDENTIAL NOTICE This communication
may contain confidential andor privileged information of Washington Mutual Inc andor
its subsidiaries If you have received this communication in
error please advise the sender by reply email and
immediately
delete this message an any attachments without copying or disclosing the contents Thank
you
This
email
i
s sent
b
y
a law firm and contains information that
may
be
privileged
and confidential
I
f
you
are not the intended
recipient
please
delete the email and notify us immediately
httpsmattersamicillccomjpmc
16webcontentgetpage135087native1
isViewer=1 8192009
Return
ASSET PLEDGE AGREEMENT
THIS ASSET PLEDGE AGREEMENT
the Pledge Agreement
dated as of
September 29 2005 i
s entered into
by
and between
Pledgor
and
Washington Mutual Bank fsb
Pledgee
Recitals
A Pledgor i
s the maker of and
Pledgee i
s the
payee
of that certain
Revolving
Credit
Note dated
September 29 2005
as i
t
maybe
from time to time
amended modified extended or
restated the
Note pursuant
to which
Pledgor may
borrow
money
from
Pledgee
from time to
time
B The
parties
desire that
Pledgor provide collateral as security for satisfaction of its
obligations
under the Note
C
Pledgor owns and will own from time to time residential
mortgage loans all such
loans
currently
owned
by Pledgor or hereafter
acquired by Pledgor the
Mortgage Loans
and
D As
security
for satisfaction of
Pledgors obligations
under the Loan
Agreement
Pledgor i
s
executing
and
delivering this
Pledge Agreement
and
granting to Pledgee the security
interest in certain of the
Mortgage Loans and related assets as described herein
Agreement
NOW THEREFORE i
n consideration of the foregoing
and the mutual covenants
contained herein and
intending
to be
legally
bound
hereby
the
parties agree
as follows
1 a Pledgor hereby pledges
to
Pledgee
and
grants to Pledgee a first
priority
lien and
security
interest in the
Pledged Mortgage
Loans
as
hereinafter
defined all
mortgages
and deeds of trusts
securing
the
Pledged Mortgage Loans
all notes and other evidence of
indebtedness under the Pledged Mortgage Loans all
ancillary security agreements policies
certificates of insurance guarantees evidences of recordation applications underwriting
materials appraisals approvals permits notices opinions
of
counsel loan servicing data and all
other electronic or written records
relating to the
Pledged Mortgage Loans and all
distributions
cash instruments and other
property or proceeds from time to time received receivable or
otherwise distributed in
respect
of or in
exchange for
any or all of the Pledged Mortgage Loans
collectively
the
Pledged Interests
b
If
Pledgor shall become entitled to receive or shall
receive
in connection
with the Pledged Mortgage Loans any
distribution of
any sort
then
Pledgor
shall
accept
the
same as Pledgees agent
in trust for
Pledgee
to be
applied by Pledgee pursuant to the terms of
the Note provided
that
Pledgor
shall be entitled to retain such distributions so
long as Pledgor i
s
not in default of
any obligations
under the Note or this
Pledge Agreement
Return
2 Pledgor shall from time to time but no less often than once a week deliver to
Pledgee
in written or electronic form a notice the Collateral Notice which shall specify
i Mortgage
Loans which shall be subject to the pledge security interest and lien created
by
this
Pledge Agreement
andor ii Mortgage
Loans
previously pledged hereunder which Pledgor
requests
be released from the
pledge security
interest and lien created
by
this
Pledge Agreement
The termPledged Mortgage Loans shall be those
Mortgage
Loans which have been
specified
by Pledgor
in a Collateral Notice to Pledgee as being subject to the pledge security
interest and
lien created
by
the Agreement
and which have not been subsequently
released
Any Pledged
Mortgage
Loan with
respect
to which Pledgor requests
a release shall be released
upon receipt by
Pledgee of a Collateral Notice
requesting
such release provided however that no Pledged
Mortgage Loan shall be released
i
f taking
into effect the
requested release i
t would result
i
n the
Collateral Maintenance Level as hereinafter defined
not
being
satisfied
3 At all times
during the termof the Note Pledger
shall maintain a Collateral
Maintenance Level of at least one hundred eleven
percent 11100
The Collateral
Maintenance Level shall mean a percentage
determined from time to time
by dividing i
the
current
aggregate outstanding principal amount of all
Eligible Pledged Mortgage
Loans
by ii
the current outstanding
amount owed under the Note and
multiplying
the result by 100
Loan shall mean a Pledged Mortgage Loan which
i
s not 90 days or
more
past
due Pledgor shall at the time of
any
Collateral Notice and no less often than once a
week deliver to
Pledgee
a calculation of the Collateral Maintenance Level taking into effect
both
any new Pledged Mortgage Loans and
any requested release of Pledged Mortgaged
Loans
In addition Pledgor
shall deliver a calculation of the Collateral Maintenance
upon
the
request
of
the
Pledgee
which
may
be made at
any
time
4 This
Pledge Agreement secures
and the Pledged Interests are security for the
prompt payment
in full when due whether at stated maturity by acceleration or otherwise and
performance of all
obligations
of
Pledgor now or hereafter
existing
under the Note or under this
Pledge Agreement including any amendments
modifications or changes thereto
5 Pledgor
shall take
any
action
reasonably requested by Pledgee to acknowledge
and
perfect the security
interests created
hereby Pledgor hereby
authorizes the
filing
of
any
financing statement
necessary
to
perfect
the security
interests created
hereby
6
a
If a default by Pledgor
under the Note or this Pledge Agreement
shall have
occurred and be
continuing Pledgee shall thereafter have the following rights
and remedies in
addition to the
rights
and remedies of a secured
party
under the Uniform Commercial Code of
Washington the UCC all such
rights
and remedies
being cumulative not exclusive and
enforceable
alternatively successively or concurrently
at such time or times as the
Pledgee
deems
expedient
i the Pledgee may give demand sue for collect or make
any compromise or
settlement the Pledgee
deems suitable in
respect
of
any
of the Pledged Interests
1
2
Return
ii
the
Pledgee may
sell resell assign
or deliver or otherwise dispose
of
any
or all of the Pledged Interests for cash or credit or both and
upon
such terms at such
place
or
places
at such time or times and to such entities or other
persons as the
Pledgee
thinks
expedient
all without demand for performance by
the
Pledgor or any
notice or
advertisement whatsoever
except
as expressly provided herein or as
may
otherwise be
required by law and
iii
the
Pledgee may cause all or any part
of the
Pledged
Interests to be
transferred into its name or the name of its nominee or nominees and for such
purpose
without limitation
upon any
other
rights or remedies available to the Pledgee
b
In the event of
any disposition
of
any
of the
Pledged
Interests as provided
i
n
clause
ii
of
6a
the Pledgee shall
give
to the Pledgor at least five 5business days prior
written notice of the time and
place
of
any public sale of such Pledged Interests or of the time
after which
any private
sale or
any
other intended disposition i
s to be made The
Pledgor hereby
acknowledges
that five business
days prior
written notice of such sale or other disposition
shall
be reasonable notice
Pledgee may
enforce its
rights
hereunder without
any
other notice and
without compliance
with
any
other condition
precedent now or hereunder imposed by statute
rule of law or otherwise
all ofwhich are hereby expressly
waived by the
Pledgor
to the fullest
extent permitted by law Pledgee may buy any part or all of the
Pledged Interests at
any public
sale and
i
f
any part or all of the
Pledged Interest i
s of a type customarily
sold in a recognized
market or
i
s of the
type
which
i
s the
subject
of
widelydistributed
standard
price quotations
Pledgee may buy at private
sale and
may
make payments
thereof
by any means
c
The
proceeds
of
any
such disposition or other action by Pledgee
shall be
applied as follows
i First to the reasonable costs and
expenses
incurred in connection
therewith or incidental thereto or in
any way relating to the rights of Pledgee hereunder
including
reasonable
attorneys
fees and
legal expenses
ii Second to the satisfaction of the
obligations
under the
Note
iii Third
to the
payment
of
any
other amounts
required by applicable law
and
iv Fourth to
Pledgor t
o the extent of
any surplus proceeds
7
Pledgor represents
and warrants that
a I
t
has and has
duly exercised all requisite power
and authority to enter
into this
Pledge Agreement
to
pledge
the
Pledged
Interests for the
purposes
described herein
and to
carry
out the transactions contemplated by
this
Pledge Agreement
b I
t will be
during
the
period
oftheir pledge hereunder the legal and
beneficial owner of all of the
Pledged Interests
3
Return
c Pledgor
will own the Pledged Interests during
the
period
of their
pledge
hereunder free of
any pledge mortgage hypothecation lien charge encumbrance or security
interest in such mortgage
loans or the
proceeds thereof except
for that
granted hereunder
d
The execution and delivery ofthis
Pledge Agreement
and the
performance
of its terms
will not violate or constitute a default under the terms of
any agreement
indenture or
other instrument license judgment decree order law statute ordinance or other governmental
rule or regulation applicable to Pledgor or
any
of its property
e Upon
execution of this
Pledge Agreement and the specification of a
Mortgage
Loan as collateral in a Collateral Notice this Pledge Agreement shall create a valid
first lien
upon
the Pledged Interest related to such
Mortgage
Loan and the
proceeds thereof
subject
to no prior security interest lien charge or encumbrance or agreement purporting
to
grant to any
third
party a security
interest in the
property
or assets of
Pledgor
which would
include the
Pledged Interest and
f Pledgors
home office
i
s
currently
located in Henderson Nevada
8
a Pledgor hereby covenants that except pursuant
to the
provisions
herein
relating
to the release of
Pledged Mortgage Loans i
t will not sell convey
or otherwise dispose
any
of the
Pledged
Interests or any
interest therein or create incur or permit to exist
any pledge
mortgage lien charge encumbrance or any security
interest whatsoever
i
n
or with
respect
to
any
of the Pledged Interests or the
proceeds thereof other than that created hereby
b Pledgor warrants and will at its own expense
defend Pledgees right title
special property
and
security
interest in and to the
Pledged
Interests against the claims of
any
person firmcorporation or other entity
9 Pledgor
will
promptly
deliver to
Pledgee
all written notices and will promptly
give Pledgee
written notice of
any
other notices received
by i
t with
respect
to the Pledged
Interests and Pledgee
will
promptly give
like notice to Pledgor
of
any
such notices received
by i
t
or its nominee
10 Pledgor shall at any time
and from time to time upon
the written
request
of
Pledgee execute and deliver such further documents and do such further acts and
things
as
Pledgee mayreasonably request
to effect the
purposes
of this
Pledge Agreement
11
Upon expiration
ofthe term of the Note
the satisfaction in full of all
obligations
under the Note and hereunder and the satisfaction of all additional costs and
expenses
of
Pledgee
as provided herein this
Pledge Agreement
shall terminate and Pledgee shall deliver to Pledgor at
Pledgors expense
such of the Pledged Interests as shall not have been released sold or
otherwise
applied pursuant
to this
Pledge Agreement
Until terminated pursuant to the
immediately preceding sentence
this
Pledge Agreement
and the security interest created hereby
shall remain in full force and effect notwithstanding
that fromtime to time there
may
be no
amounts
owing
under the Note
12 a Pledgee
shall have no duty or liability
to
preserve rights pertaining
to the
Pledged Interests
4
Return
b
No course of
dealing
between Pledgor and Pledgee nor
any
failure to
exercise nor
any delay
in
exercising any right power or privilege
of Pledgee hereunder or under
the Note shall
operate
as a waiver thereof nor shall
any single or partial
exercise of
any right
power or privilege
hereunder or thereunder
preclude any
other or further exercise thereof or the
exercise of
any
other right power or privilege
c The rights and remedies provided
herein and in all other
agreements
instruments and documents delivered
pursuant
to or in connection herewith are cumulative and
are in addition to and not exclusive of
any rights or remedies provided by law including
but
without limitation the
rights
and remedies of a secured
party
under the UCC
d The provisions of this Pledge Agreement are severable and if
any
clause
or provision
shall be held invalid or unenforceable
i
n whole or in
part
in
any jurisdiction
then
such invalidity or unenforceability
shall affect only such clause or provision or part
thereof in
such
jurisdiction
and shall not in
any
manner affect such clause or provision
in
any
other
jurisdiction or any
other clause or provision
in this
Pledge Agreement
in
any jurisdiction
13 This Pledge Agreement shall inure to the benefit of and shall be binding upon
the
successors and permitted assigns
of the
parties
hereto
Pledgee may freely assign its rights and
delegate
its duties under this Pledge Agreement but no such
assignment or delegation
shall
increase or diminish Pledgors obligations hereunder
14 This Pledge Agreement shall be governed by
and construed in accordance with the
laws of the State of
Washington
Remainder
of
Page Intentionally Blank
5
Return
IN WITNESS WHEREOF the
parties
hereto have duly executed this
Pledge Agreement
as of the date and
year
first above written
Pledgor Washington
Mutual Bank
Name
Title
Pledgee Washington Mutual Bank fsb
Name
Title
SE 2117798 v2
92905 936 AM
6
Return
AMENDMENT NO1
ASSET PLEDGE AGREEMENT
THIS AMENDMENT NO I TO ASSET PLEDGE AGREEMENT the
Amendment
dated as of
August 21 2007 i
s entered into by
and between
Washington
Mutual Bank
Pledgor
and
Washington
Mutual Bank fsb Pledgee
and amends that
certain Asset Pledge Agreement
dated as of
September 29 2005 by
and between
Pledgor
and
Pledgee the Pledge Agreement
A
Pledgor i
s the maker
of
and
Pledgee i
s the
payee
of that certain
Revolving
Credit Note dated September 29
2005
as i
t
may
be from time to time amended
modified extended or restated
and
together
with
any replacement notes including
without limitationthe
Revolving
Master Note dated March 7 2007
the
Note pursuant
to which
Pledgor may
borrow
money
from
Pledgee
from time to time
B Pursuant to the
Pledge Agreement Pledgor provides Pledgee
with collateral
as security
for
under the Note
C
Pledgor
and
Pledgee
desire that Snohomish Asset
Holdings
LLC
Snohomish a whollyowned subsidiary
of
Pledgor
also
provide Pledgee
with
collateral as
security
for
under the Note
D
Simultaneously
with the execution of this Amendment Pledgor Pledgee
and Snohomish are
entering
into an Asset Pledge Agreement pursuant
to which
Snohomish will
provide Pledgee with collateral as security
for
under the Note the Snohomish Agreement
NOW THEREFORE
in consideration of the
foregoing
and the mutual covenants
contained
herein
and
intending to be
legally
bound
hereby
the
parties agree
as follows
1 Recital A of the
Pledge Agreement i
s
hereby
deleted and
replaced
in its
entirety with the following
A
Pledgor i
s the maker of and Pledgee i
s the
payee of
that
certain
Revolving
Credit Note dated
September 29
2005
as i
t
may
be from
time to time amended modified extended or restated
and
together
with
any replacement notes including
without limitation the
Revolving
Master
Note dated March
7 2007
the
Note pursuant t
o which
Pledgor may
borrow
money
from
Pledgee
from time to time
2 Clause b of Section 1 of the Pledge Agreement i
s
hereby
deleted and
replaced
in its
entirety
with the
following
b
If
Pledgor
shall become entitled to receive or shall
receive
in
connection with the
Pledged Mortgage Loans any
distribution of
any sort
then
Pledgor
shall
accept
the same as
Pledgees agent
in trust for
Pledgee
j
Return
to be
applied by Pledgee pursuant
to the terms of the Note provided
that
Pledgor
shall be entitled to retain such distributions so
long as Pledgor i
s
not
i
n default of
any obligations
under the Note
this
Pledge Agreement
and
the Snohomish
Agreement as
defined below
and so long as Snohomish
Asset
Holdings
LLC
Snohomish i
s not in default of
any obligations
under that certain Asset
Pledge Agreement
dated as of
August 21 2007
b
y
and between Snohomish Pledgor
and
Pledgee as i
t
may
be from time to
time amended modified or restated
the Snohomish
Agreement
3 The second sentence of Section 3 of the Pledge Agreement i
s
hereby
deleted and
replaced
in its
entirety
with the following
The Collateral Maintenance Level shall mean a percentage
determined
from time to time
by dividing i
the sum of
Y
the current
aggregate
outstanding principal amount of all
Loans and
Z
the current
aggregate outstanding principal
amount of all
eligible
pledged mortgage
loans
pledged by
Snohomish to Pledgee
in accordance
with the Snohomish
Agreement by ii
the current outstanding amount
owed under the
Note
and
multiplying
the result
by
100
4 The
phrase
If a default
by Pledgor
under the Note or this
Pledge
Agreement at the
beginning
of the first sentence of clause a of Section 6 of the
Pledge
Agreement i
s
hereby
deleted and
replaced
with the phrase If a default
by
Snohomish
under the Snohomish
Agreement
or a default by Pledgor
under the Note the
Pledge
Agreement
or the Snohomish
Agreement
5 The
following
new clause
c i
s
hereby
added to Section 8 of the
Pledge
Agreement
c Pledgor hereby
covenants that
i
t will
promptly notify Pledgee
in
writing i
f
Pledgor
ceases to maintain its home office in Henderson
Nevada
The
following new Section 15
i
s
hereby added to the Pledge Agreement
15 This
Pledge Agreement
shall not be amended
except i
n
writing by
the
parties
hereto
7
Pledgor
and
Pledgee
each
represent
to the other that
i
t
has
and has
duly
exercised all
requisite power
and
authority
to enter into this Amendment
8 This Amendment shall be governed by
and construed in accordance with
the laws of the State of Washington
Remainder of Page Intentionally Blank
2
Return
IN WITNESS WHEREOF the parties
hereto have duly
executed this Amendment
as of the date and
year
first above written
Pledgor
Washington
Mutual Bank
Name ROBERT J WILLIAMS
Title
SENIOR VICE PRESIDENT AND TREASURER
Pledgee
Washington
Mutual Bank fsb
Name
Title
ROBERT J WILLIAMS
SENIOR VICE
PRESIDENT AND
TREASURER
3
Return
Collateral Releases
Page
1 of I
From Scholl Jacob A
<JacobSchollhellerehrmancom>
Sent Wednesday September 24 2008 647 PM
To Smith Chad
<charlesesmithwamunet> Logan
Doreen <doreen
loganwamu
net>
Cc Russell
Bernard L
<BernardRussellhellerehrmancom>
Subject
Collateral Releases
Attach WMBfsb
pledge
release
WMBDOCSide Letter re Collateral under Securities Loan
Agreement
WMBWMBfsbDOC
Chad and Doreen
Here are a couple agreements one terminating
the asset
pledge
that relates to the
revolving promissory
note between WMB and WMBfsb and the other
documenting
the
agreement by WMBfsb and WMB to forego
posting
collateral under the MSLA The different treatment
i
s
necessary
because we are otherwise
leaving
the
securities
lending arrangement i
n
place
whereas the asset
pledge agreement
did
nothing
but
require
collateral
and therefore
i
s
superfluous
Do
you
also want a release of the Asset
Pledge Agreement by
WM
Mortgage
Securities
i
n favor of WMBfsb We tried to draft the letter
agreement broadly enough
to cover collateral
provided
under the MSLA
by
WMBs
affiliates
but that
agreement
does remain
outstanding
We presume that the
express
release of all collateral under each
agreement i
s sufficient to evidence the
release to third
parties
but
please let us know
i
f we should also
prepare
UCC termination statements
There
will be some lag
time before a UCC search would
pick up
the
filing
of a termination statement so i
n the short
term the
agreements
will be all there
i
s to show third parties
Of
course
the formal release of the
collateral
even without
doing anything
to the
financing statement i
s sufficient to release the lien
Please let me know
i
f
you
have
any questions
or comments Thanks
Jacob
<<WMBfsb
pledge
release
WMBDOC>>
<<Side Letter re Collateral under Securities Loan
Agreement WMBWMBfsbDOC>>
Jacob Scholl I Attorney I HellerEhrmanLLP 701 Fifth Avenue Suite 6100 Seattle WA 98104
tel
+120638942831
direct fax +12065158941 J email jacobschollhellerehrmancom web wwwhellerehrmancom
This
email
i
s sent
b
y
a law firm and contains information that
may
be privileged and confidential I
f
you
are not the intended recipient
please delete the email and notify us immediately
httpsmattersamicillccomirmcl6webcontentget
page135134nativelisViewer=l 8192009
Return
September 24
2008
1301 Second Avenue
Seattle Washington 98101
Ladies and Gentlemen
This Letter
the Letter
relates to the Master Securities Loan Agreement
dated as of
February 27 2004
the Lending Agreement by
and between
Washington
Mutual Bank under
its
prior name Washington
Mutual
Bank FA Borrower
and
Washington
Mutual Bank fsb
Lender All
capitalized
terms not otherwise defined herein shall have the
meanings provided
in the
Lending Agreement
Pursuant to the
Lending Agreement
Lender
agreed
to lend to Borrower certain Securities
against a transfer of Collateral from Borrower to Lender as
security
for Borrowers satisfaction
of its
obligations
under the Lending Agreement
The
parties
to the
Lending Agreement
desire
that Lender to continue to Lend Securities to Borrower on an unsecured basis Accordingly
Borrower and Lender
agree hereby
that
1 notwithstanding
the collateral
delivery requirements
set forth in the
Lending Agreement
Borrower shall not be
required
to deliver Collateral to
Lender in connection with
any
current or future Loan of Loaned Securities and
any requirement
to do so in the
Lending Agreement or
any
related document
i
s
hereby terminated 2
Lender
hereby unconditionally
releases all of its interest in
any
Collateral delivered to
i
t
whether
by
Borrower or any
of Borrowers
affiliates
under the
Lending Agreement 3
Lender
promptly
shall deliver to Borrower or the
proper
affiliate of Borrower such of the Collateral as shall not
have been sold or otherwise
applied pursuant
to the
Lending Agreement
shall take
any
action
reasonably requested by Borrower to
acknowledge
the release of such Collateral
including
without limitation that filing of termination statement for
any financing
statements filed with
respect
to such
collateral
and
shall at its own
expense
defend Borrowers right title and
interest in and to such Collateral
against
the claims of
any person firm corporation or other
entity and 4 no additional Loan Fees shall be
payable by
Borrower under the Loan Agreement
This letter shall be governed by
and construed in accordance with the laws of the state
of State of New York without
giving effect to the conflict of law
principles
thereof
other
than
Section 51401 and 51402 of the General
Obligations
Law of the State of New
York
Please
acknowledge your agreement
with the
foregoing by signing the enclosed
copy
of
this letter in the place provided below
The next
page i
s a
signature page
Return
WASHINGTON MUTUAL BANK fsb
Name
Title
Agreed
and
Accepted as of
September 24 2008
WASHINGTON MUTUAL BANK
Name
Title
Return
SE 2265702 v1
81909 747 PM 262500001
3
Return
RELEASE OF ASSET PLEDGE AGREEMENT
THIS RELEASE OF PLEDGE AGREEMENT the Release
dated as of
September 24 2008 i
s entered into
by
and between
Washington
Mutual Bank
Pledgor
and
Washington Mutual Bank fsb
Pledgee
Recitals
A
Pledgor
and
Pledgee are
parties
to that certain Asset
Pledge Agreement
dated as of
September 29 2005 as amended
the Pledge Agreement pursuant
to
which
Pledgor provides Pledgee with collateral as security
for
under a
revolving
credit
note and
B
Pledgor
and
Pledgee
desire to release
Pledgor from its
obligations
under the
Pledge Agreement
Agreement
NOW THEREFORE
in consideration of the
foregoing and
intending
to be
legally
bound
hereby
the
parties agree
as follows
1 All of
Pledgors obligations under the
Pledge Agreement are
hereby
immediately terminated and all of
Pledgees interests in the
Pledged Interests
as
defined
in the
Pledge Agreement are hereby immediately
released
Pledgee promptly
shall
deliver to
Pledgor
such of the
Pledged Interest as shall not have been sold or otherwise
applied pursuant
to the
Pledge Agreement the Remaining Collateral
2
Pledgee
shall take
any
action
reasonably requested by Pledgor
to
acknowledge
the release of the
Remaining Collateral including without limitation the
filing
of termination statements for
any financing
statements filed with
respect
to the
Remaining Collateral
Pledgee will at its own
expense
defend
Pledgors right title and
interest in and to the
Remaining
Collateral
against
the claims of
any person firm
corporation or other
entity
3
Pledgor and
Pledgee
each
hereby represents
and warrants to the other that
a I
t
has and has
duly exercised all
requisite power
and
authority
to
enter into this Release and to
carry
out the transactions
contemplated by
this
Release
and
b The execution and
delivery
of this
Release and the
performance
of
its
terms
will not violate or constitute a default under the terms of
any agreement
indenture or other
instrument license judgment decree order law statute ordinance or
other
governmental
rule or
regulation applicable to
i
t
or
any
of its
property
4 The
provisions
of this Release are severable and
i
f
any
clause or
provision
shall be held invalid or unenforceable in whole or in
part
in
any jurisdiction then such
Return
invalidity or unenforceability
shall affect
only
such clause or
provision or part
thereof
i
n
such
jurisdiction
and shall not in
any manner affect such clause or provision
in
any
other
jurisdiction or
any
other clause or
provision
in this Release in
any jurisdiction
5 This Release shall be construed
according
to the laws of the State of
Washington
Remained
of
Page Intentionally Blank
2
Return
IN WITNESS
WHEREOF the
parties
hereto have
duly
executed this Release as
of the date and
year
first above written
Pledgor Washington
Mutual Bank
Name
Title
Pledgee Washington Mutual Bank fsb
Name
Title
SE 2265716 v1
81909 747 PM 262500001
3
Return
From Noblezada Yolanda B
Sent
To Plummer Nancy
Subject RE DDA 44100000064234
Not FULLY yetstill groping for GL
postings
Thank
you so much for a speedy response
to our needs
Yolanda
From Plummer Nancy
Sent Wednesday September 24 2008 1113 AM
To Noblezada Yolanda B
Subject
RE DDA 44100000064234
Congratulations Glad you got i
t done
Nancy D Plummer
Technology Manager
Retail QA Back Office
Retail Bank Technology
Washington Mutual
1111 3rd Avenue EET1030
Seattle WA 98101
2065008142 direct 2064908155 fax
nancy plu mmerwamu net
Notice This communication may contain privileged or other confidential information
I
f
you
have
received
i
t in
error please advise the sender by reply email and immediately delete the
message
and
any
attachments without
copying or disclosing the contents Thank you
From
Noblezada Yolanda B
Sent Tuesday September 23 2008 322 PM
To
Logan Doreen
Cc Smallow Timothy B Schulte Patricia Winder Brandon J St John Lourdes
A Plummer Nancy
Roybal Heidi H Ryason Tawnya Ghasemi Kim A McBumey
Norren
L Priest Adonis K
Subject DDA 44100000064234
FINALLY after 3
grueling days the new DDA on fsb
i
s now LEGALLY on Co 40 fsb under our
own cost center 9911
All GL entries will be
posted as soon as GL accounts are open on the GL posting system
Thank
you everyone
who
helped me set this
up
RIGHTLY
Yolanda
Yolanda B Noblezada
Treasury Cash Management
1301 2nd Avenue WMC 1409
Seattle WA 98101
HIGHLY CONFIDENTIAL - ATTORNEYS' EYES' ONLY INFORMATION
Return
p
2063024325
f 2065547207
2063024489
yolandanoblezadawamunet
CONFIDENTIALITY NOTICE This email
message including
all attachments i
s for the sole use of the intended
recipient s and may contain confidential and privileged information
I
f
you
are not the intended
recipient you may NOT
use disclose copy or disseminate this information Please contact the sender by reply email immediately and destroy all
copies of the original message including all attachments Your cooperation i
s
greatly appreciated
Return
From
From Logan
Doreen
Sent
Monday April 17 2006 22521 PM
To
Phillips
Laura
CC Falls Keith Smallow Timothy B
Subject RE IC Master Note
Page 1 of 3
Collateral
i
s all
mortgages
not
mortgage
securities You can send the examiner to Keith Falls
i
n
Treasury He pledges loans from Co 2 to Co 40 weekly
Doreen Logan CPA
Original
MessageFrom
Phillips Laura
Sent
Monday April 17
2006 1124 AM
To Logan Doreen
Subject
RE IC Master Note
I havent heard back from the Examiner She isnt here
today
What about on Co 2s side What
i
s
collateralizing
the balance
I
s
i
t
mostly mortgage securities
I
f she wanted to see the detail where would she be able to
get
it
Thanks
Laura L
Phitfips
Regulatory Reporting Controllers Group
2063774833
email LauraLPhillipswamunet
From
Logan Doreen
Sent Monday April 17 2006 1115 AM
To Phillips Laura
Subject
RE IC Master Note
Did
you need more info on this or
i
s
i
t all okay
Doreen
Logan CPA
Original
MessageFrom
Phillips Laura
Sent
Wednesday April 12 2006 151 PM
To Logan Doreen
Doreen
Thank you Do we know the
specifics
of what made
up
the balance at 12312005
Laura
Laura L
2hifips
Regulatory Reporting
Controllers
Group
2063774833
email
LauraLPhillipswamunet
Original
Messagemhtmlhttpsmattersamicillccomjpmc
16webcontentgetpage84475201native1 isVi 8252009
Return
From Page
2 of 3
From Logan Doreen
Sent Wednesday April 12 2006 148 PM
To
Phillips
Laura
Cc Smallow Timothy B Sherrington Gregg R Berger
Monica
J Schulte
Patricia
Laura
Thank
you
for
your question on the Master Note between Co 2 and Co 40
The Master Note was set
up i
n September 2004 and updated i
n
September 2005 to create an
earning asset for Co 40 Before the creation of the master note excess cash was on deposit at
Co 2
i
n a demand deposit account The size of that deposit account rose to almost $14 billion
I
t
i
s unreasonable to assume that any business would leave $14 billion
i
n a demand deposit
account uninvested Therefore we created the master note between Co 2 and Co 40 to
create an earning
asset for Co 40
Excess funds at Co 40 arise when there are asset sales or PI collections on MBS etc Co 40
does not have substantial cash needs Before the master Note when the
incoming cash
exceeded the need Co 40 was left with
only
two options leave
i
t on deposit at the Federal
Reserve Bank for no benefit or leave
i
t on deposit with Co 2 Both of those
options did provide
an income stream to Co 40 Co 40 could have opened an MMDA account at Co 2 but there
would be more than 6 debits a month so the account would no longer qualify
for MMDA status
The Master Note
i
s basically a commercial loan from Co 40 to Co 2 Co 2
pays Co 40 interest on
this note at the
per annum rate of onemonth LIBOR Interest
i
s calculated and posted monthly
The Master Note was executed by Robert Williams under the authority i
n the
Intercompany
Transaction Standard of the ALMLP Transaction Type 3
The note
i
s secured by a weekly pledge of loans from Co 2 to Co 40 Keith Falls
i
s i
n
charge of
the
weekly
loan
pledge
There
i
s no ALLL
required
for this master note because
i
t
i
s a loan from a sub to its parent i
t
i
s
secured by real estate and
i
t
i
s eliminated
i
n consolidation
Let me know
i
f you have any questions Ill send a copy of the Master Note to your attention
I
t
says
VOID VOID VOID all over the note because
i
t
i
s on safety paper the original does not
say
VOID VOID
VOID
Ive
copied a few other folks that needed to know the information too as well as the
potential
recipients of other OTS questions about the Master Note
Doreen
Logan
CPA
Original
MessageFrom
Phillips
Laura
Sent Wednesday April 12 2006 946 AM
To Logan Doreen
Subject
IC Master Note
Hi Doreen
An OTS Examiner Denise Mueller has been tasked with
finding
out what the detail of the $9 billion
balance of the IC Master Note on fsbs books consists of Do
you
have anything i
n writing that describes
it
Thanks
mhtmlhttpsmattersamicillccomjpmc 16webcontentgetpage84475201native1 isVi 8252009
Return
From
Page
3 of 3
Laura
Laura L
Phir1ips
Regulatory Reporting Controllers Group
2063774833
email
LauraLPhillipswamunet
mhtmlhttpsmatters amicillccomj pmc 16webcontentgetpage84475201
native 1 isVi 8252009
Return
Summary
o
f
Washington Mutual 10
K
,
Note
2
4
Work Papers
Date Comments
1
.
Feb. 12, 2008 (2pm)
(DRAFT
I
)
Distribution
o
f
draft FASB 107
Fair Value
o
f
Loans Held for Investment
a
t
$214.9B (a $26.9B
discount
t
o Carrying Value) and impliedfinancial insolvency
(financial assets less financial liabilities)
o
f
$15.0B
2
.
Feb. 14, 2008 (2pm) Comments from Home Loans Group and others
o
n
draft FASB 107
FASB 107 table same
a
s
above
3
.
Feb. 20, 2008 (6pm)
(DRAFT
I
I
)
Distribution
o
f
draft 10 K
t
o Audit Committee
Fair Value
o
f
Loans Held
i
n Portfolio
a
t
$217.2B (a $24.6B discount
t
o Carrying Value) and impliedfinancial insolvency (financial assets
less financial liabilities)
o
f
$12.2B
4
.
Feb. 21, 2008 (11am) Investor Relations email comments highlighting $24B difference; further
comments fromCFO, Risk Management, and Home Loans Group
5
.
Feb. 26, 2008 (7pm) Home Loan Group outlines economic reasons for why Fair Value
o
f
Loans
Held for Investment may have deteriorated since 12/ 31/ 2007 and may
b
e
worse than disclosed
i
n FASB 107
6
.
Feb. 28, 2008 (1pm) Fair Value PRIORITY meeting
i
n CFO office
7
.
Feb. 28, 2008 (7pm) FASB 107 valuation back
u
p
materials distributed internally and
t
o Deloitte
&Touche
Fair Value
o
f
Loans Held
i
n Portfolio
a
t
t
o
f
$2.8B
8
.
Feb. 29, 2008 (9am) Valuation correction/ adjustment
t
o FASB 107 distributed internally
Fair Value
o
f
Loans Held
i
n Portfolio
a
t
t
o
f
$3.1B
9
.
Feb. 29, 2008 (1pm)
(DRAFT III)
Washington Mutual 10 K filed publicly
o
n
SEC
Work papers
a
s
o
f
2

29
0
8
HIGHLY CONFIDENTIAL
Return
From
Sent
To
Subject
F
Jurgens Rolland
Tuesday February 12 2008 200 PM
Coultas Dave Stack Fergal
FW Fair Value of Financial Instrument Disclosure
airs leoaliv privifeQed cc
d only for the use of the individual or entity named abov
eying distribution or taking any action based on the contents of
ease contact sender and delete all copies
From Tuckett
William E
Sent Tuesday February 12 2008 150 PM
To
Levy Douglas S Anderson Amy
D
Cc Gaur Shobhit Jurgens Rolland Wajner Matthew F White Jonathan
Subject
Fair Value of Financial Instrument Disclosure
Please find attached a draft of the FAS 107 disclosure for the 10K The disclosure i
s marked
up except for table
from a
draft Doug presented last week Please review and let me know
i
f
you
have
any questions comments or recommended
edits The amounts i
n the table are from the balance sheet and notes
carrying value and FV for financial instruments
carried at FV draft RFI provided by Treasury Shobhit and deck used for the Valuation Committee
Rolly and Matt Could
you please review the discussion of methods and assumptions used for LHFS LHIP and MSR
Please let me know
i
f
you
have comments or recommended edits
Shobhit I think
I would like
t
o have all edits back
by Wednesday evening
as we have a distribution on
Thursday evening
Than
your
assistance
v d
your changes t
o the
specific
instruments Please let me know
i
f
you
have
questions
you
Bill Tuckett
Financial ReportingSEC
2065003197
Note 21 draft fail
value V2do
HIGHLY CONFIDENTIAL
Return
Note 24 Fair Value of Financial Instruments
The table below
presents
the
carrying
value and fair value of the Companys
financial
instruments in accordance with SFAS FASB Statement No 07 Disclosures about Fair Value of
Financial Instruments Statement No 107 Accordingly
the
Company
has not included certain
material items in this disclosure such as the value of the longterm relationships with its deposit
and
credit card customers
since these
intangibles are not financial instruments The table also excludes the
values of leases and pension
and benefit
obligations as well as other nonfinancial assets and
liabilities such as premises
and
equipment net tax assetsliabilities real estate held for investment
foreclosed assets and goodwill
In addition the value of the
servicing rights
for loans sold in which the
MSR has not been capitalized i
s excluded
Also as
required
the disclosure excludes
The tax ramifications related to the realization of unrealized
gains
and losses
Any premium or discount that could result fromoffering for sale at one time the entire
holdings of a particular instrument and
The excess fair value associated with deposits with no fixed maturity
The items excluded are integral
to a full assessment of the Companys financial position and the
value of its net assets Accordingly
the total of the fair value estimates presented do not represent and
should not be construed to represent
the
underlying
value of the
Company
Fair value
i
s defined as the
price
that would be received to sell an asset or paid tipea44ieto
transfer efa liability i
n an orderly
transaction between market
participants
at the measurement date
The Companys fair value measurements are generally
determined based on assumptions that market
participants
would use
i
n pricing
the asset or liability
and are based on market data obtained from
independent
sources where available However i
n certain cases where an active secondary market
does not exist the
Company
uses i
t o internal valuation models
using asstimptiens
about inn
partieipant assiiRptiens developed
based en the best itifbfmatien available
i
f
i the eifeaRistanees fa
eiafflpleto
estimate the fair value These models incorporate inputs
such as forward
yield curves
loan
prepayment assumptions market volatilities and
pricing spreads utilizing
marketbased
inputs
where
readily available These valuations are the Companys estimates and are often calculated based on
appropr
internal valuation policies the economic and competitive environment estimates of future
loss
experience
the risk characteristics of the financial instruments and other such factors Therefore
the results cannot be determined with precision and
may
not be realized in an actual sale or immediate
settlement of the instruments
i
n a current market exchange
The
degree
of
management judgment
involved in determining the fair value of a financial
instrument or other asset
i
s
dependent upon
the availability of quoted market prices or observable
market value
inputs
For financial instruments that are actively traded
i
n the marketplace or whose
values are based on readily
available market value data little i
f
any subjectivity i
s applied when
determining the instruments fair value When observable market prices and data are not readily
available significant management judgment
often
i
s
necessary
to estimate fair value In those cases
different assumptions
could result
i
n
significant changes
in valuation Furthermore there
may
be
inherent weaknesses in
any
calculation
technique
and
changes
in the underlying assumptions used
including
discount rates and estimates of future cash flows that could
significantly
affect the results
The
following
methods and
assumptions were used to estimate the fair value of each class of
financial instrument as of December
31
2007 and 2006
Financial Assets
Cash and cash
equivalents
The
Company
considers the
carrying
amounts of cash and cash
equivalents
carried at cost including
cash on hand amounts due from banks US
Treasury bills
7A1T
Zyb 1E2 4 Turr otliu cS tl Froflt i cr7vr
HIGHLY CONFIDENTIAL
Return
overnight
investments and commercial
paper
with
maturities when purchased of three months or less
to approximate
fair value due to their shortterm nature and minimal credit risk
Federal funds sold and securities
purchased
under
agreements to resell The
carrying amount
represented
fair value Federal funds sold and securities purchased under resale
agreements
are
investments of high liquidity and have characteristics similar to cash
Trading assets Trading assets are carried at fair value Fair value
i
s based on
quoted prices
when available
i
n an active market
I
f
quoted market prices are not available then fair values are
estimated using pricing models quoted prices
of securities with similar characteristics or discounted
cash flows
Availableforsale securities Availableforsale securities are carried at fair value Fair value
i
s
based on quoted prices
when available
i
n an active market If
quoted
market
prices are not
available
then fair values are estimated
using pricing models quoted prices
of securities with similar
characteristics or discounted cash flows The fair values of availableforsale securities are reported
i
n Note 5 to the Consolidated Financial Statements Securities
of
the C lid ed Fiiiancial
S atcment
Loans held for sale The fair value of loans
designated as held for sale
i
s generally based on
observable market prices of securities that have loan collateral or interests
i
n loans that are similar to
the held for sale loans or whole loan sale prices i
f
formally
committed
I
f market
prices
are not
readily available fair value
i
s based on a discounted cash flow model which takes into account
expected prepayment
factors and the degree of credit risk associated with the loans and the estimated
effects of
changes i
n market interest rates relative to the loans interest rates
Loans held
i
n
portfolio
Fair values were estimated for rou s of similar loans based u on YVe
of loan and maturity The fair value of loans was detennined
by discounting estimated cash flows
using managements best estimate of market interest rates for similar collateral interest rates
awns a aFefle
~herent Credit risk Where quoted market
prices were available
~ rily
f
r home loan such
market
prices were utilized as estimates for fair values The fair values of
nonperforming loans were
calculated
by discounting
estimated cash flows
using
discount rates commensurate with the risk
associated with the cash flows
During 2007 the Company experienced a significant unrealized marktomarket decline
i
n its
loans held in
portfolio as a result of the effect of credit deterioration and increased market risk
premiums driven by the decline in liquidity for
nonconforming mortgage loans i
n
particular
subprime
and home
equity
loans Because of the
illiquidity
in the
secondary
market for
nonconforming
mortgage loans
the fair values
presented
are significantly lower than the
Companys
internal estimate of economic value
Investment
i
n FHLBs FHLB stock does not have a readily determinable fair value as i
t
i
s
nonmarketable
and
i
s
required
to be sold back at its
par
value
Accordingly
the fair value of FHLB stock
i
s its
par
value which
i
s also its
carrying
value
Mortgage Servicing Rights MSR
The market for MSRs
i
s not
sufficiently liquid to provide
participants
with
quoted
market
prices Accordingly
the
Company uses an optionadjusted spread
OAS
valuation
approach
to determine the fair value of MSRs This
approach projects cash flows
over multiple
interest rate scenarios and discounts these cash flows using riskadjusted discount rates
e idecAdditionally an
independent
broker estimate of the fair value of the MSR i
s obtained
quarterly along with other market based evidence Management uses this information along with OAS
valuation
methodology
to estimate the fair value
o
f
MSR The fair values of MSRs are reported i
n
Note 8 to the Consolidated Financial Statement
Mortgage Banking Activities Of the C^nnolidate
Financial Statements
Financial Liabilities
HIGHLY CONFIDENTIAL
Return
Deposits
FASStatement No 107 states that the fair value of
deposits with no stated
maturity
such as oitest
bearing
demandd dep sites s
nterest
bearig l1ekillg and market rate and ether re
savingschecking deposits savings deposits
and
money
market
deposits i
s equal to the amount
payable
on demand at the
reporting
date
Accordingly the amount included for these deposits i
n the
following
table i
s their
carrying
value at December 31 2007 and 2006 The fair value
reported i
n the table
below excludes the excess fair value of the unrecorded
intangible asset associated with such
deposits
related to the relative stability of interest rates paid even when market interest rates
change
and the
tendency of such deposits to remain with the Company despite changes i
n market interest rates
The fair value of deposits with stated maturities such as time
deposits was determined
using
projected
cash flows methodoloy Projected cash flows of these
instruments adjusted for the effects
projectedfuture
cost to service these balances were discounted at LIBOR
Swap
curve The The dis
rt
was dQ the
lUl 1
ed fem the
rate
cilil
bllll urrently
offered alter ate funding
sources
l u
5
with l ttiri+ e
Federal funds
purchased
commercial
paper
and securities sold under
agreements
to
repurchase
The
carrying amounts represented
fair value due to the shortterm nature of the financial instruments
Advances from FHLBs and other
borrowings Advances from FHLBs are valued
using
the
discounted cash flow
methodology Projected future cash flows of these
borrowings are discounted at
LIBOR Swap carve Other borrowings were valued at observable traded
prices
The
pricing
methodology
relies on pricing
derived from the most recent observable trades on these instruments
Where such prices are not observable the instruments are priced
based on their contractual exit values
or a discounted cash flow methodology
Derivatives
Derivative financial instruments
Exchangetraded
derivatives are valued
using quoted prices
However few classes of derivative contracts are listed on an exchange
and thus the majority of the
Companys
derivative
positions are valued
using internally developed
models that
use as their basis
readily
h dutie1 rellbservude
Vcwl 111
basic interest rate
swaps
and pti
observable market
parameters
c
ether
Derivatives that are normally
traded less
actively such as mortgage loan commitments are
valued based
upon
models with
significant
unobservable market
parameters
See Note 23 to the
Consolidated Financial Statenebts Derivative Financial Instruments for further information
HIGHLY CONFIDENTIAL
Return
The information
i
n the table below
presented i
s based on fair value estimates as of December 31
2007 and 20052006 These amounts have not been
updated
since
yearend therefore the valuations
may
have
changed significantly
since that point i
n time The carrying amounts
reported i
n the table are
recorded iron the balance sheet under the indicated
captions
The estimated fair value of the
Companys
financial instruments was as follows
December 31
2007 2006
Carrying
Fair
Carrying Fair
Amount Value Amount Value
in millions
Financial Assets
Cash and cash
equivalents $ 9560 $ 9560 $ 6948 S 6948
purchased
under
agreements
to resell 1877 1877 3743 3743
Trading assets
2768 2768 4434 4434
Availableforsale securities 27540 27540 24978 24978
Loans held for sale
5403 5547 44970 45060
Loans held in
portfolio net of allowance for loan losses 241815 21487 223330 221401
Investment
i
n FHLBs
3351 3351 2705 2705
MSR 6278 6278 6193 6193
Derivatives included
i
n other assets 2093 2093 748 748
Total financial assets $298685 $273 $ $318049 $316210
All other
deposits $109069 $109069 $
95082 $ 95101
Time
deposits 72857 73293 118874 118874
Federal funds
purchased and commercial
paper 2003 2003 4778 4778
Securities sold under
agreements
to
repurchase 4148 4148 11953 11953
Advances from FHLBs
63852 63965 44297 44283
Other
borrowings 38958 35990 32852 32874
Derivatives included i
n other liabilities 408 408 1081 1081
Total financial liabilities $ j2816 $308
Includes checking deposits savings deposits and money market deposits
HIGHLY CONFIDENTIAL
Return
From
Sent
To
Cc
Subject
are are mvcomments
te 24 draf
value V2
Jurgens Rolland
Thursday February 14 2008 147 PM
Tuckett William E
Levy Douglas S Anderson Amy D
Gaur Shobhit Wainer
Matthew F White Jonathan D Coultas Dave Stack Fe
RE Fair Value of Financial Instrument Disclosure
f TY NOTICE This electronic mail transmissionmay contain legally privileged confidential inform
intended only for the use of the individual or entity named above I
f
you
are not the intended recipient
disclosure copying distribution or taking any action based on the contents of this electronic mail is strictly p
From Tuckett William E
Sent Tuesday February 12
2008 150 PM
To
Levy Douglas S Anderson Amy
D
Cc Gaur Shobhit Jurgens Rolland Wajner Matthew F White Jonathan D
Subject Fair Value of Financial Instrument Disclosure
he
that any
s electronic
Please find attached a draft of the FAS 107 disclosure for the 10K The disclosure
i
s marked
up except for table from
draft Doug presented last week Please review and let me know i
f
you have any questions
comments or recommended
edits The amounts
i
n the table are from the balance sheet and notes carrying value and FV for financial instruments
carried at FV draft RFI provided by Treasury Shobhit
and deck used for the Valuation Committee
Rolly and Matt Could you please
review the discussion of methods and assumptions used for LHFS LHIP and MSR
Please let me know
i
f
you
have comments or recommended edits
Shobhit I think I have captured your changes
t
o the specific
instruments Please let me know
i
f
you have questions
I would like to have all edits back by Wednesda
your assistance
Sill Tuckett
2065003197
evening a we have a distribution on Thursday evening
Thank
you
for
Dote 24 draft fair value
HIGHLY CONFIDENTIAL
Return
From Sinkula Diane M
Sent Wednesday February 20 2008 607 PM
To Ballenger Melissa J Landefeld Stewart M Hume Sophie King Ruthanne Magleby Alan
C
Subject
F Wisdorf Doug Levy Douglas S Cathcart Ron McMurray John Bates Timothy
Fancher Jennifer A Schwartz David M Hunt
James W Stack Fergal Jurgens Rolland
Miller Brad Baker Todd Casey Tom
Goulart Ill Tony West Denise MacKenzie James Sutton Darla L Coy Nancy L Robbins
Marita Long Kevin P Roberts Denise R
WMI10K Audit Committee distribution
Please find attached both a clean and blacklined version of the Audit Committee version of the l 0K
which
was distributed to the Audit Committee earlier
today
The
blacklining
shows
changes
from the certification
distribution that was sent out last Thu
At this
stage
of the
process please limit
your
comments
t
o address only significant errors or omission
them on to Denise West or Tony
Goulart Please also
pass
on
any
comments related to credit to Jame
MacKenzie
IOK2007 WMI Aud 10K2007 WMI Aud
i
t Commdeand i
t
Commmarkup
T
anc
Diane Sinkula
SEC
Reporting Production Manage
2065003178
HIGHLY CONFIDENTIAL
Return
Note 24: Fair Value
o
f
Financial Instruments
The table below presents the carrying value and fair value
o
f
the Companys financial instruments
i
n
accordance with FASB Statement No. 107, Disclosures about Fair Value
o
f
(
Statement No. 107). Accordingly,

t
h
e
Company has
n
o
t
included certain material items
i
n this
disclosure, such
a
s
t
h
e
value
o
f
t
h
e
long-term relationships with
i
t
s
deposit and credit card customers, since
these intangibles
a
r
e
not financial instruments. The table also excludes
t
h
e
values
o
f
leases and pension
and benefit obligations,
a
s
well
a
s
other nonfinancial assets and liabilities such
a
s
premises and equipment,
n
e
t
t
a
x
assets/ liabilities, real estate held
f
o
r
investment, foreclosed assets and goodwill.
I
n addition, the
value
o
f
t
h
e
servicing rights
f
o
r
loans sold
i
n which the MSR has
n
o
t
been capitalized
i
s excluded.
Also,
a
s
required,
t
h
e
disclosure excludes:
The
t
a
x
ramifications related
t
o
t
h
e
realization
o
f
unrealized gains and losses;
Any premium
o
r
discount that could result from offering
f
o
r
sale
a
t
one time
t
h
e
entire
holdings
o
f
a particular instrument; and
The excess fair value associated with deposits with
n
o
fixed maturity.
The items excluded
a
r
e
integral
t
o a full assessment
o
f
t
h
e
Companys financial position and
t
h
e
value
o
f
i
t
s
n
e
t
assets. Accordingly,
t
h
e
total
o
f
the fair value estimates presented
d
o
n
o
t
represent, and should
not
b
e
construed
t
o represent,
t
h
e
underlying value
o
f
t
h
e
Company.
Fair value
i
s defined
a
s
t
h
e
price that would
b
e
received
t
o sell
a
n
asset
o
r
paid
t
o transfer a liability
i
n
a
n
orderly transaction between market participants
a
t
t
h
e
measurement date. The Companys fair value
measurements
a
r
e
generally determined estimated based
o
n
assumptions that market participants would use
i
n pricing
t
h
e
asset
o
r
liability and
a
r
e
based
o
n
market data obtained from independent sources where
available. However,
i
n certain cases where
a
n
active secondary market does
n
o
t
exist,
t
h
e
Company uses
internal valuation models
t
o estimate
t
h
e
fair value. These models incorporate inputs such
a
s
forward yield
curves, loan prepayment assumptions, market volatilities and pricing spreads utilizing marketbased inputs
where readily available. These valuations
a
r
e
t
h
e
Companys estimates, and
a
r
e
often calculated based
o
n
internal valuation policies,
t
h
e
economic and competitive environment, estimates
o
f
future loss experience,
t
h
e
risk characteristics
o
f
t
h
e
financial instruments and other such factors. Therefore,
t
h
e
results cannot
b
e
determined with precision and may not
b
e
realized
i
n
a
n
actual sale
o
r
immediate settlement
o
f
the
instruments
i
n a current market exchange.
The degree
o
f
management judgment involved
i
n determining estimating
t
h
e
fair value
o
f
a financial
instrument
o
r
other asset
i
s dependent upon
t
h
e
availability
o
f
quoted market prices
o
r
observable market
value inputs. For financial instruments that
a
r
e
actively traded
i
n
t
h
e
marketplace
o
r
whose values
a
r
e
based
o
n
readily available market value data, little,
i
f any, subjectivity
i
s applied when determining
estimating
t
h
e
instruments fair value. When observable market prices and data are
n
o
t
readily available,
significant management judgment often
i
s necessary
t
o estimate fair value.
I
n those cases, different
assumptions could result
i
n significant changes
i
n valuation. Furthermore, there may
b
e
inherent
weaknesses
i
n any calculation technique, and changes
i
n the underlying assumptions used, including
discount rates and estimates
o
f
future cash flows, that could significantly affect
t
h
e
results.
The following methods and assumptions were used
t
o estimate
t
h
e
fair value
o
f
each class
o
f
financial
instrument
a
s
o
f
December
3
1
,
2007 and 2006:
Financial Assets
Cash and cash equivalents The Company considers
t
h
e
carrying amounts
o
f
cash and cash
equivalents carried
a
t
cost, including cash
o
n
hand, amounts due from banks,
U
.
S
.
Treasury bills, overnight
investments and commercial paper with maturities, when purchased,
o
f
three months
o
r
less,
t
o
approximate
f
a
i
r
value due
t
o their shortterm nature and minimal credit risk.
Formatted: Indent: First line: 0.18"
HIGHLY CONFIDENTIAL
Return
Federal funds sold and securities purchased under agreements
t
o resell The carrying amount
represented fair value. Federal funds sold and securities purchased under resale agreements
a
r
e
investments
o
f
high liquidity and have characteristics similar
t
o cash.
Trading assets Trading assets
a
r
e
carried
a
t
fair value. Fair value
i
s based
o
n
quoted prices when
available
i
n
a
n
active market.
I
f quoted market prices
a
r
e
n
o
t
available, then fair values
a
r
e
estimated using
pricing models, quoted prices
o
f
securities with similar characteristics,
o
r
discounted cash flows.
Available- for- sale securities Available- for- sale securities
a
r
e
carried
a
t
i
s
based
o
n
quoted prices when available
i
n
a
n
active market.
I
f quoted market prices
a
r
e
n
o
t
available, then
fair values
a
r
e
estimated using pricing models, quoted prices
o
f
o
r
discounted cash flows. The fair values
o
f
available- for- sale securities
a
r
e
reported
i
n Note 5
t
o
t
h
e
Consolidated Financial Statements Available- for- Sale Securities.
Loans held
f
o
r
sale The fair value
o
f
loans designated
a
s
held
f
o
r
sale
i
s generally based
o
n
observable market prices
o
f
securities that have loan collateral
o
r
interests
i
n loans that
a
r
e
similar
t
o
t
h
e
held
f
o
r
sale loans
o
r
whole loan sale prices
i
f formally committed.
I
f market prices
a
r
e
n
o
t
readily
available, fair value
i
s based
o
n
a discounted cash flow models, which takes into account expected
prepayment factors and
t
h
e
degree
o
f
credit risk associated with
t
h
e
loans and
t
h
e
estimated effects
o
f
changes
i
n market interest rates relative
t
o the loans interest rates.
Loans held
i
n portfolio Fair values were estimated
f
o
r
groups
o
f
similar loans based upon type
o
f
loan and maturity. The fair value
o
f
loans was determined estimated
b
y
discounting estimated cash flows
using managements best estimate
o
f
market interest rates
f
o
r
similar collateral. Where quoted market
prices were available, such market prices were utilized
a
s
estimates
f
o
r
fair values. The
f
a
i
r
values
o
f
nonperforming loans were calculated
b
y
discounting estimated cash flows using discount rates
commensurate with
t
h
e
risk associated with
t
h
e
cash flows. During 2007,
t
h
e
Company experienced a
significant unrealized mark-
t
o
-
market decline
i
n
i
t
s
loans held
i
n portfolio
a
s
a resultdue
t
o
o
f
the effect
o
f
actual and expected credit deterioration and increased market risk premiums driven
b
y
the decline
i
n
liquidity
f
o
r
non- conformingnonconforming mortgage loans,
i
n particular subprime and home equity loans.
Because
o
f
t
h
e
illiquidity
i
n
t
h
e
secondary market
f
o
r
nonconforming mortgage loans, theAs a result,
t
h
e
aggregate estimated fair values presented
a
r
e
significantly
i
n
t
h
e
table
f
o
r
loans held
i
n portfolio
i
s lower
than the Company believes
i
s implied
b
y
itss internal estimates
o
f
economic value based upon
t
h
e
total
expected returns
o
n
t
h
e
loans, including internal estimates
o
f
expected credit losses.
Investment
i
n FHLBs FHLB stock does not have a readily determinable fair value
a
s
i
t
i
s non-
marketable and
i
s required
t
o
b
e
sold back
a
t
i
t
s
p
a
r
value. Accordingly,
t
h
e
fair value
o
f
FHLB stock
i
s
i
t
s
p
a
r
value which
i
s also
i
t
s
carrying value.
Mortgage Servicing Rights (MSR) The market
f
o
r
MSRs
i
s not sufficiently liquid
t
o provide
participants with quoted market prices. Accordingly,
t
h
e
Company uses
a
n
optionadjusted spread
(
OAS) valuation approach

t
o determine estimate
t
h
e
fair value
o
f
MSRs. This approach projects cash
flows over multiple interest rate scenarios and discounts these cash flows using riskadjusted discount rates.
Additionally,
a
n
independent broker estimate
o
f
the fair value
o
f
t
h
e
MSR
i
s obtained quarterly along with
other market based evidence. Management uses this information along with OAS valuation methodology
t
o estimate
t
h
e
fair value
o
f
MSR. The fair values
o
f
MSRs
a
r
e
reported
i
n Note 8
t
o the Consolidated
Financial Statements Mortgage Banking Activities.
Deposits Statement No. 107 states that
t
h
e
f
a
i
r
value
o
f
deposits with
n
o
stated maturity, such
a
s
checking deposits, savings deposits and money market deposits,
i
s equal
t
o
t
h
e
amount payable
o
n
demand
a
t
t
h
e
reporting date. Accordingly, the amount included
f
o
r
these deposits
i
n
t
h
e
following table
i
s their
carrying value
a
t
December
3
1
,
2007 and 2006. The fair value reported
i
n
t
h
e
table below excludes
t
h
e
excess fair value
o
f
t
h
e
unrecorded intangible asset associated with such deposits related
t
o
t
h
e
relative
stability
o
f
interest rates paid, even when market interest rates change, and the tendency
o
f
such deposits
t
o
remain with
t
h
e
Company despite changes
i
n market interest rates.
HIGHLY CONFIDENTIAL
Return
The fair value
o
f
deposits with stated maturities, such
a
s
time deposits, was determined using a
projected cash flow methodology. Projected cash flows
o
f
these instruments adjusted
f
o
r
t
h
e
projected
future cost
t
o service these balances, were discounted
a
t
LIBOR swap curve.
Federal funds purchased, commercial paper and securities sold under agreements
t
o repurchase The
carrying amounts represented fair value due
t
o
t
h
e
shortterm nature
o
f
t
h
e
financial instruments.
Advances from FHLBs and other borrowings Advances from FHLBs are valued using the
discounted cash flow methodology. Projected future cash flows
o
f
these borrowings
a
r
e
discounted
a
t
LIBOR swap curve. Other borrowings were valued
a
t
observable traded prices. The pricing methodology
relies
o
n
pricing derived from
t
h
e
most recent observable trades
o
n
these instruments. Where such prices
a
r
e
not observable, the instruments
a
r
e
priced based
o
n
their contractual exit values
o
r
a discounted cash
flow methodology.
Derivatives
Derivative financial instruments Exchange- traded derivatives
a
r
e
valued using quoted prices.
However, few classes
o
f
derivative contracts
a
r
e
listed
o
n
a
n
exchange and thus
t
h
e
majority
o
f
t
h
e
Companys derivative positions are valued using internally developed models that use,
a
s
their basis,
readily observable market parameters. Derivatives that
a
r
e
normally traded less actively
a
r
e
valued based
upon models with significant unobservable market parameters. See Note
2
3
t
o
t
h
e
Consolidated Financial
Statements Derivative Financial Instruments
f
o
r
further information.
The information
i
n
t
h
e
table below presented
i
s based
o
n
fair value estimates
a
s
o
f
December
3
1
,
2007
and 2006. These amounts have
n
o
t
been updated since yearend; therefore,
t
h
e
valuations may have
changed significantly since that point
i
n time. The carrying amounts reported
i
n
t
h
e
table
a
r
e
recorded
o
n
t
h
e
balance sheet under
t
h
e
indicated captions. The estimated fair values
o
f
t
h
e
Companys financial
instruments were
a
s
follows:
December 31,
2007 2006
Carrying
Amount
Fair
Value
Carrying
Amount
Fair
Value
(
i
n millions)
Financial Assets:
Cash and cash equivalents ........................................................ $ 9,560 $ 9,560 $ 6,948 $ 6,948
Federal funds sold and securities purchased under
agreements
t
o resell ................................................................. 1,877 1,877 3,743 3,743
Trading assets ............................................................................ 2,768 2,768 4,434 4,434
Available- for- sale securities ..................................................... 27,540 27,540 24,978 24,978
Loans held
f
o
r
sale .................................................................... 5,403 5,547 44,970 45,060
Loans held
i
n portfolio, net
o
f
allowance
f
o
r
loan losses ........
241,815
2174,8712
5
5
223,330 221,401
Investment
i
n FHLBs ................................................................ 3,351 3,351 2,705 2,705
MSR........................................................................................... 6,278 6,278 6,193 6,193
Derivatives, included
i
n other assets ........................................ 2,093 2,093 748 748
Total financial assets .............................................................. $
298300,68
5
$
2763,8852
6
9
$318,049 $ 316,210
Financial Liabilities:
A
l
l
other deposits( 1
)
.................................................................... $109,069 $109,069 $ 95,082 $ 95,101
Time deposits ............................................................................ 72,857 73,293 118,874 118,874
Federal funds purchased and commercial paper ...................... 2,003 2,003 4,778 4,778
Securities sold under agreements
t
o repurchase ....................... 4,148 4,148 11,953 11,953
Advances from FHLBs ............................................................. 63,852 63,965 44,297 44,283
Other borrowings ...................................................................... 38,958 35,990603 32,852 32,874
i
n other liabilities ................................... 408 408 1,081 1,081
HIGHLY CONFIDENTIAL
Return
Total financial liabilities ........................................................ $291,295 $288,876 $308,917 $ 308,944
(
1
)
Includes checking deposits, savings deposits and money market deposits.
HIGHLY CONFIDENTIAL
Return
From MacKenzie James
Sent Thursday February 21 2008 1130 AM
To Casey Tom Magleby
Alan F Sinkula Diane M Ballenger
Melissa J Landefeld Stewart
Cc
Subject
Attachments
Hume Sophie King Ruthanne Wisddorf Doug Levy Douglas S Cathcart Ron
McMurray John Bates Timothy Hunt James W Stack Feral Jurgens Rolland Baker
Todd Schneider David CFeltgen Cheryl
Goulart 111 Tony West Denise Long
Kevin P Roberts Denise R
RE WMI 1GK Audit Committeedistribution
RE Loan Underwriting Disclosures limited doc loans
attached an email
containing analysis performed by Troy
Haines team in Home Loans
Credit in response to a request from me for data supporting
the conclusion that limited
documentation loans
have a higher
risk of default than
fully
documented loans
amen
original
From
Casey
Sent Thursd
To Magleby AJ
Sophie King
Bates Timothy
David
C Feltg
Cc Goulart II
Subjee
2008 1118 AM
a Diane M Ballenger Melissa J Landefeld Stewart M Hume
orf Doug Levy Douglas S Cathcart Ron McMurray John
Jurgens Rolland Baker Todd Schneider
Denise MacKenzie James Long yin P Rober R
it Committee distribution
We need to have
Cheryl
and Dav
occassions that we waive dcc fo
facts support
our position
performing
worse I have not
credit
On the FV This will
perspective
to the rea
Sent from
my
BlackBe
Original Message
is Magleby
Alan
o Sinkula Diane
y q1e
comment on the no doc comment
They
have told me on several
certain
high quality borrowers We need to make sure the
of the
hype Do we have an analysis
that shows that they are
chedules showg it so we will need to
reg
strants We should provide the
and BV are different
ndheld
ecessa
Ballenger Melissa J Landefeld Stewart M Hume Sophie King
Ruthanne Wisdorf Doug Levy Douglas S Cathcart Ron McMurray John Bates Timothy
Hunt James W Stack Fergal Jurgens Rolland Baker Todd Casey Tom
Cc Goulart
III Tony West Denise MacKenzie James Long
Kevin P Roberts Denise R
HIGHLY CONFIDENTIAL
Return
TonyDiane
21 105842 2008
WMI 10K Audit Committee dis ibution
In
reviewing
the latest version of the 10K I tried to look for a few ahha moments that
investors and
especially analysts
will focus on and draw attention to In 2005s 10K this
was the disclosure about loans underwritten at the Administrative rate vs the
fully
indexed
rate I still receive questions from analysts about that issue on a regular basis In 2006s
10K it was the disclosure of the
purchase
of $25 billion in
subprime
seconds that raised
alarms
that are still being
sounded
today
In this years 10K I think there are 2 items that we have not previously disclosed that will
set off the
analyst
and investor
questions
and will
likely get
a lot of attention from the
media as well And
no
its not the exhaustive list of risk factors that went from 3 12
pages
in 2005s 10K to 4 12
pages
in 2006s 10K to a whopping 9
pages this year
The two
items that will generate the most interest in my estimation are
1 on page 82 of the black lined
version under the Loan Products have features that may
result in increased credit risk
category
the 4th paragraph states A
significant percentage
of Option Arm loans in the Companys portfolio were originated using limited documentation
and a
higher
risk of default than
fully
documented loans As a result a continued downturn
in economic conditions or decrease in housing prices
could cause higher rates of default in
the Companys loan portfolio than would otherwise be anticipated This is the first time
weve mentioned low doc and option arm in the same sentence and this will
generate
a lot of
requests
and a lot of concern In the
past
weve said we havent originated ALT A loans but
that some analysts would consider an Option Arm to be ALT A In fact weve said that the
secondary market did not price Option Arms in the same fashion as ALT A so Option Arms were
somewhere between ALT A loc doc and Prime full Doc but the premium vs Prime was drive
by
the
product features not the documentation So we have a disconnect where now everyone
will most analysts will classify our Option Arm portfolio as ALT A and investors will
question even more so the quality of that portfolio
This
statement was actually revised
from the
prior
version which indicated that a significant percentage
of loans in the
companys portfolio were limited doc This version limits the comments to
option arms which
makes it a little more palatable
2 on
page
166 of the black lined version we have the table which shows the Fair Value of
various Financial Assets and Financial Liabilities The difference on the liability side
between carrying amount and Fair value is only about $3
billion on a total
carrying amount of
$291billion On the Financial Asset side the difference between carrying
amount and Fair
value is $24 billion and the
only asset that has a difference between
carrying amount and
Fair Value is Loans Held in
Portfolio net of allowance for loan losses Here we show a
carrying amount of $241 billion and a Fair Value of $217 billion or a 10 reduction
Analysts and investors and the financial media will be all over that number and will assume
that this means that we will have $24 billion in
chargeoffs on this
portfolio
There is a
paragraph on page 165 which tries to explain
this
variance but I dont believe the media or
the very negative
sell siders who are expecting significant chargeoffs
will focus on or
believe the statements we are making regarding this difference between Carrying and
will
surely
need a lot of
talking points
for this one%i
HIGHLY CONFIDENTIAL
Return
Alan
Alan
Magleby
Washington Mutual
SVP Director of Investor Relations
623 Fifth Avenue
New York NY 10017
New York Offi
Seattle Offic
NOTE This mess
Thank
you
From Sinkula
lenger Melissa
Ala F Wisdorf Doug
Fancher Jennifer A S
Miller Brad Baker
Cc Goulart III Ton
Robbins Marita Lon
Subject
RE WMI
10Attached
please
find the
Tent of tF
e to the
0
2
2
0
6
4148
e including attachments
is CONFIDENTIAL
delivering
this
distribute or
copy
information or an employee or agent responsible for
=nded recipients please do not read disseminate
nformation If
you have received this message
Wednesday Februar 20 2008 929
West Denise MacKenzie James Sutton DariaL Coy
n P Roberts
Denise R
Audit Committee distribution
<< File 10K Audit Comm
Diane Sinkula
SEC
Reporting
Production Manage
2065003178
Committee memo
ee Memofinaldoc >> Thank
you
From Sinkula Diane M
Sent Wednesday February 20 2008
To Ballenger Melissa J Landefeld Stewart M Hume So
F Wisdorf Doug Levy Douglas S Cathcart Ron McMurr
Jennifer A Schwartz
David M Hunt James W Stack Fe
Brad Baker Todd Casey Tom
n error please contact the
e not the intended
sender
andefeld Stewart M Hume Sophie King Ruthanne Maglet
Levy Douglas S Cathcart Ron McMurray John Bates Timothy
hwartz David M Hunt James W Stack Fergal Jurgens
Rollan
Casey Tort
vane
King Ruthanne Magleby
Alan
y John Bates T moth
gal Jurgens Rolland M
HIGHLY CONFIDENTIAL
Return
Cc Goulart III Tony West Denise MacKenzie James Sutton
Robbins Marita Long
Kevin
P Roberts
Denise R
Subject
WMI 10K Audit Committee distribution
Coy Nanc
Please find attached both a clean and blacklined version of the Audit Committee version of
the 10K which was distributed to the Audit Committee earlier today
The
blacklining
shows
changes
from the certification distribution that was sent out last Thursday 214
Cage
of the
process please limit
your
comments to address only significant errors
or omissions and pass
them on to Denise West or Tony Goulart Please also
pass
on
any
comments related to credit to James MacKenzie
rhank
you
Diane Sinkula
SEC Reporting Production
Manager
2065003178
HIGHLY CONFIDENTIAL
Return
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HIGHLY CONFIDENTIAL
Return
From
Sent
To
Cc
Subject
Overa
betwe
disclose
awe on
07 and
s conch
your
iowever deterioration
i
s p
sed on the folio
The decrease i
n the Fed Funds rate has
i
n 2008 mortgage rates have remained
r
f
Fed Funds rate but mortgage rates have risen s
Iditionally interest rates are not the key drive
liquidity
Certain loans are tied to Prime
leg
are floating rate assets the value
i
s n
cing has gotten worse sin
used
b
y ERM to price MBS 1
as rare
nd due
Still limited to no activity
i
n the secondary me
ce 123107 Amount of observable market
tercel loansl woul
imited impact on mortgage rates While
t
t
flat There was a decrease
i
n mortgage r
ice then
t
rmining fair value exit price
ercial ioa
sensitive More
sign
edit and liqu
key drivers are credit and
ie yields have come down Since
to the value i
s the further decline i
n liquid an
evidenced by the widenining credit
spre
ads have also been observed
i
n the Commercial market
t which means that amount of observable market data has not
c
t
to has decreased for Commercial
From Stack Fergal
Sent Friday February 22 2008 1256 PM
To TuckettWilliam E Coultas Dave Coultas Dave Skinne
Cc Goulart III Tony West Denise
Subject RE Fair Value of LHIP
vin Wainer Matth V
nee
t
i
s an
interesting question and
may
be worth some qualitative
discussion first before re running
the entire process What
s timeframe
KevinMatt can i consider this a and Dave and I can discuss on Monda
1 mortgage rates have not moved much despite
the fed cuts so may
not be that much
o
f
an impact
2 helocs are mostly impacted as based on prime rate so the all i
n
gross yield on a heloc i
s less now than
i
t was at year
end
3 the fed funds may have more
o
f
an impact on the debt side
4 liquidity
i
s probably worse now than
i
t was at
year end so prices would be lower
From Tuckett William E
Sent Fri 02222008 1129 Al~
To Stack Fergal
Cc Goulart III Tony West Denise
Subject Fair Value of LHIP
Wajner Matthew F
Tuesday February
26 2008 640 PM
Stack Fergal
Coultas Dave Skinner Kevin Miller Steve
FW Fair Value of LHIP
esoonsE
Fergal
Would
i
t be
possible
to rerun the fair value calculation on the LHIP
using
static 12312007
balances as of the
most recently available market data Specifically we wereasked i
f we could quantify the impact of the recent changes
HIGHLY CONFIDENTIAL
Return
since yearend such as the recent Fed cuts on the fair market value estimate provided i
n the FAS 107 note There
might
be some
thought
to
provide additional discussion within the document about the
possible change
most
likely just a
qualitative discussion Please let me know
i
f you have any questions Thanks for
your
assistance
Bill Tuckett
Financial Reportinf
2065003197
HIGHLY CONFIDENTIAL
since year-end, such as the recent Fed cuts, on the fair market value estimate provided in the FAS 107 note. There might
be some thought to provide additional discussion within the document about the possible change - most likely just a
qualitative discussion. Please let me know if you have any questions. Thanks for your assistance.
Bill Tuckett
Financial Reporting/SEC
206-500-31 97
2
Return
Subject
FW Fair Value PRIORITY CaseyBa1IengerLevyStackWoods
Location Tom Caseys Office
Start
End
Show Time As
Recurrence ne
Meeting
Status Not yet responded
Organizer
Thu 2282008 1230 PM
Thu 2282008 100 PM
Tentative
Woods John F
From Woods John F
Sent Thursday February 28 2008 848 AM
To Casey Tom Ballenger Melissa J LE
Subject Fair Val
When Thursday Febr
Where Tom Caseys Office
Stack Fergal Woods John F
rLevystackWoods
PM100 PM GMTa0800 Pacific Time US Canada Tijuar
When Thursday February 28 2008 1230 PM100 PM GMT0800
Pacific Time
US Canada Tijuana
Where Tom Caseys Office
HIGHLY CONFIDENTIAL
Return
From Wajner Matthew F
Sent Thursday February 28 2008 701 PM
To Coultas Dave Ballenger Melissa
torobinson adeloittecom aschaubdeloittecom
Subject Meeting
materials
Attached are the following documents for our meet
07 Summary
1 Summary of final 107 HFI
2 Home Equity
2nd lien
pricing>
3 Updated Home Equity DCF value
Q Value Estimate
ROAi
S McCarthy Michelle Stack gal
HIGHLY CONFIDENTIAL
Return
UPB Book_ Value
F
V
Price
F
V
Difference UPB Book_Value
F
V
Price
F
V
Difference UPB Book_ Value
F
V
Price
F
V
Difference
Option ARM 51,556,870 52,149,379 96.20 49,597,614 -2,551,765 50,090,462 50,663,762 96.53 48,354,761 - 2,309,001 1,466,408 1,485,617 83.34 1,222,133 - 263,485
JumboHybrid 35,011,591 35,123,399 97.28 34,058,381 -1,065,019 34,635,624 34,745,366 97.40 33,734,796 - 1,010,571 375,967 378,033 86.09 323,679 -54,353
Conforming Hybrid 14,673,853 14,738,429 100.40 14,732,760 -5,669 14,436,610 14,499,892 100.60 14,522,846 22,954 237,244 238,537 88.52 210,018 -28,519
JumboFixed 3,098,289 3,068,296 99.86 3,093,855 25,559 3,065,752 3,036,092 100.00 3,065,602 29,510 32,538 32,204 86.82 28,249 -3,955
Conforming Fixed 2,431,147 2,408,141 99.42 2,417,001 8,860 2,383,859 2,361,320 99.67 2,376,032 14,712 47,289 46,821 87.73 41,488 -5,333
Other 2,592,605 2,584,191 99.04 2,567,645 - 16,546 2,506,831 2,499,729 99.45 2,492,964 - 6,765 85,774 84,462 88.20 75,656 -8,806
Non- Accrual 2,588,915 2,541,693 71.58 1,853,112 - 688,581 0 0 - 0 0 2,588,915 2,541,693 - 1,853,146 - 688,548
Total SFR 111,953,271 112,613,529 96.75 108,320,368 -4,293,162 107,119,137 107,806,162 97.60 104,547,001 - 3,259,161 4,834,134 4,807,367 77.66 3,754,368 -1,052,999
1st Lien 14,999,699 15,124,766 93.12 13,967,825 -1,156,941 14,872,331 14,995,993 93.22 13,863,323 - 1,132,670 127,368 128,773 82.05 104,501 -24,272
2nd Lien 44,548,711 45,091,410 85.38 38,035,397 -7,056,014 43,807,281 44,340,329 86.00 37,674,262 - 6,666,068 741,430 751,081 48.71 361,135 - 389,946
NonAccrual 948,367 951,271 13.66 129,528 - 821,743 0 0 - 0 0 948,367 951,271 13.66 129,528 - 821,743
Total Consumer 60,496,777 61,167,447 86.17 52,132,749 -9,034,698 58,679,612 59,336,322 87.83 51,537,585 - 7,798,737 1,817,166 1,831,125 32.75 595,164 -1,235,961
1
s
t
Lien 13,361,579 13,485,066 88.29 11,796,483 -1,688,583 12,257,077 12,373,358 90.42 11,082,900 - 1,290,458 1,104,503 1,111,708 64.61 713,583 - 398,125
2nd Lien 2,385,735 2,405,094 86.00 2,051,732 - 353,363 2,248,046 2,266,289 86.00 1,933,320 - 332,969 137,688 138,806 86.00 118,412 -20,394
NonAccrual 2,888,772 2,727,180 64.61 1,866,544 - 860,635 0 0 - 0 0 2,888,772 2,727,180 64.61 1,866,544 - 860,635
Total Subprime 18,636,086 18,617,341 84.32 15,714,759 -2,902,581 14,505,123 14,639,647 89.74 13,016,220 - 1,623,427 4,130,963 3,977,694 65.32 2,698,540 -1,279,154
Commercial 41,089,887 41,096,634 97.56 40,085,890 -1,010,744
Commercial Non-
R
E 2,055,491 2,060,565 96.69 1,987,448 - 73,117
Cards 8,830,603 8,830,603 95.8891 8,467,586 - 363,017
ALLL -2,571,349
Total 243,062,116 241,814,769 93.27 226,708,799 - 15,105,970
Prior 243,062,116 241,814,769 89.38 217,254,986 - 24,559,783
Difference 9,453,813 9,453,813
Total Current Delinquent (
3
0 Days
+
)
Summary Page 1 107 Summary
HIGHLY CONFIDENTIAL
Return
SUBACCOUNTNAME Face Amount Book Value
Clean
Price BaseMV
Difference from
BOOK Face Amount Book Value
Clean
Price BaseMV
Difference from
BOOK
Face
Amount Book Value
Clean
Price BaseMV
Difference
fromBOOK
MTA Opt Jumb NegAm1Y 15,112,480 15,220,602 94.37 14,261,928 -958,674 14,694,034 14,799,163 94.68 13,911,824 - 887,339 418,445 421,439 82.53 345,329 - 76,110
5
/ 1
I
O Jumbo 13,845,818 13,898,874 96.98 13,428,228 -470,647 13,736,641 13,789,279 97.07 13,334,559 - 454,720 109,177 109,596 85.79 93,661 - 15,935
5
/ 1 Jumbo 8,346,832 8,384,726 97.22 8,115,144 -269,582 8,249,192 8,286,643 97.35 8,030,988 - 255,655 97,640 98,083 86.21 84,174 - 13,909
MTA Opt Conf NegAm1Y 6,895,125 6,939,056 98.20 6,771,343 -167,713 6,752,133 6,795,153 98.47 6,648,705 - 146,447 142,993 143,904 85.77 122,638 - 21,266
5
/ 1 Conforming 6,755,558 6,783,265 100.07 6,759,949 - 23,316 6,658,034 6,685,341 100.23 6,673,310 - 12,032 97,524 97,924 88.85 86,655 - 11,269
MTA Opt Conf NegAm3Y 6,559,991 6,713,755 99.27 6,511,840 -201,915 6,324,901 6,473,154 99.70 6,305,850 - 167,304 235,091 240,601 87.62 205,983 - 34,618
7
/ 1 Jumbo 5,263,532 5,271,750 98.10 5,163,538 -108,211 5,217,177 5,225,322 98.20 5,123,394 - 101,929 46,355 46,427 86.61 40,149 -6,278
10/ 1 and Other Hybrid 4,877,572 4,861,298 96.63 4,713,075 -148,223 4,845,485 4,829,318 96.70 4,685,713 - 143,605 32,087 31,980 85.35 27,387 -4,592
5
/ 1
I
O Conforming 4,762,237 4,773,496 101.04 4,811,570 38,074 4,717,712 4,728,865 101.15 4,772,159 43,294 44,525 44,631 88.50 39,406 -5,224
COFI Option ARM Jumbo NegAm 4,230,054 4,270,729 95.14 4,024,558 -246,171 4,128,923 4,168,626 95.43 3,940,369 - 228,257 101,131 102,103 83.24 84,180 - 17,923
3
0 Year Fixed Jumbo 2,702,722 2,675,006 99.84 2,698,288 23,282 2,670,185 2,642,802 99.99 2,670,036 27,234 32,538 32,204 86.82 28,249 -3,955
COFI Option ARM Conf NegAm 2,672,457 2,686,810 98.96 2,644,624 - 42,187 2,617,260 2,631,316 99.09 2,593,443 - 37,874 55,197 55,494 90.03 49,693 -5,801
Nonaccrual Fxd 2,588,915 2,541,693 71.58 1,853,112 -688,581 0 0 0.00 0 0 2,588,915 2,541,693 71.58 1,853,146 -688,548
MTA Opt Conf NegAm0Y 2,413,537 2,423,523 97.92 2,363,286 - 60,237 2,369,385 2,379,188 98.14 2,325,363 - 53,826 44,152 44,334 85.89 37,922 -6,412
3
0 Year Fixed Conforming 2,148,275 2,126,623 99.33 2,133,821 7,197 2,102,703 2,081,511 99.60 2,094,293 12,781 45,571 45,112 87.59 39,917 -5,195
ARM Conforming 1,500,995 1,520,422 98.58 1,479,661 - 40,762 1,454,151 1,472,973 98.98 1,439,381 - 33,592 46,844 47,450 86.18 40,369 -7,081
3
/ 1 Jumbo 1,494,468 1,502,164 98.72 1,475,402 - 26,762 1,464,127 1,471,666 98.96 1,448,843 - 22,823 30,341 30,497 87.59 26,576 -3,922
3
/ 1 Conforming 1,486,481 1,493,063 101.73 1,512,203 19,140 1,442,912 1,449,301 102.07 1,472,742 23,441 43,569 43,762 90.58 39,465 -4,297
ARM Jumbo 1,183,370 1,204,587 98.28 1,162,994 - 41,593 1,123,002 1,143,138 98.96 1,111,298 - 31,839 60,367 61,450 85.70 51,732 -9,717
Custom Construction Adj 1,153,313 1,156,969 99.40 1,146,430 - 10,539 1,124,738 1,128,303 99.70 1,121,376 - 6,927 28,575 28,666 91.11 26,035 -2,631
Land Loans Fixed 684,759 684,939 99.25 679,611 -5,328 675,767 675,945 99.39 671,654 - 4,290 8,992 8,994 88.40 7,949 -1,045
3
0
Y
r
Government Fxd 433,121 419,920 97.17 420,877 958 386,866 375,075 98.48 380,999 5,924 46,255 44,845 86.22 39,882 -4,963
1
5 Year Fixed Jumbo 395,567 393,290 100.00 395,567 2,276 395,567 393,290 100.00 395,567 2,276 0 0 0.00 0 0
1
5
Year Fixed Conforming 282,873 281,518 100.11 283,180 1,662 281,155 279,809 100.21 281,740 1,931 1,717 1,709 91.46 1,571 - 138
Land Loans Adj 208,222 209,025 99.67 207,528 -1,497 207,314 208,115 99.72 206,734 - 1,381 907 911 87.39 793 - 118
7
/ 1 Conforming 168,582 168,183 100.47 169,378 1,194 163,800 163,412 100.89 165,255 1,842 4,782 4,771 86.22 4,123 - 648
Custom Construction Fixed 113,191 113,338 100.01 113,199 - 139 112,146 112,292 100.05 112,201 -
9
1 1,045 1,046 95.42 997 -
4
9
Total SFR 111,953,271 112,613,529 96.75 108,320,368 -4,293,162 107,119,137 107,806,162 97.60 104,547,001 -3,259,161 4,834,134 4,807,367 77.66 3,754,368 - 1,052,999
Clean
Price BaseMV
Difference from
Clean
Price BaseMV
Difference from
BOOK
Face
Amount Book Value
Clean
Price BaseMV
Difference
fromBOOK
Home Equity LOC Adj 2nd Lien 31,311,665 31,840,752 85.35 26,725,674 -5,115,078 30,759,129 31,278,879 86.00 26,452,851 -4,826,028 552,536 561,873 49.38 272,823 -289,050
FRLO Fxd 2nd Lien 9,920,791 9,920,230 85.53 8,484,760 -1,435,470 9,799,427 9,798,873 86.00 8,427,508 -1,371,365 121,364 121,357 47.17 57,252 - 64,105
Mortgage Plus - 1st Lien Fixed 3,744,072 3,742,998 93.90 3,515,718 -227,281 3,714,002 3,712,936 94.00 3,491,161 - 221,775 30,071 30,062 81.66 24,556 -5,506
Home Equity Fxd 1st Lien
3
0 YR 3,455,975 3,477,937 91.42 3,159,419 -318,518 3,443,675 3,465,558 91.45 3,149,240 - 316,318 12,301 12,379 82.74 10,178 -2,201
Mortgage Plus - 1st Lien Adj 3,391,493 3,451,365 93.80 3,181,347 -270,018 3,335,937 3,394,828 94.00 3,135,781 - 259,047 55,556 56,537 82.02 45,566 - 10,971
Home Equity LOC Adj 1st Lien 2,558,458 2,593,075 93.32 2,387,627 -205,448 2,534,313 2,568,603 93.43 2,367,808 - 200,795 24,145 24,472 82.08 19,819 -4,654
Home Equity Fxd 2nd Lien
3
0 YR 2,211,026 2,222,454 84.97 1,878,666 -343,788 2,157,517 2,168,668 86.00 1,855,465 - 313,203 53,509 53,786 43.36 23,201 - 30,585
Home Equity Fxd 1st Lien
1
5 YR 1,170,054 1,179,776 91.56 1,071,259 -108,518 1,166,688 1,176,382 91.58 1,068,452 - 107,929 3,367 3,395 83.35 2,806 - 588
Nonaccrual Fxd 948,367 951,271 13.66 129,528 -821,743 0 0 0.00 0 0 948,367 951,271 13.66 129,528 -821,743
Home Equity Fxd 2nd Lien
1
5
Y
R 818,354 821,867 85.52 699,818 -122,049 809,890 813,368 86.00 696,505 - 116,862 8,464 8,500 39.14 3,313 -5,187
FRLO Fxd 1st Lien 679,646 679,615 96.00 652,456 - 27,158 677,718 677,686 96.04 650,880 - 26,806 1,929 1,929 81.71 1,576 - 353
Unsecured LOC CMT 87,673 87,673 85.95 75,352 - 12,321 86,497 86,497 86.00 74,388 - 12,110 1,176 1,176 82.03 964 - 211
Home Equity Adj 86,136 83,907 85.92 74,010 -9,897 85,062 82,860 86.00 73,153 - 9,707 1,075 1,047 79.70 857 - 190
Unsecured LOC Adj 63,662 64,991 85.89 54,682 - 10,309 62,162 63,461 86.00 53,460 - 10,001 1,499 1,531 81.53 1,222 - 308
Collateral Fixed 31,046 31,123 85.86 26,657 -4,465 29,647 29,720 86.00 25,496 - 4,224 1,399 1,403 82.98 1,161 - 242
Current Loans Delinquent Loans
SFR Loans ( Prime)
Consumer
Reported (FAS107) (All Loans)
Reported (FAS107) (
A
l
l
Loans) Current Loans Delinquent Loans
Details Page 2 107 Summary
HIGHLY CONFIDENTIAL
Return
Unsecured LOC Fxd 7,630 7,630 85.96 6,558 -1,071 7,537 7,537 86.00 6,482 - 1,055
9
2
9
2 82.78
7
7 -
1
6
Personal Fxd 5,287 5,302 85.94 4,543 - 759 5,178 5,193 86.00 4,453 - 740 109 109 82.87
9
0 -
1
9
Auto/ Boat/ RV Fixed 4,816 4,856 85.92 4,138 - 718 4,705 4,744 86.00 4,047 - 698 111 112 82.48
9
1 -
2
0
Manufactured Housing Fixed 527 528 86.08 454 -
7
4 431 432 86.00 371 -
6
1
9
6
9
6 86.43
8
3 -
1
3
Manufactured Housing Adj
9
8
9
9 86.00
8
4 -
1
4
9
8
9
9 86.00
8
4 -
1
4 0 0 0.00 0 0
Total Consumer 60,496,777 61,167,447 86.17 52,132,749 -9,034,698 58,679,612 59,336,322 87.83 51,537,585 -7,798,737 1,817,166 1,831,125 32.75 595,164 - 1,235,961
Clean
Price BaseMV
Difference from
Clean
Price BaseMV
Difference from
BOOK
Face
Amount Book Value
Clean
Price BaseMV
Difference
fromBOOK
Subprime Fixed
p
p 4,700,342 4,767,298 89.66 4,214,414 -552,883 4,562,465 4,627,457 90.42 4,125,400 - 502,057 137,877 139,841 64.56 89,015 - 50,826
Nonaccrual Fxd 2,888,772 2,727,180 64.61 1,866,544 -860,635 0 0 0.00 0 0 2,888,772 2,727,180 64.61 1,866,544 -860,635
Subprime
2
/
2
8 2Y 2,878,337 2,876,906 86.41 2,487,285 -389,620 2,430,099 2,428,891 90.42 2,197,306 - 231,585 448,238 448,015 64.69 289,980 -158,035
Subprime
H
E 2nds Fxd 2,385,735 2,405,094 86.00 2,051,732 -353,363 2,248,046 2,266,289 86.00 1,933,320 - 332,969 137,688 138,806 86.00 118,412 - 20,394
Subprime Fixed
0
Y 1,481,828 1,496,393 89.69 1,329,095 -167,298 1,440,023 1,454,177 90.42 1,302,075 - 152,102 41,805 42,216 64.63 27,020 - 15,196
Subprime
2
/
2
8 0Y 1,315,259 1,325,135 86.87 1,142,609 -182,526 1,134,819 1,143,340 90.42 1,026,108 - 117,232 180,440 181,795 64.56 116,501 - 65,294
Subprime
2
/
2
8 3Y 1,068,401 1,093,142 87.49 934,755 -158,387 948,610 970,576 90.42 857,737 - 112,839 119,791 122,565 64.29 77,018 - 45,548
Subprime
3
/
2
7
p
p 954,037 961,176 87.75 837,156 -124,020 854,985 861,383 90.42 773,081 - 88,302 99,052 99,793 64.69 64,075 - 35,718
Subprime
3
/
2
7 0Y 577,947 579,900 87.95 508,277 - 71,623 522,565 524,331 90.42 472,506 - 51,825 55,382 55,569 64.59 35,772 - 19,797
Subprime
5
/
2
5
p
p 235,964 234,908 89.10 210,242 - 24,666 223,823 222,822 90.42 202,382 - 20,440 12,141 12,086 64.74 7,860 -4,226
Subprime
5
/
2
5 0Y 73,924 73,789 88.85 65,678 -8,111 69,353 69,226 90.42 62,709 - 6,517 4,571 4,563 64.95 2,969 -1,594
Subprime ARM
p
p
52,310 52,841 88.46 46,274 -6,567 48,314 48,804 90.42 43,685 - 5,118 3,996 4,037 64.76 2,588 -1,449
Subprime ARM 0Y 23,230 23,579 89.10 20,697 -2,881 22,020 22,350 90.42 19,911 - 2,440 1,210 1,228 65.00 787 - 442
Total Subprime 18,636,086 18,617,341 84.32 15,714,759 -2,902,581 14,505,123 14,639,647 89.74 13,016,220 -1,623,427 4,130,963 3,977,694 65.32 2,698,540 - 1,279,154
Changes fromprior version
1
)
Removed OA haircut
o
f
4
2
)
HE 2nds and other small misc Consumer accounts changed from
8
4
t
o
8
6
3
)
Subprime HE 2nds changed from
8
4
t
o
8
6
OA Only 51,556,870 52,149,379 96.20 49,597,614 -2,551,765
Subprime Channel
Reported (FAS107) (
A
l
l
Loans) Current Loans Delinquent Loans
Details Page 3 107 Summary
HIGHLY CONFIDENTIAL
Return
Consumer 2nd Liens Range
o
f
Values
Discounted Cash Flow Value - Performing 92.50
Implied Securitization Static Pool Value 75.00
CWHEL 2006- A
A
1
DQ Value Implied Performing Value
7
-
Dec
Delinq 30-
5
9
(%) 2.38
6
6
Delinq 60-
8
9
(%) 2.47
2
5
Delinq 90+ (%) 6.55
1
4
81.15
RFMS2 2004- HS1 AI6 Just Group 1
7
-
Dec
Delinq 30-
5
9
(%) 1.25 0.53%
6
6
Delinq 60-
8
9
(%) 0.77 0.61%
2
5
Delinq 90+ (%) 0.65 0.45%
1
4
75.92
CWHEL 2006- C
2
A Just Group 2
7
-
Dec
Delinq 30-
5
9 (%) 2.89 3.12%
6
6
Delinq 60-
8
9
(%) 2.01 2.26%
2
5
Delinq 90+ (%) 5.68 6.59%
1
4
80.29
NCHET 2004- A AII7 Just Group 2
7
-
Dec
7
-
Dec
Delinq 30-
5
9
(%) 1.45 1.08%
6
6
Delinq 60-
8
9
(%) 0.33 0.07%
2
5
Delinq 90+ (%) 0.79 0.80%
1
4 75.80
Average 78.29
2.00
Ajustment
f
o
r
Better Portfolio Credit
v
s
Securitizations 80.29
Range 80.29 92.50
Midpoint 86.39
Rounded $
8
6
0
0
Sheet1 Page 1 HEQ Value Range (
4
)
(
2
)
86.00
1
.
A discounted cash flow analysis using stress lossand ROA assumptions suggests a value
o
f
$92.50.
2
.
Although Wamu has never securitized prime HELOC's, there have been a few Countrywide and GMAC HELOCs deals.
Very limited recent secondary trade color has been obtained which suggests a securitized value
o
f
$
7
5
f
o
r
the entire capital
structure
o
n
a static pool basis.
Using the same delinquent pricing
w
e
used
f
o
r
DQ pricing applied
t
o
t
h
e
DQ loans within these deals, suggests that non- Wamu
performing collateral
i
s worth
a
n
average
o
f
$78.25.
Wamu's collateral
i
s superior
t
o
t
h
e
the CW deal
f
o
r
t
h
e
following reasons:
o Wamus higher concentration
o
f
Retail originated collateral (93%) would
b
e
expected
t
o get a higher price than Countrywides
mostly wholesale collateral.
o Retail delinquency performance
i
s much stronger than wholesale. (2.9% wholesale NPA
v
s
1.6%
f
o
r
the HEQ portfolio
a
s
a
whole)
o Wamus credit mix
i
s much stronger than CW deal:
WA FICO WA LTV
Wamu 728
7
1
CWHEL 2006- A 705
8
6
o This implies that the Wamu securitized value would
b
e
more, perhaps 2 points
Using securitization implied performing
a
s
a floor, and the DCF analysis
a
s
a ceiling, this suggests a range
o
f
$80.25 - $92.50.
The midpoint
o
f
the range
i
s approximately $86.
HIGHLY CONFIDENTIAL
Return
estimated estimated
1
1
/
3
0
/
2007
Portfolio
ROA* 140 ROA 140 ROA 150 ROA 200 ROA
Balance
6.30%
Loss
6.30%
Loss
9.5%
Loss
9.5%
Loss
12.60%
Loss ROA Duration
HELOC 30,172,134,491 7.745 95.36 94.27 92.21 91.77 86.5 -4.36
FRLO 5,318,659,512 7.713 97.56 96.8 94.41 94.106 89.52 -3.04
FRLO
I
O 3,850,332,075 8.151 98.86 97.17 95.71 95.034 90.34 -6.76
HEL 3,114,040,435 7.915 98.24 96.88 95.09 94.546 90.3 -5.44
Total 2nd Lien 42,455,166,514 7.79 96.16 95.04 93.01 92.562 87.51 -4.48
80.25 88.21 87.65 86.63 86.41 83.88
Product Code Coupon
Sheet1 Page 1 HEQ Value Estimate ROA
v
s
Loss
HIGHLY CONFIDENTIAL
Return
From
Sent
To
Subject
All
I
n
reviewinc
loans last night from 70 to
e Stack Fergal
price of the Subprime 2nd Lien
ie analysis and VC vote yesterday was specific to Consumer 2nd Lien loans and did not include Subprime 2nd Lien
ans I recommend that we change
the
price
of the Subprime
2nd Lien loans back to 70
Changing the price
back
t
c
would result
i
n an additional discount of $382mm $24b UPB x 16 points This means that total discount goes from
$151 billion to $155billion
As
support
for the lower
price we reviewed the credit characteristics of the
Subprime
2nd Liens
they were worse than
the Consumer 2nd Liens which supports the price difference Heres a snapshot of the characteristics
2nd Lien Consurr
2nd Lien Subprime 670 94
Conduit
Additionaly the Consumer 2nd Liens are primarly retail originated The Subprime 2nd Liens are 3rd party originated
purchased
e believe these differences support Si
Loans
Ive attached
CLTV
r Lien Loans remain
evised version of the schedule I sent out
Ten compared to the 86 for Consumer
Let
me know i
f
you have any questions
107Summarvxls
From
Sent
To
Subject
Wajner Matthew F
Thursday February 28 2008 701 PM
Coultas Dave Ballenger Melissa J Levy Douglas S McCarthy Michelle Stack Fergal torobinson d
aschaubdeloittecom
Meeting materials
Attached are the
following
documents for our meeting
iai 7 HFI values compared to prior value
Home Equity 2nd lien pricing
Wajner
Matthew F
Friday February 29 2008852 AM
Ballenger Melissa J McCarthy Michelle Levy Douglas S Coulta
FW
Meeting materials
HBQ Value Range
n
HIGHLY CONFIDENTIAL
Return
3 Updated Home Equity DCF value
tEQ Value Estimate
ROA vs
HIGHLY CONFIDENTIAL
3. Updated Home Equity DCF value -->
,EQ Value Estimate
ROA vs Loss".
2
Return
UPB Book_ Value
F
V
Price
F
V
Difference UPB Book_Value
F
V
Price
F
V
Difference UPB Book_ Value
F
V
Price
F
V
Difference
Option ARM 51,556,870 52,149,379 96.20 49,597,614 -2,551,765 50,090,462 50,663,762 96.53 48,354,761 - 2,309,001 1,466,408 1,485,617 83.34 1,222,133 - 263,485
JumboHybrid 35,011,591 35,123,399 97.28 34,058,381 -1,065,019 34,635,624 34,745,366 97.40 33,734,796 - 1,010,571 375,967 378,033 86.09 323,679 -54,353
Conforming Hybrid 14,673,853 14,738,429 100.40 14,732,760 -5,669 14,436,610 14,499,892 100.60 14,522,846 22,954 237,244 238,537 88.52 210,018 -28,519
JumboFixed 3,098,289 3,068,296 99.86 3,093,855 25,559 3,065,752 3,036,092 100.00 3,065,602 29,510 32,538 32,204 86.82 28,249 -3,955
Conforming Fixed 2,431,147 2,408,141 99.42 2,417,001 8,860 2,383,859 2,361,320 99.67 2,376,032 14,712 47,289 46,821 87.73 41,488 -5,333
Other 2,592,605 2,584,191 99.04 2,567,645 - 16,546 2,506,831 2,499,729 99.45 2,492,964 - 6,765 85,774 84,462 88.20 75,656 -8,806
Non- Accrual 2,588,915 2,541,693 71.58 1,853,112 - 688,581 0 0 - 0 0 2,588,915 2,541,693 - 1,853,146 - 688,548
Total SFR 111,953,271 112,613,529 96.75 108,320,368 -4,293,162 107,119,137 107,806,162 97.60 104,547,001 - 3,259,161 4,834,134 4,807,367 77.66 3,754,368 -1,052,999
1st Lien 14,999,699 15,124,766 93.12 13,967,825 -1,156,941 14,872,331 14,995,993 93.22 13,863,323 - 1,132,670 127,368 128,773 82.05 104,501 -24,272
2nd Lien 44,548,711 45,091,410 85.38 38,035,397 -7,056,014 43,807,281 44,340,329 86.00 37,674,262 - 6,666,068 741,430 751,081 48.71 361,135 - 389,946
NonAccrual 948,367 951,271 13.66 129,528 - 821,743 0 0 - 0 0 948,367 951,271 13.66 129,528 - 821,743
Total Consumer 60,496,777 61,167,447 86.17 52,132,749 -9,034,698 58,679,612 59,336,322 87.83 51,537,585 - 7,798,737 1,817,166 1,831,125 32.75 595,164 -1,235,961
1
s
t
Lien 13,361,579 13,485,066 88.29 11,796,483 -1,688,583 12,257,077 12,373,358 90.42 11,082,900 - 1,290,458 1,104,503 1,111,708 64.61 713,583 - 398,125
2nd Lien 2,385,735 2,405,094 70.00 1,670,014 - 735,080 2,248,046 2,266,289 86.00 1,933,320 - 332,969 137,688 138,806 86.00 118,412 -20,394
NonAccrual 2,888,772 2,727,180 64.61 1,866,544 - 860,635 0 0 - 0 0 2,888,772 2,727,180 64.61 1,866,544 - 860,635
Total Subprime 18,636,086 18,617,341 82.28 15,333,042 -3,284,299 14,505,123 14,639,647 89.74 13,016,220 - 1,623,427 4,130,963 3,977,694 65.32 2,698,540 -1,279,154
Commercial 41,089,887 41,096,634 97.56 40,085,890 -1,010,744
Commercial Non-
R
E 2,055,491 2,060,565 96.69 1,987,448 - 73,117
Cards 8,830,603 8,830,603 95.8891 8,467,586 - 363,017
ALLL -2,571,349
Total 243,062,116 241,814,769 93.11 226,327,082 - 15,487,688
Prior 243,062,116 241,814,769 89.38 217,254,986 - 24,559,783
Difference 9,072,096 9,072,095
Total Current Delinquent (
3
0 Days
+
)
Summary Page 1 107 Summary
HIGHLY CONFIDENTIAL
Return
Note 24 Fair Value of Financial Instruments
The table below
presents
the
carrying
value and fair value of the
Companys financial
instruments i
n accordance with SFAS FASB Statement
No 07 Disclosures about Fair Value
of
Financial Instruments Statement No 1072
Accordingly
the
Company has not included certain
material items
i
n this disclosure such as the value of the
longterm relationships with its deposit and
credit card
customers since these intangibles are not financial instruments The table also excludes the
values of leases and pension and benefit
obligations as well as other nonfinancial assets and
liabilities such as premises and
equipment
net tax assetsliabilities real estate held for investment
foreclosed assets and goodwill In addition the value of the
servicing rights for loans sold
i
n which the
MSR has not been
capitalized i
s excluded
Also as
required
the disclosure excludes
The tax ramifications related to the realization of unrealized gains and losses
Any premium or discount that could result from
offering
for sale at one time the entire
holdings of a particular instrument and
The excess fair value associated with deposits with no fixed
maturity
The items excluded are integral to a full assessment of the
Companys
financial
position and the
value of its net assets Accordingly the total of the fair value estimates
presented
do not
represent
and
should not be construed to
represent
the
underlying
value of the
Company
Fair value i
s defined as the price that would be received to sell an asset or paid uperto
transfer efa liability i
n an orderly transaction between market
participants a
t
the measurement date
The Companys fair value measurements are
generally
determined based on assumptions that market
participants would use in pricing the asset or liability
and are based on market data obtained from
independent sources where available However i
n certain cases where an active secondary market
does not exist the
Company
uses its own internal valuation models
exampleLo estimate the fair value These models
incorporate inputs such as forward yield curves
loan
prepayment assumptions
market volatilities and
pricing spreads utilizing marketbased
inputs
where
readily available These valuations are the
Companys estimates and are often calculated based on
appreciate internal valuation
policies
the economic and
competitive environment estimates of future
loss
experience
the risk characteristics of the financial instruments and other such factors Therefore
the results cannot be determined with
precision and
may
not be realized
i
n an actual sale or immediate
settlement of the instruments in a current market exchange
The
degree
of
management judgment
involved in
determining the fair value of a financial
instrument or other asset i
s
dependent upon
the
availability
of
quoted
market
prices or observable
market value
inputs
For financial instruments that are
actively
traded
i
n the
marketplace or whose
values are based on readily
available market value data little i
f
any subjectivity i
s
applied when
determining
the instruments fair value When observable market
prices
and data are not readily
available significant management judgment often
i
s
necessary
to estimate fair value In those cases
different
assumptions
could result i
n
significant changes i
n valuation
Furthermore there
may
be
inherent weaknesses in
any
calculation
technique
and
changes
in the
underlying assumptions used
including
discount rates and estimates of future cash flows that could
significantly affect the results
The
following methods and assumptions were used to estimate the fair value of each class of
financial instrument as of December
31 2007 and 2006
Financial Assets
Cash and cash
equivalents The Company considers the
carrying amounts of cash and cash
equivalents
carried at cost including cash on hand amounts due from banks US
Treasury bills
r
t
7o g Iseo FtNAz c cc< L4 r` LZZzaP
1
HIGHLY CONFIDENTIAL
Return
overnight
investments and commercial
paper
with maturities when
purchased
of three months or less
to approximate fair value due to their shortterm nature and minimal credit risk
purchased
under
agreements to resell The
carrying amount
represented fair value Federal funds sold and securities
purchased
under resale
agreements are
investments of
high liquidity
and have characteristics similar to cash
Trading assets Trading assets are carried at fair value Fair value
i
s based on quoted prices
when available
i
n an active market If
quoted
market
prices are not available then fair values are
estimated using pricing models quoted prices
characteristics or discounted
cash flows
Availableforsale securities Availableforsale securities are carried at fair value Fair value
i
s
based on quoted prices
when available in an active market
I
f
quoted market
prices are not available
then fair values are estimated using pricing models quoted prices
characteristics or discounted cash flows The fair values of availableforsale securities are reported
i
n Note 5 to the Consolidated Financial Statements Securities
of
the Consolidated Financial
States ents
Loans held for sale The fair value of loans
designated as held for sale
i
s
generally
based on
observable market
prices
of securities that have loan collateral or interests
i
n loans that are similar to
the held for sale loans or whole loan sale
prices i
f
formally
committed
I
f
market prices are not
readily available fair value
i
s based on a discounted cash flow model which takes into account
expected prepayment
factors and the
degree
of credit risk associated with the loans and the estimated
effects of changes i
n market interest rates relative to the loans interest rates
Loans held
i
n
portfolio
Fair values were estimated for
groups
of similar loans based
upon
type
of loan and
maturity
The fair value of loans was determined
by discounting estimated cash flows
using managements
best estimate of market interest rates for similar collateral tcrct rates
efej t
credit
isk Where
quoted marketprices were available such
market
prices were utilized as estimates for fair values The fair values of
noriperforrning
loans were
calculated
b
y
discounting estimated cash flows
using discount rates commensurate with the risk
associated with the cash flows
During 2007 the
Company experienced a significant
unrealized marktomarket decline
i
n its
loans held
i
n portfolio ue to the effect of actual and
expected
credit deterioration and
increased market risk
premiums
driven
by
the decline in
liquidity
for
nonconforming mortgage loans
in
particular subprime
and home
equity
loans Asa result the
aggregate
estimated fair value presented
in the table for loans held in
portfolio i
s lower than what the
company
believes
i
s
implied by its
internal estimates of value based
upon
the total expected returns on the loans includin internal
I
estimates of expected credit losses
ifitefnal timate of economic aluc
Investment in FHLBs FHLB stock does not have a readily determinable fair value as
i
t
i
s
nonmarketable
and
i
s
required
to be sold back at its
par
value Accordingly the fair value of FHLB stock
i
s its
par
value which
i
s also its
carrying
value
Mortgage Servicing Rights MSR
The market for MSRs
i
s not sufficiently liquid to provide
participants
with
quoted
market
prices Accordingly the Company uses an optionadjusted spread
OAS
valuation
approach to determine the fair value of MSRs This
approach projects
cash flows
over multiple
interest rate scenarios and discounts these cash flows using riskadjusted
discount rates
ernasee
eideiieAdditionally an independent broker estimate of the fair value of the MSR
i
s obtained
quarterlyalongwith
other market based evidence
Management uses this information
along
with OAS
valuation
methodology to estimate the fair value of MSR The fair values of MSRs are reported i
n
HIGHLY CONFIDENTIAL
Return
Note 8 to the Consolidated Financial Statement Mortgage Banking Activities of the Consolidated
Financial Sttcncntr
Deposits PASStatement No 107 states that the fair value of
deposits
with no stated
maturity
such as
savingschecking deposits savings deposits and money market deposits i
s equal to the amount payable
on demand at the
reporting
date Accordingly the amount included for these deposits i
n the following
table i
s their
carrying
value at December 31 2007 and 2006 The fair value reported i
n the table
below excludes the excess fair value of the unrecorded
intangible
asset associated with such
deposits
related to the relative stability
of interest rates
paid even when market interest rates
change
and the
tendency
of such
deposits to remain with the
Company despite changes i
n market interest rates
The fair value of
deposits
with stated maturities such as time
deposits was determined
using
projected
cash flows methodology Projected
cash flows of these instruments
adjusted
for the eta
of anticipated ctentio projected future cost to service these balances were discounted at LIBOR
Swap
curve
with similar 4rties
satifees
eH9
Federal funds
purchased
commercial
paper
and securities sold under agreements to repurchase
The
carrying
amounts represented fair value due to the shortterm nature of the financial instruments
Advances from FHLBs and other borrowings Advances fromFHLBs are valued using the
discounted cash flow methodology Projected future cash flows of these borrowings are discounted at
LIBOR
Swap curve Other borrowings were valued at observable tradedprices The Pricin
methodology
relies on
pricing
derived from the most recent observable trades on these instruments
Where such prices are not observable the instruments are priced
based on their contractual exit values
or a discounted cash flow methodology
Derivatives
Derivative financial instruments
Exchangetraded
derivatives are valued
using quoted prices
However few classes of derivative contracts are listed on an exchange
and thus the
majority
of the
Companys
derivative positions are valued using internally developed
models that
use as their basis
readily
observable market
parameters
Sideh deFivaies include basic interest rate
swaps
and
aptionril
sDerivatives that are normally traded less actively
stteh as maAgage
lean are
valued based
upon
models with significant unobservable market
parameters
See Note 23 to the
Consolidated Financial
C
tsStatements Derivative Financial Instruments for further
information
HIGHLY CONFIDENTIAL
Return
The information in the table below
presented i
s based on fair value estimates as of December 31
2007 and 052006 These amounts have not been
updated
since
yearend therefore the valuations
may
have
changed significantly
since that point i
n time The carrying amounts
reported i
n the table are
recorded inon the balance sheet under the indicated captions
The estimated fair value of the
Companys
financial instruments was as follows
December 31
2007 2006
Carrying Fair
Carrying
Fair
in millions
Financial Assets
Cash and cash equivalents $ 9560 $ 9560 $ 6948 $ 6948
purchased
under
agreements
to resell 1877 1877 3743 3743
Trading assets
2768 2768 4434 4434
Availableforsale securities
27540 27540 24978 24978
Loans held for sale
5403 5547 44970 45060
Loans held
i
n
portfolio net of allowance for loan losses
226447
3241815
327 223330 221401
Investment
i
n FHLBs
3351 3351 2705 2705
MSR
6278 6278 6 1 93
6193
i
n other assets 2093 2093 748 748
Total financial assets $ $$31621 0
300 b8 285735
5 341
All other deposits $109069 $109069 $ $
95082118 9510118
874 874
Time
deposits 72857 73293
1187495 11887495
082 O1
Federal funds
purchased
and commercial
paper 2003 2003 4778 4778
Securities sold under agreements to repurchase 4148 4148 11953 11953
Advances from FHLBs
63852 63965 44297 44283
Other borrowings 38958 35597999 32852 32874
i
n other liabilities 408 408 1081 1081
Total financial liabilities 2 $ 5308211 3 1S A 9 4
288483$
6
Includes checking deposits savings deposits and money market deposits

HIGHLY CONFIDENTIAL
Return
RF1 Work
paper
er
Preparation
ec
TO
Financial Reporting
Email GM Financial Reporting RFI
Fax 2063771583
Mailstop FIS0803
FROM Shobhit GaurSteven Tholl
I I 706
selected
fair values WMI
only
Instructions Below
i
s our workpaper preparation checklist which should aid
providers
of information in
compiling complete and accurate information i
n a standardized format This checklist must be
completed
for each Request for Information RFI on Financial
Reportings
RFI List When
submitting the requested
information please submit this checklist with
your
name and the RFI number indicated above We
appreciate your cooperation i
n
our efforts to maintain standardization and data
integrity validation Thank
TASK
Ensure that the information provided on the leadshcet
summary workpaper i
s
supported by appropriate
details iesystem reports GiIL Indicate the source
information on details
i
f applicable
Retain in
your
files copies of workpapers submitted
along
with
any detailed system reports ie ED
Summit as Internal Audit Deloitte Touche andor
the bank regulators may request them
Ensure mathematical accuracy of all leadsheets and
supporting details ie footing crossfooting and
rounding
Agreereconcile system information ie ED Summit
to the consolidation or OL where applicable Provide
an explanation for
any discrepancies
For monthly QTD and YTD information ensure that
the balances roll forward properly from previously
reported balances where applicable
Provide comments for any significant fluctu
prior periods
Preparers
I
Reviewers
Signoff and
l
j
Signoff and
Date Date
5
508
Restated with HL
numbers
1s
10
Restated with
numbers
SG 022908
SG
stated with HL
numbers
G 022
G
2508
Restated
numbers
SG 022908
022508
Restated ss ith HL
numbers
S 02129
SG
0212508
Restated with HI
numbers
SG 022908
SDT
Restated with HI
numbers
SDT 0212908
022608
SID
Restatedwith Hl
7T 022908
0226108
SID
Restated with HL
numbers
SDT 022908
0226108
SDT
Restated with I
numbers
SDT 0212908
022608
SDT
Restated with
numbers
SDT 0229108
0226108
SDT
022608
SDT
Restated wi
numbers
Comments
Review of text and Fair Valt
d limited to Time
deposits Securities sold under
eements to repurchase
Ivances from FHL13s and
Other
borrowings Loan fair
res and text received from
Home Loans group
Reconciled with press release I
Values approved by valuation
committee
T 0225
HIGHLY CONFIDENTIAL
Return
Inform Financial Reporting of changes i
n
methodology
for tracking
items or processing information from prior
periods i
f
any
Inform Financial Reporting of any amendments to prior
period numbers
i
f any
For nonfinancial information contained within RFIs
ensure that the information provided has been prepared
in accordance with the appropriate regulatorylegalfSFC
guidance and that i
t has been reviewed before
submission
Restated wit
numbers
SG 022908
Restated with HI
numbers
SG 022908
Restated with HI
numbers
022608
SDT
JI
Restated
w
v
numbers
SDT 0
02
Sul
SDI
VOX
Restated with Ht
numbers
SUP 022908
022608
SLIT
Restated witl
numbers
SIFT 0229108
ime Deposit Fair vale
006 to exclude the iml
itangibles i
n accordan
uidce
Methodology reviewed and
approved by valuation committee
MRC
HIGHLY CONFIDENTIAL
Return
White
From
Sent
To
Subject
Attachments
Bill Tuckett
2065003197
Tuckett William E
Friday February 29 2008 1034 AM
White Jonathan D
FW RFI 706 Final FAS 107 Deliverables
WMI 2007 Fair Value Disclosuredoc RF1706
WMI Workpaper Preparation Cheeklistdoc
WMB 2007 Fair Value Disclosure doc RFI 706 WMB Workpaper Preparation Checklistdoc
RE FAS 107 Update Picture Metafile
From Tholl Steven
Sent Friday February 29 2008 1000 AM
To GM Financial Reporting RFI Tuckett William E
Cc Hunt James W Sutton Dacia L
Subject RE 706 Final FAS 107 Deliverables
RFI 706 as revised has been reviewed and approved i
n accordance with the RFI Workpaper Preparation
Checklist Review of text and Fair Values limited to Time
deposits Securities sold under agreements t
o
repurchase
Advances from FHLBs and Other
borrowings
Loan fair values and text received from Home Loans
group
Fair Values for all were reviewed by
the Valuation Committee and
approved by
MRC
Thanks
Steve Tholl
Asset
Liability Management Group
206 3024285
This
message including attachments i
s CONFIDENTIAL
i
f you are not the intended recipient of this information or an employee or agent responsible
for delivering this message to the intended recipients please do not read disseminate distribute or copy this information
I
f
you have received this
message i
n error please contact the sender immediately
From Gaur Shobhit
Sent Friday February 29 2008 952 AM
To Tholl Steven
Subject Final Fas 107 Deliverables
Steve
Could you forward these to Bill Tuckett to the general
RFI mailbox
WMI 2007 Fair RFJ 706WMI
Value Disclosure Workpaper Prepay
WMB
HIGHLY CONFIDENTIAL
Return
WMB 2007 Fair RFT 706 WMB
Value Disclosure
Workpaper Prepar
Su ort
<0ProductionRFI4200712007121R F
1
706SupporttWMI2007 WM1 FAS107 Deliverable
Email confirmation from HL after their review
RE FAS 107
Update
Shobhit Gaur
302427
203024491 fax
Treasury l LM
Washington a
HIGHLY CONFIDENTIAL
Return
Home Latest Filings Previous Page
Filing Detail
Search the Next- Generation
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Form 10- K - Annual report [ Section
1
3
and 15(
d
)
,
not
S
-
K Item 405] SEC Accession No. 0001047469- 08-002083
2008-02-
2
9
2008-02-
2
9
16: 30:
2
4
2
1
Filing Date
Accepted
Documents
2007- 12-
3
1
2008- 02-
2
9
Period
o
f
Report
Filing Date Changed
Document Format Files
Seq Description Document Type Size
1 10- K a2182890z10-
k
.
htm 10- K 3295747
2 EXHIBIT 3.1 a2182890zex-
3
_
1
.
htm EX-3.1 942288
3 EXHIBIT 10.2(
A
) a2182890zex-
10_ 2a. htm
EX-10.2(
A
)
89455
4 EXHIBIT 10.2(
B
) a2182890zex-
10_ 2b. htm
EX-10.2(
B
)
88889
5 EXHIBIT 10.2(
C
) a2182890zex-
10_ 2c. htm
EX-10.2(
C
)
134058
6 EXHIBIT 10.2(
D
) a2182890zex-
10_ 2d. htm
EX-10.2(
D
)
127751
7 EXHIBIT 10.3
a2182890zex-
10_
3
.
htm
EX-10.3 33419
8 EXHIBIT 10.8.1
a2182890zex-
10_ 81. htm
EX-10.8.1 18750
9 EXHIBIT 10.8.2
a2182890zex-
10_ 82. htm
EX-10.8.2 34216
1
0
EXHIBIT 10.11
a2182890zex-
10_ 11. htm
EX-10.11 9766
1
1
EXHIBIT 10.24
a2182890zex-
10_ 24. htm
EX-10.24 61625
1
2
EXHIBIT 12.1
a2182890zex-
12_
1
.
htm
EX-12.1 40595
1
3
EXHIBIT 12.2
a2182890zex-
12_
2
.
htm
EX-12.2 53275
1
4
EXHIBIT
2
1
a2182890zex- 21. htm EX-
2
1
147886
1
5
EXHIBIT
2
3
a2182890zex- 23. htm EX-
2
3
2496
1
6
EXHIBIT 31.1
a2182890zex-
31_
1
.
htm
EX-31.1 6935
1
7
EXHIBIT 31.2
a2182890zex-
31_
2
.
htm
EX-31.2 6943
1
8
EXHIBIT 32.1
a2182890zex-
32_
1
.
htm
EX-32.1 3318
1
9
EXHIBIT 32.2
a2182890zex-
32_
2
.
htm
EX-32.2 3326
EDGAR Filing Documents
f
o
r
0001047469- 08- 002083 Page 1
o
f
2
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6
/
22/ 2010
HIGHLY CONFIDENTIAL
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WASHINGTON MUTUAL, INC (Filer) CIK: 0000933136
( see
a
l
l
company filings)
IRS No.: 911653725 State
o
f
Incorp.: WA Fiscal Year End: 1231
Type: 10-K Act:
3
4
FileNo.: 001- 14667 Film No.: 08656203
SIC: 6035 Savings Institution, Federally Chartered
Assistant Director 7
Mailing Address
1301 SECOND
AVENUE
SEATTLE WA 98101
Business Address
1301 SECOND
AVENUE
SEATTLE WA 98101
206- 461- 2000
2
0
G127671. JPG g127671. jpg GRAPHIC 3278
2
1
G23682KKI001. JPG g23682kki001. jpg GRAPHIC 2995
Complete submission text file
0001047469- 08-
002083.
t
x
t
5111173
EDGAR Filing Documents
f
o
r
0001047469- 08- 002083 Page 2
o
f
2
http:// www. sec. gov/ Archives/ edgar/ data/ 933136/ 000104746908002083/ 0001047469- 08- 002...
6
/
22/ 2010
HIGHLY CONFIDENTIAL
Return
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,
D
.
C
.
20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION
1
3
OR 15(
d
)
OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2007
CommissionFile Number
1
-
14667
WASHINGTON MUTUAL, INC.
(Exact name
o
f
registrant
a
s
specified
i
n
i
t
s
charter)
Washington 91-1653725
(State
o
r
other jurisdiction
o
f
(
I
.
R
.
S
.
Employer
incorporation
o
r
organization) Identification Number)
1301 Second Avenue, Seattle, Washington 98101
(Address
o
f
principal executive offices) (Zip Code)
Registrants telephone number, including area code: (206) 461- 2000
Securities registered pursuant
t
o Section 12(
b
)
o
f
the Act:
Title
o
f
each class Name
o
f
each exchange
o
n
which registered
Common Stock New York Stock Exchange
Depositary Shares each representing a
1
/
40,000th interest
i
n
a share
o
f
Series K Perpetual Preferred Non-Cumulative
Floating Rate Stock New York Stock Exchange
7.75% Series R Non-Cumulative Perpetual Convertible
Preferred Stock New York Stock Exchange
Securities registered pursuant
t
o Section 12(
b
)
o
f
the Act:
Title
o
f
each class Name
o
f
each exchange on which registered
Litigation Tracking Warrants NASDAQ
Indicate
b
y
check mark
i
f the registrant
i
s a well- known seasoned issuer
a
s
defined
i
n Rule 405
o
f
the Securities
Act. Yes
N
o
.
Indicate
b
y
check mark
i
f the registrant
i
s not required
t
o file reports pursuant
t
o Section
1
3
o
r
Section 15(
d
)
o
f
the
Exchange Act. Yes No .
Indicate
b
y
check mark whether the registrant (
1
)
has filed
a
l
l
reports required
t
o
b
e
filed
b
y
Section
1
3
o
r
15(
d
)
o
f
the Securities Exchange Act
o
f
1934 during the preceding
1
2
months (
o
r
for such shorter period that the registrant was
required
t
o file such reports), and (
2
)
has been subject
t
o such filing requirements for the past
9
0
days. Yes No .
Indicate
b
y
check mark
i
f disclosure
o
f
delinquent filers pursuant
t
o Item 405
o
f
Regulation
S
-
K
i
s not contained
herein, and will not
b
e
contained,
t
o the best
o
f
registrants knowledge,
i
n definitive proxy
o
r
information statements
incorporated
b
y
reference
i
n Part
I
I
I
o
f
this Form 10-K
o
r
any amendment
t
o this Form 10-
K
.
.
Indicate
b
y
check mark whether the registrant
i
s a large accelerated filer,
a
n
accelerated filer, a non- accelerated
filer,
o
r
a smaller reporting company. See the definitions
o
f
large accelerated filer,
accelerated filer and
smaller
reporting company
i
n Rule 12b- 2
o
f
the Exchange Act. (Check one):
Large accelerated Accelerated filer Non- accelerated filer Smaller reporting company
filer (Do not check
i
f a smaller
reporting company)
Indicate
b
y
check mark whether the registrant
i
s a shell company (
a
s
defined
i
n Rule 12b- 2
o
f
the Exchange
Act). Yes No .
The aggregate market value
o
f
voting stock held
b
y
non- affiliates
o
f
the registrant
a
s
o
f
June 30, 2007, based
o
n
the
closing sale price
a
s
reported
o
n
the New York Stock Exchange:
Common Stock $36,953,361,076( 1
)
(
1
)
Does not include any value attributable
t
o 6,000,000 shares held
i
n escrow.
The number
o
f
shares outstanding
o
f
the issuers classes
o
f
common stock
a
s
o
f
January 31, 2008:
Common Stock 882,557,330( 2
)
(
2
)
Includes 6,000,000 shares held
i
n escrow.
Documents Incorporated
b
y
Reference
Portions
o
f
the definitive proxy statement for the Annual Meeting
o
f
Shareholders
t
o
b
e
held April 15, 2008, are
incorporated
b
y
reference into Part III.
HIGHLY CONFIDENTIAL
Return
WASHINGTON MUTUAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 24: Fair Value
o
f
Fair value
i
s defined
a
s
the price that would
b
e
received
t
o sell
a
n
asset
o
r
paid
t
o transfer a
liability
i
n
a
n
orderly transaction between market participants
a
t
the measurement date. The Companys
fair value measurements are estimated based
o
n
assumptions that market participants would use
i
n
pricing the asset
o
r
liability and are based
o
n
market data obtained from independent sources where
available. However,
i
n certain cases where
a
n
active secondary market does not exist, the Company
uses internal valuation models
t
o estimate the fair value. These models incorporate inputs such
a
s
forward yield curves, loan prepayment assumptions, market volatilities and pricing spreads utilizing
market-based inputs where readily available. These valuations are the Companys estimates, and are
often calculated based
o
n
internal valuation policies, the economic and competitive environment,
estimates
o
f
future loss experience, the risk characteristics
o
f
the financial instruments and other such
factors. Therefore, the results cannot
b
e
determined with precision and may not
b
e
realized
i
n
a
n
actual sale
o
r
immediate settlement
o
f
the instruments
i
n a current market exchange.
The degree
o
f
management judgment involved
i
n estimating the fair value
o
f
a financial instrument
o
r
other asset
i
s dependent upon the availability
o
f
quoted market prices
o
r
observable market value
inputs. For financial instruments that are actively traded
i
n the marketplace
o
r
whose values are based
o
n
readily available market value data, little,
i
f any, subjectivity
i
s applied when estimating the
instruments fair value. When observable market prices and data are not readily available, significant
management judgment often
i
s necessary
t
o estimate fair value.
I
n those cases, different assumptions
could result
i
n significant changes
i
n valuation.
181
HIGHLY CONFIDENTIAL
Return
The table below presents the carrying value and fair value
o
f
the Companys financial instruments
a
t
December 31, 2007 and 2006
i
n accordance with FASB Statement No. 107, Disclosures about Fair
Value
o
f
(
Statement No. 107):

December 31,
2007 2006
Carrying Fair Carrying Fair
(
i
n millions)
Financial Assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . $ 9,560 $ 9,560 $ 6,948 $ 6,948
Federal funds sold and securities purchased under
agreements
t
o resell . . . . . . . . . . . . . . . . . . . . . . . . . 1,877 1,877 3,743 3,743
Trading assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,768 2,768 4,434 4,434
Available- for- sale securities . . . . . . . . . . . . . . . . . . . . . 27,540 27,540 24,978 24,978
Loans held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,403 5,547 44,970 45,060
Loans held
i
n portfolio, net
o
f
allowance for loan losses . . 241,815 226,327 223,330 221,401
Investment
i
n FHLBs . . . . . . . . . . . . . . . . . . . . . . . . . 3,351 3,351 2,705 2,705
MSR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,278 6,278 6,193 6,193
i
n other assets . . . . . . . . . . . . . . . 2,093 2,093 748 748
Total financial assets . . . . . . . . . . . . . . . . . . . . . . . . . $300,685 $285,341 $318,049 $316,210
Financial Liabilities:
All other deposits( 1
)
. . . . . . . . . . . . . . . . . . . . . . . . . . . $109,069 $109,069 $118,874 $118,874
Time deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72,857 73,293 95,082 95,101
Federal funds purchased and commercial paper . . . . . . 2,003 2,003 4,778 4,778
Securities sold under agreements
t
o repurchase . . . . . . . 4,148 4,148 11,953 11,953
Advances from FHLBs . . . . . . . . . . . . . . . . . . . . . . . . 63,852 63,965 44,297 44,283
Other borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38,958 35,597 32,852 32,874
i
n other liabilities . . . . . . . . . . . . . 408 408 1,081 1,081
Total financial liabilities . . . . . . . . . . . . . . . . . . . . . . $291,295 $288,483 $308,917 $308,944
(
1
)
Includes checking deposits, savings deposits and money market deposits.
Limitations
o
f
Fair Value Disclosure
I
n accordance with Statement No. 107, the Company has not included certain material items
i
n this
disclosure, such
a
s
the value
o
f
the longterm relationships with
i
t
s deposit and credit card customers,
since these intangibles are not financial instruments. The table also excludes the values
o
f
leases and
pension and benefit obligations,
a
s
well
a
s
other nonfinancial assets and liabilities such
a
s
premises and
equipment, net tax assets/ liabilities, real estate held for investment, foreclosed assets and goodwill.
I
n
addition, the value
o
f
the servicing rights for loans sold
i
n which the MSR has not been capitalized
i
s
excluded.
Also,
a
s
required, the disclosure excludes:
the tax ramifications related
t
o the realization
o
f
unrealized gains and losses;
any premium
o
r
discount that could result from offering for sale
a
t
one time the entire holdings
o
f
a particular instrument; and
182
HIGHLY CONFIDENTIAL
Return
the excess fair value associated with deposits with
n
o
fixed maturity.
The items excluded are integral
t
o a full assessment
o
f
the Companys financial position and the
value
o
f
i
t
s net assets. Accordingly, the total
o
f
the fair value estimates presented
d
o
not represent, and
should not
b
e
construed
t
o represent, the underlying value
o
f
the Company.
Methods and Assumptions
The following methods and assumptions were used
t
o estimate the fair value
o
f
each class
o
f
financial instrument
a
s
o
f
December 31, 2007 and 2006:
Cash and cash equivalents The Company considers the carrying amounts
o
f
cash and cash
equivalents carried
a
t
cost, including cash
o
n
hand, amounts due from banks,
U
.
S
.
Treasury bills,
overnight investments and commercial paper with maturities, when purchased,
o
f
three months
o
r
less,
t
o approximate fair value due
t
o their shortterm nature and minimal credit risk.
Federal funds sold and securities purchased under agreements
t
o resell The carrying amount
represents fair value. Federal funds sold and securities purchased under resale agreements are
investments
o
f
high liquidity and have characteristics similar
t
o cash.
Trading assets Trading assets are carried
a
t
i
s based
o
n
quoted prices when
available
i
n
a
n
active market.
I
f quoted market prices are not available, then fair values are estimated
using pricing models, quoted prices
o
f
o
r
discounted cash flows.
Available- for- sale securities Available- for- sale securities are carried
a
t
i
s
based
o
n
quoted prices when available
i
n
a
n
active market.
I
f quoted market prices are not available,
then fair values are estimated using pricing models, quoted prices
o
f
securities with similar
characteristics,
o
r
discounted cash flows. The fair values
o
f
available- for- sale securities are reported
i
n
Note 5
t
o the Consolidated Financial Statements
Available- for- Sale Securities.

Loans held for sale The fair value
o
f
loans designated
a
s
held for sale
i
s generally based
o
n
observable market prices
o
f
securities that have loan collateral
o
r
interests
i
n loans that are similar
t
o
the held for sale loans
o
r
whole loan sale prices
i
f formally committed.
I
f market prices are not readily
available, fair value
i
s based
o
n
discounted cash flow models, which take into account expected
prepayment factors and the degree
o
f
credit risk associated with the loans and the estimated effects
o
f
changes
i
n market interest rates relative
t
o the loans interest rates.
Loans held
i
n portfolio Loans held
i
n portfolio
a
t
December 31, 2007 are those loans which the
Company has the intent and ability
t
o hold for the foreseeable future
o
r
until maturity. Even though
the Company has
n
o
intent
t
o sell these loans, GAAP requires disclosure
o
f
the fair value based
o
n
hypothetical sales transactions
a
s
o
f
the balance sheet date. Accordingly, the fair values
o
f
loans held
i
n
portfolio reflect assumptions appropriate for a hypothetical sale
i
n a market characterized
b
y
illiquidity
and a deteriorating credit environment. However, the Company does not expect
t
o realize these fair
value losses
b
y
selling the loans, and the estimated fair values are lower than the Company believes are
implied
b
y
i
t
s internal estimates
o
f
value based upon the total expected returns
o
f
the loans, including
estimates
o
f
expected credit losses.
Given the lack
o
f
liquidity
i
n the secondary mortgage market
a
t
December 31, 2007, significant
management judgment was necessary
t
o
f
loans held
i
n portfolio. Fair values
were estimated for groups
o
f
similar loans based upon type
o
f
loan and maturity. Where quoted market
prices were available, such market prices were utilized
a
s
estimates for fair values. Otherwise, the fair
value
o
f
loans was estimated
b
y
discounting estimated cash flows using managements best estimate
o
f
183
HIGHLY CONFIDENTIAL
Return
market interest rates for similar collateral. The fair values
o
f
nonperforming loans were calculated
b
y
discounting estimated cash flows using discount rates commensurate with the risk associated with the
cash flows. Management used assumptions that the Company believes market participants would have
used
i
n pricing the loans
i
n a transaction
t
o sell the loans
a
s
o
f
the balance sheet date; these
assumptions include high discount rates reflecting increased market risk premiums driven
b
y
the decline
i
n liquidity for nonconforming mortgage loans,
i
n particular subprime and home equity loans.
A
s
applicable, estimated cash flows included expected and unexpected credit loss projections that were
consistent with market conditions
a
t
that date.
Investment
i
n FHLBs FHLB stock does not have a readily determinable fair value
a
s
i
t
i
s
nonmarketable and
i
s required
t
o
b
e
sold back
a
t
i
t
s par value. Accordingly, the fair value
o
f
FHLB
stock
i
s
i
t
s par value which
i
s also
i
t
s carrying value.
Mortgage Servicing Rights
(
MSR) The market for MSRs

i
s not sufficiently liquid
t
o provide
participants with quoted market prices. Accordingly, the Company uses
a
n
option-adjusted spread
(
OAS) valuation approach

t
o
f
MSRs. This approach projects cash flows over
multiple interest rate scenarios and discounts these cash flows using riskadjusted discount rates.
Additionally,
a
n
independent broker estimate
o
f
the fair value
o
f
the MSR
i
s obtained quarterly along
with other market based evidence. Management uses this information along with OAS valuation
methodology
t
o
f
MSR. The fair values
o
f
MSRs are reported
i
n Note 8
t
o the
Consolidated Financial Statements
Mortgage Banking Activities.

Deposits Statement No. 107 states that the fair value
o
f
deposits with
n
o
stated maturity, such
a
s
checking deposits, savings deposits and money market deposits,
i
s equal
t
o the amount payable
o
n
demand
a
t
the reporting date. Accordingly, the amount included for these deposits
i
s their carrying
value
a
t
December 31, 2007 and 2006. The fair value excludes the excess fair value
o
f
the unrecorded
intangible asset associated with such deposits related
t
o the relative stability
o
f
interest rates paid, even
when market interest rates change, and the tendency
o
f
such deposits
t
o remain with the Company
despite changes
i
n market interest rates.
The fair value
o
f
deposits with stated maturities, such
a
s
time deposits, was determined using a
projected cash flow methodology. Projected cash flows
o
f
these instruments adjusted for the projected
future cost
t
o service these balances, were discounted
a
t
the LIBOR swap curve.
Federal funds purchased, commercial paper and securities sold under agreements
t
o repurchase
The carrying amounts represent fair value due
t
o the shortterm nature
o
f
the financial instruments.
Advances from FHLBs and other borrowings Advances from FHLBs are valued using the
discounted cash flow methodology. Projected future cash flows
o
f
these borrowings are discounted
a
t
LIBOR swap curve. Other borrowings were valued
a
t
observable traded prices. The pricing
methodology relies
o
n
pricing derived from the most recent observable trades
o
n
these instruments.
Where such prices are not observable, the instruments are priced based
o
n
their contractual exit values
o
r
a discounted cash flow methodology.
Derivative financial instruments Exchange- traded derivatives are valued using quoted prices.
However, few classes
o
f
derivative contracts are listed
o
n
a
n
exchange and thus the majority
o
f
the
Companys derivative positions are valued using internally developed models that use,
a
s
their basis,
readily observable market parameters. Derivatives that are normally traded less actively are valued
based upon models with significant unobservable market parameters. See Note
2
3
t
o the Consolidated
Financial Statements
Derivative Financial Instruments for further information.

184
HIGHLY CONFIDENTIAL
Return
Summary
o
f
K
,
Note
2
4
Work Papers Changes
t
o FMV Table
Version Date Financial Instrument Fair Value
Carrying
Amount Difference
2
/
14/ 2008 Loans Held for Investment $214,871 $241,815 $26,944
Financial Assets $273,885 $300,685 $26,800
Financial Liabilities $288,876 $291,295 $2,419
2
/
2
/
12/ 31/ 2007 Note: 10 K book value
o
f
Shareholders' Equity $24,584
Page 1
o
f
1
HIGHLY CONFIDENTIAL
Return
WMI_PC_701361067.00001 Restricted For Use in Connection with Plan Confirmation Only
CONFIDENTIAL
March 19,2008
Stephen Dannhauser
Weil Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153
JPMorganChase 0
Re: JPMorgan Chase Request for Proposal for Legal Services 200812009
Dear Mr. Dannhauser:
On behalf of Legal & Compliance department of JPMC, thank you for expressing interest in
participating in the JPMC 2008/2009 Legal RFP. JPMorgan Chase is acknowledging your
response to our RFP and confirming that we will accept the terms agreed upon and set forth
below, the terms of which will govem our relationship for the next two years along with the
200812009 Legal RFP and the Outside Counsel Manual. You may receive assignments from time
to time consistent with the substantive work you have historically provided or where in the future
your expertise is particularly relevant to a JPMorgan Chase issue.
We want to confirm the key standard terms that must be agreed upon between JPMC and your
firm, which agreement Signifies that your firm is considered a "sourced" law firm eligible to receive
JPMC own-account engagements.
NY2\187343TIOH145JXOI f DOCI99980.0001
March 19,2008
Stephen Dannhauser
767 Fifth Avenue
New York, NY 10153
JPMorganChase 0
Re: JPMorgan Chase Request for Proposal for Legal Services 200812009
Dear Mr. Dannhauser:
On behalf of Legal & Compliance department of JPMC, thank you for expressing interest in
participating in the JPMC 2008/2009 Legal RFP. JPMorgan Chase is acknowledging your
response to our RFP and confirming that we will accept the terms agreed upon and set forth
below, the terms of which will govem our relationship for the next two years along with the
200812009 Legal RFP and the Outside Counsel Manual. You may receive assignments from time
to time consistent with the substantive work you have historically provided or where in the future
your expertise is particularly relevant to a JPMorgan Chase issue.
We want to confirm the key standard terms that must be agreed upon between JPMC and your
firm, which agreement Signifies that your firm is considered a "sourced" law firm eligible to receive
JPMC own-account engagements.
NY2\187343TIOH145JXOI f DOCI99980.0001
Return
CONFIDENTIAL
March 19,2008
The following details the agreement between your firm and JPMC regarding certain
representations by your firm of other clients who may have interests adverse to JPMC:
JPMC will grant waivers to permit the firm to represent entities in
financial distress or classes of creditors in such situations, including in
bankruptcies, where JPI\I1C ... ..... W(3&M \Viii
obtain such a waiver from JPMC promptly after it becomes aware that
JPMC may have an adverse interest to WG&M's client (except where
WG&M's ethical and other obligations of confidentiality owed to the client
that is or is potentially adverse to JPMC require a delay in contacting
JPMC, in which case WG&M will use reasonable efforts to bring such
NY2:\J873437\OJII45JXOJ'DOC'.99980.000J 2
March 19,2008
The following details the agreement between your firm and JPMC regarding certain
representations by your firm of other clients who may have interests adverse to JPMC:
JPMC will grant waivers to permit the firm to represent entities in
financial distress or classes of creditors in such situations, including in
bankruptcies, where JPI\I1C ... ..... W(3&M \Viii
obtain such a waiver from JPMC promptly after it becomes aware that
JPMC may have an adverse interest to WG&M's client (except where
WG&M's ethical and other obligations of confidentiality owed to the client
that is or is potentially adverse to JPMC require a delay in contacting
JPMC, in which case WG&M will use reasonable efforts to bring such
NY2:\J873437\OJII45JXOJ'DOC'.99980.000J 2
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CONFIDENTIAL
March 19,2008
matter to JPMC's attention and obtain such waiver as soon as WG&M's
obligations of confidentiality to the other client no longer requires such
delay). Notwithstanding the foregoing, JPMC's waiver in such matters
will provide that the firm cannot be involved in any of the following
without a specific waiver at the relevant time:
1. The assertion and prosecution of any lender liability or similar
claim or allegation of JPMC misconduct or wrongdoing;
2. Subject to the provisions of the last bullet point of this section,
any attack on the validity or priority of JPMC claims, liens and/or
security interests asserted in the case; and
3. The prosecution of any proceeding to recover any monies or
other consideration paid or transferred to JPMC by or on behalf
of a debtor as a voidable transfer under the United States
Bankruptcy code or other applicable law or any such other
avoidance theory.
If any claim or proceeding arises as described in paragraphs 1, 2 or 3
above, WGM would be proscribed from representing such party in
connection with such claim or proceeding unless JPMC gave a new
consent (which JPMC is under no obligation to give). Of course, the
above proscriptions are without prejudice to the ability of such party to
engage other or special counsel to pursue and prosecute any claim or
proceeding. In addition, such proscriptions would not preclude WGM
from representing such party in the negotiation with JPMC as to the
provisions of any restructuring or plan of reorganization, taking adverse
positions to JPMC with respect to such plan, or from objecting to any
proof of claim filed in the bankruptcy case by JPMC based upon the
calculation of amounts due in accordance with the applicable governing
documents; provided, however, to the extent that WGM attorneys or
personnel involved with the representation of any above-described
parties have participated or currently participate in any WGM
representation of JPMC, WGM will take appropriate measures to ensure
that no information gathered in the course of such representation of
JPMC is used to JPMC's disadvantage.
The firm can represent opposing parties to JPMC in commercial
situations (i.e., representation of a borrower where JPMC is a lender, an
issuer where JPMC is the underwriter, a purchaser or seller of assets)
provided clearance is obtained from a lawyer at JPMC.
The Outside Counsel Manual in Section 4.4.2 requires your firm to provide quarterly reports
concerning diversity spend, customer or third party paid fees received by your firm and business
referrals to JPMC. Attachment B to this letter contains the reporting template for these quarterly
reports, along with a reporting schedule for 2008.
If members of your firm need to travel on JPMC business, please enroll all such professionals in
the Travel Online program. The enrollment process takes a minimum of 72 hours, so please
proceed to enroll those professionals who anticipate traveling for JPMC in 2008 now to facilitate
timely use of the Travel Online program. In order to enroll, please contact the following individual:
SahdySfldams
NY2:\1873437\OII145JXOI'DOCI99980.0001
Sandy.SUdams@JPMCliase.c::om
(614) 248-6528 Direct Line
3
March 19,2008
matter to JPMC's attention and obtain such waiver as soon as WG&M's
obligations of confidentiality to the other client no longer requires such
delay). Notwithstanding the foregoing, JPMC's waiver in such matters
will provide that the firm cannot be involved in any of the following
without a specific waiver at the relevant time:
1. The assertion and prosecution of any lender liability or similar
claim or allegation of JPMC misconduct or wrongdoing;
2. Subject to the provisions of the last bullet point of this section,
any attack on the validity or priority of JPMC claims, liens and/or
security interests asserted in the case; and
3. The prosecution of any proceeding to recover any monies or
other consideration paid or transferred to JPMC by or on behalf
of a debtor as a voidable transfer under the United States
Bankruptcy code or other applicable law or any such other
avoidance theory.
If any claim or proceeding arises as described in paragraphs 1, 2 or 3
above, WGM would be proscribed from representing such party in
connection with such claim or proceeding unless JPMC gave a new
consent (which JPMC is under no obligation to give). Of course, the
above proscriptions are without prejudice to the ability of such party to
engage other or special counsel to pursue and prosecute any claim or
proceeding. In addition, such proscriptions would not preclude WGM
from representing such party in the negotiation with JPMC as to the
provisions of any restructuring or plan of reorganization, taking adverse
positions to JPMC with respect to such plan, or from objecting to any
proof of claim filed in the bankruptcy case by JPMC based upon the
calculation of amounts due in accordance with the applicable governing
documents; provided, however, to the extent that WGM attorneys or
personnel involved with the representation of any above-described
parties have participated or currently participate in any WGM
representation of JPMC, WGM will take appropriate measures to ensure
that no information gathered in the course of such representation of
JPMC is used to JPMC's disadvantage.
The firm can represent opposing parties to JPMC in commercial
situations (i.e., representation of a borrower where JPMC is a lender, an
issuer where JPMC is the underwriter, a purchaser or seller of assets)
provided clearance is obtained from a lawyer at JPMC.
The Outside Counsel Manual in Section 4.4.2 requires your firm to provide quarterly reports
concerning diversity spend, customer or third party paid fees received by your firm and business
referrals to JPMC. Attachment B to this letter contains the reporting template for these quarterly
reports, along with a reporting schedule for 2008.
If members of your firm need to travel on JPMC business, please enroll all such professionals in
the Travel Online program. The enrollment process takes a minimum of 72 hours, so please
proceed to enroll those professionals who anticipate traveling for JPMC in 2008 now to facilitate
timely use of the Travel Online program. In order to enroll, please contact the following individual:
SahdySfldams
NY2:\1873437\OII145JXOI'DOCI99980.0001
Sandy.SUdams@JPMCliase.c::om
(614) 248-6528 Direct Line
3
Return
CONFIDENTIAL
March 19,2008
If you have any other questions, please contact Judith Trail by email at
Judith.trail@jpmchase.com or by telephone at (614) 248-7597. We congratulate you on being
selected as a provider of Legal Services to JPMorgan Chase, and we appreciate all your efforts in
working with us through our RFP process.
Very truly yours,
~
Stephen M. Cutler
Executive Vice President and General Counsel
I hereby acknowledge and represent that I am authorized to accept and bind Weil Gotshal &
Manges LLP to agree to and comply with the terms and conditions set forth above in this letter
agreement, which incorporates by reference the JPMC 2008/2009 Legal RFP and the JPMorgan
Chase Outside Counsel Manual, and confirm that these terms are in effect for the two year period
beginning January 1,2008 through December 31,2009.
NY2\1873437\O 1I145JXOI'DOC\99980.000 1 4
March 19,2008
If you have any other questions, please contact Judith Trail by email at
Judith.trail@jpmchase.com or by telephone at (614) 248-7597. We congratulate you on being
selected as a provider of Legal Services to JPMorgan Chase, and we appreciate all your efforts in
working with us through our RFP process.
Very truly yours,
~
Stephen M. Cutler
Executive Vice President and General Counsel
I hereby acknowledge and represent that I am authorized to accept and bind Weil Gotshal &
Manges LLP to agree to and comply with the terms and conditions set forth above in this letter
agreement, which incorporates by reference the JPMC 2008/2009 Legal RFP and the JPMorgan
Chase Outside Counsel Manual, and confirm that these terms are in effect for the two year period
beginning January 1,2008 through December 31,2009.
NY2\1873437\O 1I145JXOI'DOC\99980.000 1 4
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AttorneyClient Privileged Work Product
WM Confidential Limited Access
WASHINGTON MUTUAL INC
Board of Directors
Meeting Minutes
Friday April 4 2008
The Board of Directors
o
f
the Holding Company
met
concurrently
with the Board of Directors of Washington Mutual
Bank
the Bank
on Friday April 4 2008 for
a special telephonic meeting
Directors Present
Stephen 1 Chazen
Anne V Farrell
Stephen
E Frank
Kerry
K
Killinger
Thomas C Leppert
Charles M Lillis
Phillip
D Matthews
Michael K Murphy
Margaret Osmer McQuade
Mary
E
Pugh
Wm G Reed Jr
Orin C Smith
James
H
Stever
Directors Absent
Regina
T
Montoya
Management
Present
Todd Baker
Carey
M Brennan
Thomas
W
Casey
Ronald J Cathcart
Daryl
D David
Stewart M Landefeld
Stephen
J Rotella
Susan R Taylor
Robert J Williams
Advisors Present
John
Mahoney
of Goldman Sachs
Todd Owens of Goldman Sachs
Frank Cicero of Lehman Brothers
Lee
Meyerson of Simpson Thacher
Bartlett LLP
Prior to the meeting management posted onto BoardVantage the agenda and a
PowerPoint
presentation prepared by
Goldman Sachs and Lehman Brothers
Mr
Killinger presided
and called the
meeting
to order at 730 am Pacific
Daylight
Time and Ms
Taylor served as
secretary
All those
present attended
the meeting by telephone Management
Mr
Killinger and the financial advisors
were together i
n the Executive Conference Room at the WaMu Center All
attendees were present
at the beginning
of the
meeting
HIGHLY CONFIDENTIAL
Return
Confidential Limited Access
CEO Update
Mr
Killinger spoke briefly
at
the beginning
of the
meeting
Mr
Killinger explained
that discussions with the private equity
firms to raise a minimum of $5 billion of
capital were moving forward quickly
and the terms and structure of a transaction
were
i
n the
process
of
being put together
He
expressed
his view that the most
probable transaction that
management would recommend to the Holding
Companys
Board would focus first on one or two lead
private equity investors
and second on several institutional
investors
with the goal
of
raising a minimum
of $5 billion
i
n
capital
He also reported on the continued
dialogue
with Flint and
a recent request fromthem for a significant
amount of due
diligence materials
He
reported
that
although
the
Holding Companys financial advisors had advised
that the pricing
and terms offered
by
Flint were relatively unattractive they were
continuing
to move ahead with due
diligence
and discussions i
n
part i
n
response
to the need
t
o
keep all alternatives given
the
fluidity
of the prior equity
discussions
Financial Advisors Update
Mr Mahoney
of Goldman
Sachs and Mr Cicero of Lehman
Brothers reported
on
progress
made
i
n
negotiations
with
private equity firms since the Board
meeting on Tuesday April
1 Mr Cicero
began by asking the Board to refer to
the written material previously provided
which reviewed the three different
proposals i
n detail He reviewed the two
prong process underway
to raise the
necessary capital He reported that the financial advisors contacted Titanium the
night
before and had offered
i
t
subject to the
Holding Companys Board
concurrence
the lead position i
n
a capital transaction He described the
strategy
as focusing on obtaining a commitment from Titanium first and then possibly from
Carbon as a
possible
second lead investor Carbon
required that an auto
purchase
flow
agreement
be entered into as a condition to their
capital
investment Mr Cicero also
reported on the
progress
made with Boron and
Oxygen regarding their joint proposal
He
reported among other aspects that
Boron and Oxygen might
need weeks to finish their due diligence had asked
several board
positions
and had submitted the lowest bid
Mr Cicero then responded
t
o several questions
from Directors
I
n
response
to a
Directors
question
he
explained
the terms of the warrants
i
n Titaniums bid and
the status of
negotiations
Messrs Cicero and
Mahoney responded
to a question
from Mr Frank regarding the basis for the financial advisors preference for
Titanium over Carbon Mr Mahoney reviewed the contingency
i
n Carbons
proposal that
any
investment by
Carbon was conditioned
upon
the Bank entering
into a fiveyear flow agreement to purchase
auto loans and
leases
from affiliates
of Carbon Messrs Cicero and Mahoney reviewed the
multiple
issues
relating
to
the
proposed
flow
agreement
with Carbon including
the
necessity
of
obtaining
regulatory approval
and the difficulty
of
doing so within the
requisite
time frame
Doc 177254
HIGHLY CONFIDENTIAL
Return
Mr Rotella
spoke
of Titaniums
strong reputation i
n the external
marketplace
In
response t
o a
question from Mr Matthews Mr Rotella reviewed the
strategic
pros
and cons
of
entering
into the proposed auto flow agreement including the
complexity the risk profile the impact on the balance sheet and
liquidity
and the
timing
and risk of
obtaining
Office of Thrift
Supervision CATS approval
Mr Mahoney continued the
presentation by referring
the Board to the material on
the
page
entitled Public `WallCrossed Investor
Marketing
Mr
Mahoney
reviewed the marketing plan and schedule for meeting with institutional investors
and
sovereign
wealth funds He
reported
that the
early
feedback had been
positive
and that the financial advisors had received
significant pressure
from
potential institutional investors to
identify
the lead private equity
firm and the
terms of the transaction with the lead investor He
explained
that identification of
the lead firm would drive the timing
of
putting together the rest of the transaction
I
n
response to a question
he indicated that the
sovereign wealth funds
might not
be able to move quickly enough
to
participate given
the time frame Mr Cicero
spoke about the
goal
of identifying the lead private equity investor and of
sharing
that information with the wallcrossed investors
i
n order to negotiate
the most
favorable terms within the
necessary
timeframe
Mr
Mahoney reported on managements
and the financial advisors
recommendation that Carbon be offered the
position
of second lead with a
commitment on the Holding Companys part to exert best efforts to enter into the
auto purchase
flow
agreement but that
i
f Carbon insisted on the flow
agreement
as a contingency a transaction with them should not be
pursued Mr
Killinger
then
reported
his view that
entering
into the auto purchase
flow
agreement
would
be prudent only
under certain conditions including
confirmation that the Holding
Company and the Bank have the
necessary risk management and controls in
place to oversee such an arrangement and that he viewed
i
t as
very unlikely
that
the
parties could finalize a final
agreement
for the auto purchase flow agreement
within the next three or four
days
Mr
Killinger emphasized
that
identifying
the
lead investor with a
strong name was of
key importance
for
proceeding with
obtaining the rest
o
f
the capital believed
t
o be necessary The
Holding
Companys Board continued to actively discuss with
management and
the
Holding Companys
Boards advisors the different
aspects
of the three
private
equity proposals including
the financial and nonfinancial terms as well as the
nature of the conversations among the parties concluding
that the
strategy being
pursued was correct
Mr
Killinger
then
reported on the status of
negotiations
with Flint He reviewed
the
proposal
and some of the features of the
offer including a condition that the
Holding Company
terminate its discussions with other investors and enter into
exclusive negotiations
with Flint and the break up fee He reported that while
dialogue was continuing comments from Flint with
respect
to the Holding
Companys
credit
assumptions
indicated that Flints further due
diligence may
Doc 177254
HIGHLY CONFIDENTIAL
Return
result i
n a
negative price adjustment
Mr Killinger reported to the Board on his
conversations with the OTS concerning Flint as well as the other alternatives
The
Holding Companys Board then
engaged i
n
lengthy
discussion
concerning
the various
proposals and asked several questions Mr Mahoney responded
to
additional questions
Redacted
Another
concerning
the
length
of
delay
that would be caused by raising equity publicly i
f a
delivered to the Directors Mr Cicero
responded
to a Directors
question
Board
meeting
scheduled for
Sunday April 6 including timing
of materials
t
o be
actor agreed
Messrs Landefeld and
Killinger
then
responded
to
questions concerning the
sufficient amount of capital was not raised
privately
HIGHLY CONFIDENTIAL
Return
From: Brouwer, Curt
To: Anderson, Jason
S
.
US Seattle)
Sent: 8/21/2008 6:54:23 PM
Subject: Per our discussion
Attachments: Discussion Materials 032608.pdf
As we discussed, only provide this document
t
o Jimuntil we have further discussionswith Todd tomorrow.
Curt <<...>>
Curt Brouwer
Washington Mutual
Senior Vice President, Corporate Tax
1301 Second Ave., WMC3201
Seattle, WA 98101
206.500.4155 direct 206.377.3018 fax
E-mail: curt.brouwer@wamu.net
IRS Circular 230 Disclosure: To Ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal
tax advice contained in this communication including any attachments) is not intended or written to be used, and cannot be
used, for the purpose of i) avoiding penalties under the Internal Revenue Code or ii) promoting, marketing or recommending
to another party any transaction or matter addressed herein.
CONFIDENTIALITY NOTICE: This message including any attachments) is confidential and may contain sensitive information. Do
not disseminate this information to parties who do not have the authorization to view this material. If you are not the
intended recipient of this information or an employee or agent responsible for delivering this message to the intended
recipient(s), please do not read, disseminate, distribute or copy this information.
I
f you have received this message in
error, please contact the sender immediately. Washington Mutual reserves the right tomonitor all e-mail. Electronic mail
sent through the Internet is not secure.
CONFIDENTIAL
Return
Project Olympic
Discussion Materials
26 March 2008
CONFIDENTIAL
Return
Summary
Project Olympic
1
Cerberus has significant interest
i
n a partnership with WaMu
Partnership will
b
e
a strategic and financial investment
Significant value created through synergies and revenue enhancement
opportunities; access
t
o other Cerberus portfolio companies
Material equity investment
b
y
Cerberus
Creation
o
f
SPV majority owned
b
y
Cerberus
t
o buy residuals from
securitization
o
f
higher-risk assets
WaMu acquisition
o
f
Chrysler Financial provides asset and earnings
diversification
a
s
well
a
s
substantial tangible equity capital
Cerberus team able
t
o move quickly
CONFIDENTIAL
Return
Advantages for WaMu
Project Olympic
2
Diversification
o
f
balance sheet and business
Mortgage loans fall from ~73%
o
f
loans
t
o ~57%
o
f
loans
o
n
a managed basis: adds auto, and
expands commercial and small business loans
Exclusive access
t
o
a
l
l
subvented automotive loans and leases through 9 year exclusivity
agreement with Chrysler
$
7
5
billion managed auto loan portfolio; $
4
0
billion on-balance- sheet portfolio
Improved diversification will improve valuation
i
n public market
Minimal auto lease residual risk (0.5%)
SPV accelerates problem asset disposition
Utilization
o
f
significant excess capital
a
t
Chrysler Financial
Chrysler Financial has tangible common equity
o
f
$7.4Bn( 1
)
resulting
i
n a tangible common
t
o
tangible assets ratio
o
f
17%
Value creation through synergies
Access
t
o 3.6 millioncustomers and over 3,000 dealerships (both Chrysler and non- Chrysler
dealers)
Ability
t
o create affinity branded credit card, deposit and other products
Potential cost saves from combining certain servicing functionality
Access
t
o new capital
Cerberus willing
t
o invest additional capital
i
n new company
Note
1
.
Preliminary. Audit complete subject
t
o final purchase accounting adjustment
CONFIDENTIAL
Return
Resulting Ownership( 1
)
WaMu ownership split between current WaMu
shareholders, Chrysler Holding and Cerberus
Proposed Structure
Project Olympic
3
Transaction Steps
WaMu issues shares
t
o Chrysler Holding
i
n exchange
for Chrysler Financial
Chrysler Financial sold
t
o WaMu
a
t
tangible book
value
Cerberus purchases $500 million
o
f
newly issued
WaMu equity
Daimler
Public
Shareholders
100%
Chrysler
Financial
TBV: $ 7.4Bn
Cerberus
20% 80%
$7.4Bn
Shares
WaMu
Public
Shareholders
Chrysler
Holding
Chrysler
Financial
WaMu
For illustrative purposes, we
have used WaMus current
market cap
o
f
$11.2 billion
based
o
n
3
/
25/
0
8
stock price
o
f
$12.70
t
o calculate pro
forma ownership
percentages
Cerberus willing
t
o work with
OTS on structuring
investment
SPV
WaMu writes-down
t
o
current value and
securitizes up
t
o $48 billion
o
f
higher-risk loans
Cerberus creates wholly
owned SPV
t
o buy
residuals interest
i
n the
trust and WaMu retains the
most senior tranches
$
0.5Bn
$
0.5Bn
shares
Note
1
.
Based
o
n market cap
a
t
3
/ 25/ 08
Chrysler
Holding
Cerberus
Pro Forma Ownership
Valuation
(
$ MM) %Ownership
Existing WaMu (Current Market Cap) $ 11,207
(
1
)
58.7%
ChryslerFinancial ( Tangible Book) 7,387 38.7%
New Raise ( Cerberus) 500 2.6%
Total $ 19,094 100.0%
Assuming Subsequent Distribution Cerberus 33.6%
o
f
Shares
b
y Chrysler Holding: Old Shareholders 58.7%
Daimler 7.7%
Total 100.0%
CONFIDENTIAL
Return
Retail Financing
48%
Operating Lease
28%
Dealership
Financing & Other
25%
Portfolio
b
y
Product
%
o
f
$
7
5
billion 12/ 31/
0
7
Chrysler Financial: A Leading Auto Lender
Project Olympic
4
Overview
Leading provider
o
f
financial services for dealers
and customers
o
f
the Chrysler, Dodge and Jeep
brands
$
7
5
billion managed portfolio ( Avg FICO: 705)
Over 2.7 million consumer loans and over
900,000 leases serviced (3.6 million total
customers) with avg. transaction size
o
f
~
$
25,000
Over 3,000 dealers serviced
4,150 employees
Broad presence across the Americas, with
operations
i
n the
U
.
S
.
,
Canada, Mexico,
Venezuela and Puerto Rico
Major products are retail loans, leases and
dealership finance plans
Includes Business Vehicle Finance (BVF)
business with $1.6 billion
o
f
assets which serves
small businesses
2008E pre-tax income
o
f
$459 million and
12/ 31/
0
7
tangible book value
o
f
$7.4 billion( 1
)
Estimated earning asset yield
o
f
8.4%( 2
)
U
.
S
.
83%
Canada
14%
Mexico
2%
Other 1%
Portfolio
b
y
Region
%
o
f
$75 billion 12/ 31/ 07
Notes
1
.
t
2
.
Assets are originated
a
t
fixed rate
CONFIDENTIAL
Return
Auto
17%
Card
8%
Mortgage
57%
Commercial
19%
Pro Forma 12/ 31/
0
7
Managed Loans
%
o
f
$335Bn
Provides Diversification and Capital Strength
Project Olympic
Notes
1
.
Excludes OCI from equity
2
.
Assumes 2008 provision
o
f
$13Bn
3
.
Pro forma for $500 million
o
f
new equity issued
t
o Cerberus
4
.
Based
o
n
a
ll
balance sheet loans plus securitized credit card portfolio 5
Card
10%
Mortgage
73%
Commercial
17%
WaMu 12/ 31/ 07 Managed Loans( 4
)
%
o
f
$260Bn
Mortgage assets decrease
from 73%
t
o 57%
Auto assets represent 22%
o
f
managed loans (5% included
i
n Commercial)
Significant capital creation
$6.0 billion
o
f
capital
created above current
WaMu tangible common
ratio
12/ 31/ 07A 12/ 31/ 08P Mid Case
(
2
)
PF + PF +
WaMu CF New Raise
(
3
)
WaMu New Raise
(
3
)
Tangible Equity / Tangible Assets(
1
)
6.6% 17.0% 8.0% 5.6% 7.2%
Tangible Common Equity / Tangible Assets 4.3% 17.0% 6.0% 3.1% 5.1%
Capital Above 5.50% TE/ TA
(
$ MM) 9,026 5,955
Capital Above 4.75% TC/ TA
(
$ MM) 4,453 1,218
Capital Created Above Current WaMu TC/ TA
(
$ MM) 5,970 6,822
CONFIDENTIAL
Return
Benefits
o
f
Asset Diversification
0.03
R
2
Correlation between Mortgages and Prime Auto
Project Olympic
6
0.00
2.00
4.00
6.00
8.00
Apr-
8
9 Dec-
9
0 Aug-92 Apr- 94 Dec-
9
5 Aug-
9
7 Apr-
9
9 Dec- 00 Aug- 02 Apr-04 Dec-
0
5 Dec- 07
Credit Card Mortgages Prime Auto
Historical Industry Charge- Offs
(%)
Sources Moodys, FDIC
5.10%
1.21%
0.49%
Net Charge-Offs
(%)
Credit Prime
Card Mortgages Auto
Current 5.10 0.49 1.21
1
-
Y
r
Avg. 4.67 0.26 0.79
5
-
Y
r
Avg. 5.54 0.13 0.87
10-
Y
r
Avg. 5.80 0.12 1.10
CONFIDENTIAL
Return
GAAP EPS Accretion/( Dilution)
$
2009E EPS (Mid-Case) 1.12 2009E EPS (Mid-Case) 1.12
With $4Bn Capital Raise @ $12.70 0 .83 Pro Forma with Chrysler ex Synergies
(
2
)
0.97
With $4Bn Capital Raise @ $10.00 0 .78 Pro Forma with Chrysler
w
/
Synergies
(
3
)
1.20
%Change
v
s
Standalone 7%
%Change @ $12.70 (26%) %Change
v
s Capital Raise @ $12.70 44%
%Change @ $10.00 (30%) %Change
v
s Capital Raise @ $10.00 54%
Accretive
t
o
Earnings Relative
t
o
Equity Issuance
Project Olympic
7
~
$
570 millionpre-tax synergy
run-rate potential( 1
)
45-55% less dilutive
Notes
1
.
Based
o
n funding synergy
o
f
1.5%applied
t
o $38Bn debt. Share
o
f
ultimate funding synergies
i
s subject
t
o negotiations with Daimler
2
.
Assumes Chrysler Financial adjusted earnings and 5% net income growth from 08 plan. $12.70 per share issuance price (
3
/ 25/ 08 market price)
3
.
$ 570 million pre-tax synergies taxed
a
t
38%
CONFIDENTIAL
Return
Potential Synergies
Project Olympic
8
Potential
t
o cross- sell additional products (
e
.
g
.
,
deposits, mortgage)
3.6 million current Chrysler Financial customers
Opportunity
t
o increase ChryslerFinancials penetration rate with lower
cost
o
f
funds and broader product offering
Current US penetration rate
i
s 41%
o
f
Chrysler Automotive retail sales, while
universe
o
f
potential customers
i
s 92% (excluding 8% cash buyers)
This 51%penetration rate opportunity equates
t
o over 900,000 annual contract
originations and over $
2
5
billion
o
f
annual originations
Additional opportunities
i
n Canada, Mexico and Puerto Rico
Access
t
o a network
o
f
over 3,000 dealers (including over 2,500 US dealers,
390 Canadian dealers and 175 Mexican dealers)
Over 60%
o
f
dealers are multi-franchised; dealer count includes over 400 non-
Chrysler dealers
Access
t
o other Cerberus portfolio companies
Cerberus companies currently employ over 250,000 people and have millions
o
f
customers
On-going auto asset generation
t
o diversify WaMu origination platform
CONFIDENTIAL
Return
Current Capital Structure
Project Olympic
9
Chrysler Financial Funding
$Bn
Funding:
$5.8 Bank debt
(
$ 2Bn) L+400 and
(
$ 4Bn)
L
+
650
Existing term loans would need
t
o
b
e
refinanced
a
t
closing
$28.0 Bank conduit and ABS facilities
Chrysler Financial would continue
t
o draw down on these facilities until the close
o
f
a transaction
a
t
which point the facilities would term-out (facilities would liquidate
over
3
-
5 years
a
s
the assets liquidate, with
n
o
capacity for new originations)
- As the securitizations roll off, the Company would require new financing sources
t
o fund ongoing operations
- Average life
o
f
retail loans and leases
i
s 2.5- 3 years; average life
o
f
wholesale
loans
i
s 3 months
$7.4
(
1
)
Tangible equity
Note
1
.
t
CONFIDENTIAL
Return
Project Olympic
rITOTOMMOT W
Detailed Pro Forma Financials
CONFIDENTIAL
Return
Pro Forma Balance Sheet
12/ 31/ 07A 12/ 31/ 08P
Mid Case
$ MM WaMu CF New WaMu WaMu CF New WaMu
Goodwill &Other Intangibles 7,675 - 7,675 7,675 - 7,675
AFS securities 27,540 86 27,626 NA NA NA
Loans ( includes HFS) 249,789 39,987 289,776 239,268 NA NA
Other tangible assets 42,909 3,471 46,380 59,520 42,618 341,406
Total Assets 327,913 43,544 371,457 306,463 42,618 349,081
Deposits 181,926 - 181,926 189,855 - 189,855
Unsecured debt 38,958 5,796 44,754 31,938 5,248 37,186
Secured debt 63,852 28,000 91,852 52,346 25,354 77,700
Other Liabilities 14,674 2,361 17,035 8,052 4,344 12,396
Total Liabilities 299,410 36,157 335,567 282,191 34,946 317,137
Minority Interest 3,919 - 3,919 3,917 - 3,917
Preferred Equity 3,392 - 3,392 3,392 - 3,392
Common Equity 21,192 7,387 28,579 16,963 7,672 24,635
Liabilities and Equity 327,913 43,544 371,457 306,463 42,618 349,081
Key Ratios
$500MM New
Raise
$ 500MM New
Raise
Loans / Deposits
1.37x 1.59x
Deposits / Total Assets 55.5% 49.0% 62.0% 54.4%
Common Equity / Total Assets 6.5% 17.0% 7.7% 7.8% 5.5% 18.0% 7.1% 7.2%
Tangible Equity / Tangible Assets
(
1
)
6.6% 17.0% 7.9% 8.0% 5.6% 18.0% 7.1% 7.2%
Tangible Common Equity / Tangible Assets 4.3% 17.0% 5.8% 6.0% 3.1% 18.0% 5.0% 5.1%
Preferred as a %
o
f
Tangible Equity 35.1% 25.9% 25.5% 44.0% 0.0% 30.1% 29.5%
Detailed Pro FormaFinancials
Pro Forma Balance Sheet
Project Olympic
1
0
Additional common equity
provides capacity for
preferred
Note
1
.
Excludes OCI from equity
CONFIDENTIAL
Return
2008E Pro Forma Income Statement
WaMu New WaMu
$MM (Mid Severity) CF Synergies
(
1
)
with Synergies
Net interest margin 8,829 8
8
7 570 10,286
Provisions 13,050 4
5
0 - 13,500
Gross margin ( 4,221) 4
3
7 570 (3,214)
Non- interest income 5,779 7
9
9 - 6,578
Non- interest expense 8,220 7
7
7 - 8,997
Income before taxes ( 6,662) 4
5
9 5
7
0 (5,633)
Minority interest 305 - - 305
Taxes ( 2,885) 174 217 (2,494)
Net income ( 4,082) 2
8
5 3
5
3 (3,444)
Plus: provisions 13,050 4
5
0 - 13,500
Plus: insurance losses - 77 - 77
Plus: taxes ( 2,885) 1
7
4 217 (2,494)
Plus: incremental NIM
o
n new capital raised 18 - - 18
Plus: incremental cost cutting savings - 29 - 29
Subtotal 6,101 1,015 5
7
0 7,686
Less: normalized provision ( 500) (310) - (810)
Less: preferred dividends ( 260) - - (260)
Adjusted earnings before taxes 5,341 7
0
5 570 6,616
Taxes 2,514
Adjusted net income 4,102
Detailed Pro FormaFinancials
Pro Forma Income Statement
Project Olympic
1
1
Note
1
.
Based
o
n funding synergy
o
f
1.5%applied
t
o $38Bn debt. Share
o
f
ultimate funding synergies
i
s subject
t
o negotiations with Daimler
CONFIDENTIAL
Return
Project Olympic
Chrysler
Financial Overview
CONFIDENTIAL
Return
Chrysler Financial Overview
Product Overview: Customer Financing and Leasing
Project Olympic
1
2
Retail Lease
Portfolio
(
$ bn) $34.4 $22.0
%
o
f
total 46.0% 29.4%
Origination volume
(
$ bn) $17.5 $10.5
3-year CAGR (8%) 19%
Penetration rate 28.5% 20.5%
Net charge- off ratio (US) 1.30% 1.09%
Description Majority
o
f
portfolio
i
s conventional
financing with equal monthly payments up to
72 months
New and used motor vehicles
Subvented rates offered via Chrysler
Automotive marketing efforts
Fixed rate simple interest loans
Specialized offerings include: delayed
payment options, College Graduate Finance
Plan, Chrysler Financial Plus (balloon note
with buyback option), Farmer Payment Plan
and other niche programs
Conventional lease program
u
p
t
o 48 months
new Chrysler Automotive products only
Subvented payments offered via Chrysler
Financial marketing programs
Customer EOT options: return vehicle
(subject
t
o contractual charges), exercise
purchase option ( contract residual)
Customers may be offered lease extensions

o
n
lease- to-retail conversions for loss
mitigation purposes
Customer financing and leasing
Customer financing and leasing
Note: As
o
f
or for the year ended 12/ 31/ 07
Include balloon note financing
CONFIDENTIAL
Return
Product Overview: Dealer Financing
Project Olympic
1
3
Floor plan Capital loans and Real estate Dealer Rental Car ( DRAC)
Portfolio
(
$ bn) $13.7 $2.2 $ 0.1
%
o
f
total 18.4% 3.0% 0.1%
Penetration rate 74.6% NA NA
Description

Dealer inventory financing
new and used vehicles
for Chrysler Automotive and
non- Chrysler Automotive
dealers
Rates tied to sales volume

and total financing
relationship
Rates based on either LIBOR
or prime, depending on
dealer relationship size
Provides dealer with working

capital needs
Typical capital loan
i
s 60 months
level monthly principal payments
plus interest
Some revolving lines offered on an
interest only basis
Rate
i
s new floorplan rate +
additional margin
Typical real estate loans are fixed

rate, 20- year amortization with
rate / loan renewed
a
t
5
-
year
intervals (indexed to
5
-
year T-bills)
Financing for Dealer Rent- A-

Car program
Vehicles are normally used
a
s
service loaners
Some dealers use program
t
o
run local daily rental
companies
Various incentives may
include upfront allowances
and guaranteed depreciation
Dealer pays monthly
amortization payments,
interest and insurance
Dealer financing
Dealer financing
Note: As
o
f
or for the year ended 12/ 31/ 07
CONFIDENTIAL
Return
Product Overview: Small Business and Fleet Financing
Project Olympic
1
4
Business Vehicle Finance (BVF) Fleet
Portfolio
(
$ bn) $1.6 $0.7
% of total 2.2% 0.9%
Origination volume
(
$ bn) $1.0 $0.8
3-year CAGR 84.0% NM
Description Retail and lease financing for small
t
o medium size businesses
Tailored terms and conditions
t
o
meet customer needs
Currently integrated with DC Truck

Financial
i
n Chicago for
underwriting, customer service and
collections
Two primary customer groups daily
rental companies and dealer in-house
lease companies
Chrysler Financial receives monthly
payments simple interest on daily
outstandings plus principal amortizations
on individual vehicles
Fleet companies manage all customer

contacts and collections
Small business and fleet financing services
Small business and fleet financing services
Note: As
o
f
o
r
for the year ended 12/ 31/ 07
CONFIDENTIAL
Return
Portfolio Statistics
b
y
Country
Project Olympic
1
5
End
o
f
Period On- Balance Consumer Wholesale
Net Managed Sheet Penetration Penetration
Portfolio Portfolio Rate Rate
1
U
.
S
.
Consumer: Retail (new &
used), Lease $43,990 $28,217 48.1% 75.0%
Dealer: Floorplan, Capital

Loan, Real Estate, Dealer
Rental $13,117 $6,385
Small Business: Fleet
financing, Business Vehicle $2,156 $2,156
Canada Consumer: Retail (new &
used), Lease
2
$10,548 $175 81.8% 87.1%

Loan, Real Estate $2,297 $512
Small Business: Fleet

financing $207 $207
Mexico Consumer: Retail (new &
used), Lease $1,359 $1,359 48.6% 100.0%
Loan $513 $513
Puerto Rico Consumer: Retail (new &
used), Lease $252 $252 36.4% 55.5%
Loan $
3
3 $
3
3
Venezuela Consumer: Retail (new &
used), Lease $109 $109 9.9% 96.0%
Loan $
6
9 $
6
9
Total $74,650 $39,987 51.0% 77.0%
(
1
)
Based on Field Stocks ( units)
(
2
)
Includes Gold Key Leases held
a
t
OEM
12/ 31/
0
7
$MM
Portfolio
State
(
$ billion) Percent
Texas 3.3 12.9%
California 2.1 8.1%
Florida 1.4 5.5%
Pennsylvania 1.2 4.7%
Illinois 1.0 3.8%
Other 16.8 65.0%
Total 25.8 100.0%
Portfolio
State
(
$ billion) Percent
Michigan 5.3 33.5%
New York 1.8 11.7%
Ohio 1.2 7.8%
Florida 0.9 5.8%
Pennsylvania 0.8 5.2%
Other 5.7 36.0%
Total 15.8 100.0%
Portfolio
State
(
$ billion) Percent
Texas 1.8 13.8%
California 1.0 7.6%
Florida 0.9 6.7%
Michigan 0.7 5.6%
New York 0.6 4.3%
Other 8.1 62.0%
Total 13.1 100.0%
US Retail Portfolio - Top 5 States (12/ 31/ 07)
US Lease Portfolio - Top 5 States (12/ 31/ 07)
US Dealer Portfolio - Top 5 States (12/ 31/ 07)
CONFIDENTIAL
Return
Project Olympic
Chrysler
Automotive Overview
CONFIDENTIAL
Return
12.6%
12.9% 13.2%
12.6%
13.1%
14.9%
16.0%
17.0%
19.9%
24.6% 24.9%
14.6%
24.0%
25.7%
28.1%
30.6%
33.7%
23.3%
4%
9%
14%
19%
24%
29%
34%
'
9
2 ' 93 ' 94 '
9
5 ' 96 '97 ' 98 ' 99 ' 00 ' 01 '
0
2 ' 03 '04 ' 05 ' 06 ' 07
* - Includes Jobs Bank
** - Only reflects 8,400 hourly workforce reduction due
t
o RTP II.
Salary
Manpower
Hourly
Manpower
Total
Manpower
(000 s Headcount)
45.2
53.6
61.0
21.5
19.1
19.1
' 06 Actual ' 07 Actual ' 08 PF
82.5 *
72.7 *
64.3
*
*
Chrysler Automotive Overview
Chrysler Automotive Strong Recent Performance
Project Olympic
1
6
Stability
i
n
U
.
S
.
geographic segment share since 92 relative
t
o significant declines
i
n other big Detroit competitors
Strong balance sheet with $9.7 billion unrestricted cash
Broad and diverse dealer base over 3,000 dealers
i
n the
U
.
S
.
Strong product line up supported by key new vehicle release 2008 minivan, 2009 Dodge Ram truck, 2009 Dodge
Journey
Well positioned
i
n growing international geographical segments
Rationalization
o
f
legacy cost base
GM
Ford
Chrysler
Rationalized cost base
U
.
S
.
Geographical Segment Total (1992 - 2007)
Performance Highlights
CONFIDENTIAL
Return
Project Olympic Chrysler Automotive Overview
1
7
2007 Actual
v
s
2008 Plan
Actual
2007
Plan
2008
2008 H/(
L
)
2007
Total Geographical Segment Share (%) 12.6 11.5 ( 1.1 pts)
SAAR (MM
o
f
units) 16.4 15.5 (0.9)
Worldwide Shipments (000s) 2,610 2,344 (266)
Net Revenue
(
$ Bn) 59.7 58.1 (1.6)
Fixed Cost
(
$ Bn) 14.5 12.9 (1.6)
EBITDA
(
$ Bn) 1.6 2.0
(
2
)
0.4
OpProfitDA
(
$ Bn) 2.2 2.9 0.7
Cash
(
$ Bn) 9.7 7.4 (2.3)
Estimated Dealer Inventory ( yr-end) 000s 438 325 (113)
CAPEX
(
$ Bn) 3.1 3.0 (0.1)
Notes
1
.
Preliminary and un-audited financial results
2
.
2008 business plan EBITDA
o
f
$ 2.0Bn
i
s unchanged fromthe original Investment Plan
(
1
)
CONFIDENTIAL
Return
Chrysler Automotive Overview
FinCo / CarCo Relationship
Project Olympic
1
8
ChryslerAutomotive
(
Carco) provides subvention programs exclusively

through Chrysler Financial
(
Finco)
Carco makes
a
l
l
rate subvention payments (
i
n the case
o
f
below-market APR
incentives) upfront
t
o Finco, while residual subvention payments (
i
n the case
o
f
residual enhancements
o
f
leases) are made over the life
o
f
the lease
Payments are based upon a guaranteed 1.25% ROA for Finco and are discounted
back
a
t
Fincos marginal cost
o
f
funds
Finco carries minimal (0.5%) residual value exposure
When off- lease vehicles are remarketed, the first 1%
o
f
any gain/ loss (relative
t
o
original ALG estimate
a
t
lease inception)
i
s split 50/
5
0
between Carco and Finco
All losses
o
r
gains beyond the 1% threshold are assumed
b
y
Carco
FinCo benefits froma $1.5 billion cash collateral account which supports
a
l
l
unsecured exposures between Carco and Finco
Cash collateral account
i
s held
b
y
Carco and exists solely for the benefit
o
f
Finco
The main exposure this account supports
i
s the risk
o
f
a significant decline
i
n
residual values (since Finco
i
s relying
o
n
Carco for reimbursement
o
f
any residual
losses)
Even under stressed residual value assumptions, this $1.5 billion account
i
s
expected
t
o
b
e
sufficient
t
o cover
a
l
l
unsecured exposures between Carco and Finco
CONFIDENTIAL
Return
CONFIDENTIAL JPMCD_000004963.00001
HIGHLY CONFIDENTIAL
Confidential Treabnent Reque$ted
OFFICE OF THRIFT SUPERVISION
OMS No. 15500077
Expiration Date: 1213112003 .
Docket Number: 08551
NOTICE FOR ESTABLISHMENTOF AN OPERATING SUBSIDIARY
TO; Office ofThrlft Supervision Date of'Notice: lanuary 30,2006
We, the undersigned executive officer Md secretary, pursuant to a resolution of a. majority of the members of the board
directors, of: .
Savings Institution. Name
2273 North Green yaIley PkwV
Street Address
Henderson. NY 89014
City. State, and Zip Code
(hereioaller the "Institution"), hereby provides notice to the Office of Thrift Supervision ("OTS"') that the Institution
intends to establiSh Washington Mutual Preferred Funding LLC (the "Operating Subsidiary") as an operating subsidiary, to
engage in the activities set forth on the attachment hereto pursuant to 12 C.F.R. 559.3. which .will operate in the State set forth
on the attacllment hereto, and do hereby certify that, giving effect to the proposed acquisition of the subsidiary:
1. The Opera.t.ing Subsidiary wiUengage only in activities that Federal savings. llSSociations .may undel'Ulke
directly;
2. That lIle Institutil'ln will own, indirectly, 100% of the common or voting membership interests of the
Operating Subsidiary; .
3. That no person or entity other than the Institutil'ln will exercise effective operating control over the Operating
Subsidiary;
4. That the Institution and the Operati.ng Subsidiary will observe separate corporate existence and comply fully
with 12 C.F.R. 559.10;
S. That the Operating Subsidiary will be subject tl'l OTS examination and superviSion in accordance with 12
C.F.R. SS9.3(o)(1);
6. That the Institution has notified the FOlC, pursuant to 12 U.S.C. 1828(m)(I), of the acquisition of the
Operating Subsidiary and has attached a copy of the FDIC notificatil'ln under 12 C.F.R. 303.146; and
7. That the Institution is aware that 018 may request lnfonnadon I'lr may impose conditil'lns for establishing
operating subsidiaries, and may determine that the proposed subsidiary presents supervisory concerns.
The Operating Subsidiary is not contracting with a third-patty to provide, on behalf of the Operating Subsidiary,
primary services that the Operating Subsidiary offers to the public; and, therefore, no such contract with the third-party provider
is attached.
Mike Brandebeny, Senior Vice President
ers Form 1579
RevIsed April 2001
127416.8
William L. Lynch, Secreta.ty
Date of Recoipt by OTS
WMI-TPS 701359838.00001
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HIGHLY CONFIDENTIAL
Confidential Treatment Requested
Attachment to OTS Form 1579
filed by
Washington Mutual Bank,
Washington Mutual Bank (the "Association") proposes to establish a new operating
subsidiary to be named Washington Mutual Preferred Funding LLC (the "New Operating
Subsidiary"), which will be authorized to issue preferred securities eligible to be Included in the
core capital of the Association (the "Transaction"). As of the date of this submission, the
Association anticipates raising, on a consolidated basis, not more than $1.5 billion in connection.
with the initial Transaction. The Association hereby undertakes to notify the OTS if any
amounts in excess of $1.5 billion will be raised. The New Operating Subsidiary will be formed
as a limited liability company organized under the laws of the State of Delaware, and will issue
to the Association fixed rate and variable rate preferred securities as described more fully
herein. The New Operating Subsidiary will issue a limited amount of such securities to the
Association in exchange for a corresponding amount of consumer loan assets (or interests
thereon). The New Operating Subsidiary will be a direct subsidiary of University Street, Inc.
("REIT"). REIT qualifies asa real estate investment trust for federal income tax purposes and
is a subsidiary of Marion Holdings, Inc. ,Mario.,"). Both Mario.n and REIT are operating"
subsidiaries of the Association. .
The following is a summary of the various asset transfers and securities issuances
(some of which are described below in more detail) that are expected to occur In anticipation of,
or in connection with, the Transaction:
1. The Association will contribute to the New Operating Subsidiary consumer loan
assets (or interests thereon) in exchange for a corresponding amount of the LLC
Preferred Securities (defined below);
2. REIT will contribute to the New Operating Subsidiary adcjitional consumer loan
assets (or interests thereon) in exchange for all of the common, or voting,
mel!lbership interests of the New Operating Subsidiary; and
3. The New Operating Subsidiary wiJI contribute to the Asset Trust (defined below)
all of the consumer loan assets (or interests thereon) it received from each of the
Association and REIT;
4. The Association will sell to Delaware Issuer for cash the LLC Variable Rate'
Preferred Securities (defined below);
5. The Association will sell to Cayman Co. for cash the LLC .Fixed Rate Preferred
Securities.(defined below);
6. Each of Delaware Issuer and Cayman Co. will offer securities to investors as
described more specifically below,
The New Operating Subsidiary will :satisfy all other requirements applicable to operating
subSidiaries set forth in 12 C.F.R. 559.3. As required by 12 C.F:R. 559.3(c), the
Association, through its ownership of Marion and REIT, will own 100% of the voting
membership interests of Delaware LLC.
127416.8
.. '.",
WMI-TPS 701359838.00002
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HIGHLY CONFIDENTIAL
The New Operating Subsidiary will be managed by a Board of Managers, at least one
member of which will be an individual that is not affiliated with the Association or any of its,
subsidiaries. Pursuant to its operating agreement, the New Operating Subsidiary will voluntarily
agree to refrain from taking certain actions without the consent of at least two-thirds of the
holders of the LLC Preferred Securities, acting as a single class
1
Otherwise, action by the
Board will be by majority vote. The primary assets of the New Operating Subsidiary will be
comprised of certificates representing an undivided, 100% ownership interest in the regular and
residual interests i s s u e ~ by the Asset Trust upon its receipt of the Asset Trust Assets (defined
below).
Three additional entities will b.e formed in connection with the Transaction; however,
they will not be "subsidiaries of the Association for purposes of the notice requirement set forth
in 12 CFR 559.11. Nevertheless, because these entities will be used to facilitate the
Transaction, a description of these entities is included here for your reference.
1. Washington Mutual Home Equity Trust 1(" Asset Trusf), a trust formed under the laws
of the State of Delaware pursuant to a trust agreement between Delaware LLC, as
depositor, and a trustee, unaffiliated with the Association, as Delaware Trustee, Asset
Trustwill own apprOximately $5.2 billion of first lien, closed-end, home equity loans (the
UAsset Trust Assets") acquired from the Association, -the New OPE'rating Subsidiary
and from REIT, any property that secured a.consumer loan that the Asset Trust
acquires by foreclosure or deed in lieu of foreclosure. as well as other assets authorized
for federal savings associations under federal law.
2. Washington Mutual Preferred Funding Trust I, a trust formed under the laws of the State
of Delaware ("Delaware Issuer"), will own all of the LLC Variable Rate Preferred
Securities (defined below)" The LlC Variable. Rate Preferred Securities will be the sole
asset of the Delaware Issuer. The Delaware Issuer will issue Delaware Issuer
Securities (defined below). solely to U.S. persons who are "qualifiedinstitutioral buyers"
(within the meaning of Rule 144A under the Securities Act of 1933, as amended
("Securities Act") w h ~ are also "qualified purchasers" (within the meaning of the
Investment Company act of 1940 ("Investment Company Acf in a transaction
exempt from the registration requirements of the Securities Act pursuant to Rule 144A
thereunder.
3. Washington Mutual Preferred Funding (Cayman) I Ltd., a company with limited liability
organized under the laws of the Cayman Islands ("Cayman Co. -), will own all of the LLC
Fixed Rate Preferred Securities (defined below). Cayman Co. Will not have any material
assets other than the LlC Fixed Rate Preferred Securities. Cayman Co. will issue
Cayman Co. Fixed Rate Preferred SecuritieS (described below) (i) primarily to "non-US
. persons (within the meaning of Regulation S under the Securities Act), and (ii) to US
persons who are (A) -qualified institutional buyers
w
(within the meaning of Rule 144A)
1 Actions subject to this two-thirds approval requirement include: a merger or consolidation of the New
Operating Subsidiary; the iSsuance by the New Operating Subsidiary of any senior securities: a waiver of
compliance with applicable financial covenants; and certain amendments'to the New Operating
Subsidiary'S organizational documents. These actions would materially and adversely affect the rights of
the holders of the LLC Preferred Securities ordirectly relate to the New Operating Subsidiary's ability to
pay its obligations vis.-&-'lis such holders. /los the holder of all voting membership interests in the New
Operating Subsidiary, REIT (the Association's subsidiary) will have effective control of the dayto-day
operations oltha New Operating Subsidiary. The OTS has recognized that preferred securities containing
similar rights dO not constitute voting stock. See 12 C.F.R. 567.2(u)(2)(i). No other party will have such
control.
2
WMI-TPS 701359838.00003
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> < . ~ ~ . :
HIGHLY CONFIDENTIAL
and (B) "qualified purchasers- (within the meaning of the Investment Company Act), in
a transaction exempt from the registration requirements of the'Securities Act pursuant to
Regulation S and Rule 144A, respectively. A Cayman charitable trust will own 1000Al of
the common equity of Cayman Co. The board of directors of Cayman Co. will consist of
five directors. One employee of the Association will serve as a director of Cayman Co.;
three directors will be appointed by such Cayman charitable trust; and the independent
director of Delaware LLC also will serve as the independent director of Cayman Co.
The New Operating Subsidiary will issue two classes of preferred securities (collectively
the "LLC Preferred Securities"):
a. Class A-1 Perpetual Non-Cumulative Preferred Securities (-LLC Fixed Rate Preferred
Securities"), which will have a stated amount to be determined based upon market
conditions and will pay distributions on a non-cumulative basis at a fixed rate. The LLC
Fixed Rate Preferred Securities will be issued to the Association, which will then sell
them to Cayman Co.
b. Class A-2 Perpetual Non-Cumulative Preferred Securities rLLC Variable Rate
Preferred Securities") will have a stated amount to be determined based upon market
conditions and will pay distributions on a non...cumulative basis at a fIXed rate for a
period to be determined, and thereafter will pay distributions based on a variable rate of
interest plus an applicable spread. The LLC Variable Rate Preferred Securities will be
issued to the Association, which will then sell them to Delaware Issuer.
It is anticipated that the interest rate applicable to each of the LLC Fixed Rate Preferred
Securities and the LLC Variable Rate Preferred Securities will be lower than the rate of interest
currently paid by the Association's parent, Washington Mutual, Inc. (the -Holding Company"),
on certain trust preferred securities previously sold to investors by the Holding Company.
In addition, the Holding Company will make a declaration of covenant in favor of certain holders
of the Holding Company's publicly issued debt (as well as the Cayman Co. Preferred Securities
and the Delaware Issuer Securities) that it will not permit the New Operating Subsidiary to
redeem, in the case of the LLC Preferred Securities, and will not itself redeem, in the case of
Holding Company Shares (defined below), upon a Conditional Exchange (as defined below),
except out of the net proceeds of (x) common stock issuedby the Holding Company, (y) non-
cumulative perpetual preferred stock issued by the Holding Company or the Association
satisfying certain requirements to be agreed upon with the rating agencies, or (z) certain other
qualifying equity or debt securities issued by the Holding Company or one of its subsidiaries, in
each case during the 180 days prior to the redemption date applicable to the LLC Preferred
Securities'or Holding Company Shares, as applicable; provided, however that if the Holding
Company issues common stock in connection with any redemption of the Holding Company
Shares, Cayman Co. Preferred Securities or Delaware Issuer Securities, then the Holding
Company will only have to issue common stock in an amount equal to 75% of the amount of
securities so redeemed. '
This Notice also constitutes a notice of the issuance of securities by a subsidiary pursuant to
12 C.F.R. 559.12(b).
In turn, Cayman Co. and Oelaware Issuer will issue the following securities:
i. Cayman Co. will issue t w ~ classes of securities:
3
WMI-TPS 701359838.00004
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HIGHLY CONFIDENTIAL
A Cayman Co. Ordinary Shares to a Cayman charitable trust for $1,000 (the
uOrdinary Shares").
B. Perpetual Exchangeable Non-cumulative Preferred Securities ("Cayman Co.
Preferred Securities"). The financial entitlements of the Cayman Co. Preferred
Securities will be substantially the same as the financial entitlements of the LLC
Fixed Rate Preferred Securities held by Cayman Co., with the consequence that
dividends and the redemption price on each Cayman Co. Preferred Security are
expected to be paid on the same dates and in the same amounts as the
corresponding dividends or redemption price, as applicable, on the llC Fixed
Rate Preferred Securities.
ii. Delaware Issuer will issue a single class of securities, the Perpetual Exchangeable
cumulative Trust Securities ("Delaware Issuer Securities) which will represent
undivided benefiCial ownership interests in the lLC Variable Rate Preferred Securities
held by the Delaware Issuer. The Delaware Issuer will pass.;through any distributions or
payments upon redemption or upon liquidation with respect to the LLC Variable Rate
Preferred Securities to be holders of the Delaware Issuer Securities.
Accordir:lg to the terms of the Cayman Co. Preferred Securities and the Delaware Issuer
Securities, upon the occurrence of a Supervisory Event', the Cayman Co. Preferred Securities
and the Delaware Issuer Securities will (at the direction of the OTS) each automatically be
exchanged for a corresponding amount of depositary shares (the -Holding Company Shares")
repre.senting a fractional interest in preferred stock of the Holding Company? The Holding
Company Shares will (i) generally have the same terms as the respective LLC Preferred
Securities, (ii) upon issuance, rank at least pari passu with the most senior preferred stock of
the Holding Company, if any, then outstanding, (iii) pay dividends (based on a fixed or variable
coupon, as the case may be) if, when, and as declared by the Holding Company's board of
directors, (iv) be non-cumulative and and (v) be redeemable on the same terms as
the LLC Preferred Securities; provided, however, that certain redemption events tied to
changes in tax law and the regulation of investment companies that are applicable to the LLC
Preferred Securities will not be applicable with respect to the redemption of Holding Company
Shares.
For purposes of the above discussion,. Supervlsory Evenf means:
a. the Association becomes "undercapitalized- under the OTS corrective action
n
regulations, as defined in 12 C.F.R. 565.4(b)(3);
b. the Association is placed Into bankruptcy, reorganization, conservator!ahip or
receivership; or
c. the CTS, in its sole discretion, (i) anticipates that the Association may become
undercapitalized in the near term or (ii) takes supervisory action that limits the payment of
2 During the first five-year period, the LLC Preferred Securities may. subject to approval by the OlS. be
redeemed by Delaware LLC (which will automatically cause a redemption of the related Cayman Co.
Preferred Securities and Delaware Issuer Securities) if there is a change in the law regarding the tax,
investment company or regulatory capital treatment of the LLC Preferred Securities. Thereafter; they may
be redeemed with .the prior approval of the OlS. lhese conditions do not include a detennination that the
ASSOCiation is either insolvent or placed into receivership.
4
WMI-TPS 701359838.00005
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HIGHLY CONFIDENTIAL
distributions or dividends, as applicable by the Delaware LLC or the Association, and in
connection therewith, directs such exchange.
The foregoing provision is not subject to the restriction imposed by 12 C.F.R. 559.12{a),
which states that "[a] subsidiary may not issue any sec4rity the payment,' maturity or redemption
of which may be accelerated upon the condition that [the parent savings association is1
insolvent or [has] been placed into receivership. The LLC Preferred Securities will not be paid,
mature or be redeemed as a result of the exchange described above and the capital treatment
of the LLC Preferred Securities (see below) will remain the same. The Cayman Co. Preferred
Securities and the Delaware Issuer S:ecurities are not issued by. a subsidiary of the Association
and hence are not subject to the limitation of the above cited regulation.
Confirmation of Capital Treatment. The Association respectfully requests that the OTS confirm
that the sale of the Cayman Co. Preferred Securities and the Delaware Issuer Securities to
outside investors constitutes the sale of the LLC Preferred Securities to outside investors and
that the LLC Preferred Securi.ties qualify for inclusion in core capital of the Association because
they constitute either preferred stock of a fully consolidated subsidiary or "minority interests in
equity accounts of subsidiaries that are fully consolidated" in accordance with 12 C.F.R.
)(ii) or (iii), and, if so, that the LLC Preferred Securities would also constitute Tier 1
capita) under the OTS "Prompt Corrective Action" regulations, 12 C.F.R. 565.2(g).3 We note
that the OTS has approved capital treatment to a similar issuance (See: Letter from John F.
Downey. Executive Director, Supervision, OTS, re: Capital and Prompt Corrective Action
Treatment of Minority Interests.in Capital Corporation, November 13, 1996).
To .address any supervisory concern that the OTS may have about whether the LLC Preferred
Securities (through the issuance of the Cayman Co. Preferred Securities and the Delaware
Issuer Securities) would provide the same level of capital support to the Association as other
types of core capital, the Association hereby agrees to the follOwing requirements.
1. The LLC Preferred Securities, in accordance with 12 C.F.R. 567.5(a)(1)(ii), will
constitute noncumulative, perpetual preferred stock (as defined in 12 C.F.R. 567.1)
and related surplus. The terms applicable to the Cayman Co. Preferred Securities and
the Delaware Issuer Securities will mirror in aU material respects the LLC Preferred
Securities.
2. The offering circular, preferred stoek agreement or certificate (as applicable)
related to each of the LLC Preferred Securities, the Cayman Co. Preferred Securities
and the Delaware Issuer Securities will include a disclosure stating that the respective
securities covered thereby cannot be redeemed unless the Association receives the
prior written consent of the OTS.
3. Upon the occurrence of a Supervisory Event- (described above), the Cayman
Co. Preferred Securities and the Delaware Issuer Securities will (at the direction of the
OTS) be exchanged for depositary shares representing a fractional
interest in preferred stock of the Holding Company. .
4. The amount of the Association's core capital that may be comprised of the LLC
Preferred Securities (plus any other future issuances -of subsidiary preferred stock) will
3 For avoidance of doubt, the Association is not requesting double counting of the LLC Preferred
Securities along with the Cayman Co. Preferred Securities and Delaware Issuer Securities. Instead, the
Association Is merely requesting that these securities be viewed as part of one transaction .
. 5
WMI-TPS 701359838.00006
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HIGHLY CONFIDENTIAL
not exceed 25 percent of the Association's core capital including the LLC Preferred
Securities and any future subsidiary preferred stock issuances.
II. Additional Information
The following additional information is pn:w.ided with regard to matters that have not already
been discussed above, and that are set forth in, Section 605 of the QTS Applications
Processing Handbook to assist in the decision with regard to the Association's proposal to
establish the New Operating SUbsidiary.
With respect to the -New Operating Subsidiary:
(I) The Association will provide to. the OTS, if requested, copies of organizational
documents for the New Operating Subsidiary after these documents have been finalized.
(ii) In lieu of a statement by the Association's attorney that the New Operating Subsidiary is
permitted to engage in the activities summarized above pursuant to applicable state laws, the
Association represents that s,,!ch is the case.
- .
(iii) There are no qualifications or licensing requirements of personnel responsible for the
activities summarized above.
(Iv) The New Operating Subsidiary will have requirements in its organizational documents
requiring it to maintain a separate entity existence.
(v) The Association will continue to comply with any applicable investment limitations under
5(c) of HOLA and 12 Part 560 tOr the proposed operating subsidiary activities
above.
(vi) Certain officers of the ,Association (who are "affiliated persons" of ttle Association
according to the definition in OTS regulations at 12 C.F.R 561.5(a will be nominated by the
Association to serve as directors. officers or agents of the New Operating Subsidiary. No
affiliated person of the Association has any personal interests. however, in the transaction, or
any other relationships to the New Operating Subsidiary.
Under separate cover, we are sending, to the OTS Regional Office in Daly City. California, a
check for $1 ,000 payable to the Office of Thrift SuperviSion, for the filing fee.
The Association is also filing a notice With the Federal Deposit Insurance Corporation-
("FDIC) under FDIA 18(m) and 12 C.F.R. 303.142(c) and :362.15. A copy of the notice to
the FDIC is attached in compliance With 12 C.F.R. 559.11.
Request for Confidential Treatment Pursuant to 12 C.F,R .. 51a.35(b)(1), and consistent
with the standards of the Freedom of Information Act, 5 U.S.C. 552{b), and the regulations of
the Department of the Treasury issued thereunder; 31 C.F.R. Part 1, Subpart A (incorporated
by reference into 12 C.F.R. Part 505), the Association hereby requests confidential treatment of
this notice and the enclosures (collectively, the UNotice-). The Notice contain business
information that is "commercial or financial information obtained from a person and privileged
and confidential" that is exempt from disclosure under paragraph (b){4) of the Freedom of
Information Act, 5 U.S.C. 552(b){4), and theappnoable regulations of the Department of the
Treasury. 31 C.F.R. 1.2(c)(1} and 1.6(a). The Association would not customarily disclose the
6
WMI-TPS 701359838.00007
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HIGHLY CONFIDENTIAL
Notice to the public. Disclosure of the Notice may result in negative consequences that could
adversely affect the Association and cause substantial competitive harm. The Association
believes that its competitors could riot otherwise obtain the confidential information contained
the Notice from any other source. This information is proprietary, material inside information
and not otherwise available to any other party from any other source. For these reasons, the
Association believes that the Notice is exempt from disclosure pursuant to 5 U.S.C. 552(b)(4)
and 31 C.F.R. 1.2(c)(1) and 1.6(a). Accordingly. the Notice is marked "Confidential." '
The Association requests that the Notice be treated as confidential indefinitely, because
the basis for confidential treatment will continue to exist. The Association further requests that
if, notwithstanding the foregoing, the OTSshoukl determine preliminarily to make available to
any party any of the information contained in the Notice, the OTS will notify the Association
prior to any such release, as required by 31 C..F.R. 1.6(c}, and provide the Association with an
opportunity to object to such disclosure, as pr()vided by 12 C.F.R. 1.6(d) and applicable law.
Furthermore, if the OTS decides to disclose the Notice to any party despite the Association's
objection of such disclosure, then the Association requests that. prior to any such disclosure,
the OTS provide the Association with a written notice of its decision, in accordance with 31
C.F.R. 1.6(e). The Association also requests that the ors notify the Association, in
accordance with 31 C.F.R. 1.6(f), of any suit Seeking to compel disclosure of the Notice. The
Association would appreciate the opportunity to defend against any such suit seeking to compel
disclosure. . '
If you have any questions regarding this notice, please call Robert Monheit at (212) 326-
6104, Chad Smith at (206) 49()"1836 or Bill Lynch at (206) 4 6 1 - ~ 1 4 0 .
7
WMI-TPS 701359838.00008
Return
Office of Thrift Supervision
Department
of the Treasury
101 Stewart Street Suite 1010 Seattle WA 981011048
Telephone 206 8292600 + Fax 206 8292620
February 9 2006
Mr John F Robinson
Executive Vice President
Corporate
Risk Management
1201 Third Avenue WMT 1601
Seattle Washington
98101
Dear Mr Robinson
West Region
Seattle Area Office
This responds to the notice filed January 30 2006 advising that Washington
Mutual Bank WMB
plans to establish a new subsidiary Washington Mutual Preferred Funding
LLC
WMPF
for the
purpose
of issuingtwo classes of preferred
securities to be eligible
for inclusion in core capital
of WMB
Based
upon
the representations
made in the notice we do not object to establishment of the new operating
subsidiary or to the issuance of securities by
WMPF Notwithstanding please be advised that this letter
should not be construed as authorizing the proposed capital
treatment of the SI5 billion in LLC Preferred
Securities to be issued by
WMPF That issue remains under review and we will
provide
an answer when
our review i
s
completedIn
the future we will
expect
that WMB will plan appropriately so as to allow for the full thirtyday review
by
OTS of notices of this type
Please contact me at 206 8292601 i
f
you
have
any questions
Sincerely
DarrelW Dochow
Regional Deputy Director
cc WilliamL Lynch Secretary Washington
Mutual
CONFIDENTIAL
Restricted For Use in Connection with Plan Confirmation Only WMIPC_500002025.00001
Return
Washington
Mutual
CONFIDENTIAL TREATMENT QUESTED
Sohn F Robinson
Corporate RiiskManagement
February
23 2006
Darrel Dochow
Deputy Regional
Director West Region
101 Stewart Street
Suite
1
0
10
Seattle
WA 981041048
Re Washington
Mutual Bank Docket
Number 08551 Request
for
confirmation of capital treatment of two classes
of
preferred
stock
Dear Mr Dochow
fin behalf
of Washington Mutual Inc I I I am writing with
reference to the notice
filed January 30
2006
by Washington
Mutual Bank WMB
to establish a new
subsidiary Washington Mutual Preferred Funding LLC VilMPF
for the
purpose
of
issuingtwo
classes of preferred
securities to be eligible
far inclusion
i
n core capital
of
WMB the Notice
You provided notice of the nonobjection
of the Office of Thrift
Supervision
OTS to the establishment of WMPP by your
letter dated February 9
2006
As
you
are aware i
n the Notice WMB requested
the OTS confirm that the sale of the
Cayman
Co Preferred Securities and the Delaware Issuer Securities as defined in the
Notice to outside investors constitutes the sale of the LLCPreferred Securities as
defined
i
n the Notice to outside investors and that the LLC Preferred Securities qualify
for
inclusion in core capital of WMB In connection wit=h thatrequest
WM1 hereby
undertakes
that
i
f as a result of Supervisory
Event as
defined inthe Notice
WMI exchanges its
Holding Company
Shares as
defined
i
n the Notice
for Cayman
Co Preferred Securities
and the l ielaware Issuer Securities or
i
f WTI subsequent t
o such exchange a quires
the
LLC Preferred Securities W IIWill contribute to VMB the Cayman
Co Preferred
Securities and the Delaware IssuerSecurities or as appropriate
the LLC Preferred
Securities
I
f
you
have any questions regarding this letter please
call RobertMonheit at
212 3266104 or me
at
206 4906100
SiereI
oho F Robinson
Corporate
Risk Management
12111 Third Avenue
Seattle WA 981
20649063E phone
fax 206 3 5I8
CONFIDENTIAL
Return
Department
ofthe Treasury
101 Stewart Street Suite 3010 Seattle WA 981012419
Telephone 206 8292600 Fax 206 8292620
February 24 2006
West Region
Seattle Area oft e
Mr John FRobinson
Executive Vice President FEB 2 8 2006
c
Corporate
Risk Management
Washington
Mutual Inc
LEGAL DEPARTMENT
1201 Third Avenue
WMT 1601
Seattle WA 98101
Dear Mr Robinson
This letter further responds to the notice filed January 30
2006 advising that Washington
Mutual
Bank WMB plans to establish a new subsidiary Washington
Mutual Preferred Funding LLC
WMPF
for the
purpose
of issuing two classes of Preferred Securities to be eligible for
inclusion in core capital of WMB By letter dated February 9 2006 we took no objection
to the
establishment of the new operating subsidiary
and the issuance of securities by
WMPF
Please be advised that OTS will not exercise its supervisory authority and discretion to exclude
the Preferred Securities from core capital
under 12 CFR 5675a1 footnote 4 or the
reservation of authority provision 12
CFR 56711 ofthe OTS capital rule and we hereby
confirm that
the Preferred Securities will qualify
for inclusion in WMB core capital This
decision
i
s based on the
representations
in the Notice attachment thereto
and commitment
detailed in
your
confidential letter dated February 23 2006
Notwithstanding
the above the 0TS reserves The right in its sole discretion to exclude the
Preferred Securities or prospective
issuances of Preferred Securities i
f the terms are revised or
i
t otherwise ceases to provide meaningful capital support
and a realistic ability to absorb losses
or
otherwise raises
supervisory
concerns This
may
include OTS concerns about the capital mix
or asset structure of the Subsidiary or WMB
If
you
have
any questions regarding
this letter please contact meat 206
8292601
Sincerely
WA WL
Darrel W Dochow
Regional Deputy
Director
cc William L
Lynch Secretary Washington
Mutual
CONFIDENTIAL
Return
Mailstop WMC 3301
1301 Second Avenue
Seattle WA 98101
Via Electronic Mail
September 25 2008
Examinations
Attn John Bisset
Attn Benjamin
Franklin
2065008302 direct phone
steverotellawamunet
WMI will issue a press
release on September 26 2008 announcing that each Conditional Exchange
will
occur at 800 am New York time on September 26 2008 Pursuant to Section 2 of each Exchange
Agreement the Conditional Exchange
will then occur automatically at that time and WMI will become
the owner of all the Delaware issuer trust securities and all the Preferred Securities issued by
Washington Preferred Funding Cayman
I Ltd the Cayco
Preferred Securities The occurrence of the
Conditional Exchange
has the effect of dissolving
each of the Delaware issuer trusts so that the WMPF
Preferred Securities held
by
the trusts will be owned by WMl as a result of such dissolution In any event
l award th D t t e o e
effective September25 2008
WMI has assigned to WMB all of its right
title and interes
i t
p
the Cayco
Preferred Securities and the WMPF Preferred Securities and
upon
rece
trust securities
the Delaware trust securities the Cayco
Preferred Securities and the WMPF Preferred Securities WM
will immediately contribute and transfer same to WMB and such contribution and transfer will occur
regardless
of
any
events which may occur prior to such contribution and transfer
Sincerely
By
Name Steve Rotella
Title President and Chief Operating
Officer
CONFIDENTIAL
Return
ASSIGNMENT AGREEMENT
between
as Assignee
and
as Assignor
Effective as of September 25
2008
17535196 05129267
CONFIDENTIAL
Return
ASSIGNMENT AGREEMENT
THIS ASSIGNMENT AGREEMENT as amended modified or supplemented
from time to time after the date hereof the Agreement i
s
effective
as of
September
25
2008
and
i
s made
b
y and between WASHINGTON MUTUAL BANK a
federallychartered
savings association as Assignee the Assignee
and WASHINGTON
MUTUAL INC a Washington corporation
as Assignor the Assignor
RECITALS
A Assignor
wishes to assign to Assignee
certain securities
and Assignee
wishes to accept such assignment
which Securities shall be assigned upon
the
execution of this Agreement
AGREEMENT
In consideration of the premises
and the mutual agreements
hereinafter set forth
and for other
good
and valuable consideration the receipt
and sufficiency
of which are
hereby acknowledged
the Assignee
and Assignor agree
as follows
ARTICLE I
DEFINITIONS GENERAL
INTERPRETIVE PRINCIPLES
Section 101 Definitions
Whenever used i
n this Agreement
the following
words and
phrases
unless the
context otherwise requires shall have the following meanings
Agreement
This Assignment Agreement
including all exhibits hereto
and all
amendments hereof and supplements
hereto
Certificate Any
instrument constituting evidence of ownership
of a Security
Effective Date September 25 2008
Code The Internal Revenue Code of 1986
as amended and the regulations
promulgated
thereunder and rulings issued thereunder Section references to the Code
are to the Code as
i
n effect as the date of this Agreement
and any subsequent
provisions
of the Code amendatory thereof supplemental
thereto or substituted
therefore
Assignment
The
assignment
to Assignee by Assignor
of Securities pursuant
to
this Agreement
Delive
I
s deemed to occur as of September 25 2008
WMBNWI Master Securities
Assignment Agreement
17535196 05129267
CONFIDENTIAL
Return
Person Any individual corporation limited liability company partnership joint
venture association jointstock company trust unincorporated organization
or
government
or any agency
or political
subdivision thereof
Assignee Washington
Mutual Bank a federallychartered savings association
and its successors
and assigns
Securities The securities listed
i
n Exhibit A that are the subject of this
Agreement
The term Securities includes without limitation such securities any
Certificates corresponding
to such securities
and all other rights benefits proceeds
and
obligations
of the owner of such securities arising
from or i
n connection with such
securities whether now owned or hereafter acquired
Assignor Washington Mutual Inc a Washington corporation and its successors
and
assigns
Section 102 General Interpretive Principles
For
purposes
of this Agreement except
as otherwise expressly provided
or
unless the context otherwise requires
a
the terms defined
i
n this Agreement
have the meanings assigned
to them
i
n this Agreement
and include the plural
as well as the singular and the
use of any gender
herein shall be deemed to include the other gender
b accounting terms not otherwise defined herein have the meanings
assigned to them
i
n accordance with generally accepted accounting
principles
references herein to Articles Sections Subsections Paragraphs
and other subdivisions without reference to a document are to designated
Articles Sections Subsections Paragraphs
and other subdivisions of this
Agreement
d
a reference to a Subsection without further reference to a Section
i
s a
reference to such Subsection as contained i
n the same Section
i
n which
the reference appears
and this rule shall also apply
to Paragraphs
and
other subdivisions
e
the words herein hereof hereunder and other words of similar
import
refer to this Agreement
as a whole and not to any particular
provision
and
f
the term include or including
shall mean without limitation by reason of
enumeration
2
17535196 05129267
CONFIDENTIAL
Return
ARTICLE
I
I
ASSIGNMENT OF SECURITIES
Section 201 Assignment of Securities
With respect to the Securities listed on Exhibit A attached hereto Assignor
hereby contributes transfers assigns
sets over and conveys
to Assignee without
recourse
but subject
to the terms of this Agreement
all of Assignors right
title and
interest whether now owned or hereafter acquired i
n and to the Securities
Upon
execution and delivery
of this Agreement by Assignor
and Assignee
all
rights
and benefits arising out of the Securities which come into the
possession
of
Assignor including
but not limited to funds which may
be received by Assignor
on or i
n
connection with the Securities and the ownership
of all records and documents with
respect
to the Securities which are prepared by
or which come into the possession
of
Assignor
shall immediately
vest
i
n
Assignee
Assignee acknowledges
that the assignment by Assignor to Assignee
under this
Agreement are intended to qualify as taxfree transactions under Section 351 of the
Code
ARTICLE I
I
I
REPRESENTATIONS AND WARRANTIES
Section 301 Mutual Representations and Warranties Each party hereby
represents
and warrants to the other that i
t has all requisite power
and authority
to enter
into and perform
its obligations
under this Agreement
I
t
i
s understood and agreed
that the representations
and warranties set forth
i
n
this Article V shall survive delivery
of the respective
Securities to the Assignee
and shall
continue throughout
the term of this
Agreement
ARTICLE IV
COSTS
Section 401 Costs
Each party
shall bear its own costs and expenses
All other costs and expenses
incurred
i
n connection with the transfer and delivery
of the Securities including
without
limitationrecording
and filing fees shall be paid
b
y
Assignee
Each remittance or distribution made pursuant
to this Agreement
shall be made
i
n the manner agreed
to by the parties
To the extent that the amount of a remittance or
distribution made pursuant to this Agreement i
s
greater
than the amount that was
supposed
to be made
each
party agrees
to give prompt
written notice thereof to the
other party
after discovery
thereof including
the amount of such remittance or
distribution that was paid i
n error
and to refund such overpayment immediately
3
17535196 05129267
CONFIDENTIAL
Return
ARTICLE V
MISCELLANEOUS
PROVISIONS
Section 501 Amendment
This Agreement may
be amended from time to time only by written agreement
signed by Assignor
and Assignee
Section 502 Governing Law
This Agreement
shall be construed i
n accordance with the internal laws of the
State of Washington except
to the extent preempted by
federal law and without
reference to the choice of law doctrine of such state and the obligations rights
and
remedies of the parties
hereunder shall be determined
i
n accordance with such laws
Section 503 Notices
All demands notices and communications hereunder shall be i
n writing and shall
be deemed to have been duly given i
f
personally
delivered at or mailed by registered
or
certified mail postage prepaid
to a i
n the case of Assignor
1301 Second Avenue
WMC 1411
Seattle Washington
98101
Attention Corporate Secretary
or such other address as may
hereafter be furnished by Assignor
to Assignee i
n
writing
and
b i
n the case of Assignee
Washington
Mutual Bank
1301 Second Avenue WMC 1411
Seattle Washington
98101
Attention Corporate Secretary
or such other address as may
hereafter be furnished by Assignee
to Assignor i
n
writing
Section 504 Merger Severability of Provisions
This
Agreement
and the documents and instruments referred to herein
constitute the entire agreement
of and i
s the final
and complete expression
of the parties
relating
to the subject
matter of this Agreement
and supersedes
all prior
or
contemporaneous
negotiations
and agreements
whether oral or written relating
to the
subject
matter hereof
I
f
any
one or more of the covenants agreements provisions
or terms of this
Agreement
shall be held invalid for
any
reason whatsoever then such covenants
4
17535196 05129267
CONFIDENTIAL
Return
agreements provisions
or terms shall be deemed severable from the remaining
covenants agreements provisions
or terms of this Agreement
and shall
i
n no
way
affect
the validity or enforceability
of the other provisions
of this Agreement I
f the invalidity
of
any part provision representation or warranty
of this Agreement
shall deprive any party
of the economic benefit intended to be conferred by this Agreement
the
parties
shall
negotiate i
n
good
faith to develop a structure the economic effect of which
i
s nearly as
possible
the same as the economic effect of this Agreement
without regard
to such
inability
Section 505 Execution Successors and Assicros
This Agreement may
be executed
i
n one or more counterparts
and by
the
different parties
hereto on separate counterparts
each of which when so executed
shall be deemed to be an original
such counterparts together
shall constitute one and
the same agreement
This Agreement
shall inure to the benefit of and be binding upon
Assignor
and Assignee
and their respective successors and assigns
Signatures
on Following Page
5
17535196 05129267
CONFIDENTIAL
Return
IN WITNESS WHEREOF the parties
have caused this Agreement to be
executed by
their respective duly
authorized officers on the dates shown below to be
effective as of the effective date first set forth above
By$
Name
zh
t i
rTitle
t jA
r1WASHINGTON
MUTUAL
INC
By
Name 1t
Title VVj f vol
s
17535196 05129267
CONFIDENTIAL
Return
EXHIBITA
SECURITIES
I Washington
Mutual Preferred Cayman
I Ltd 725 Perpetual Noncumulative
Preferred Securities
Series A1
ii Washington
I Ltd 725 Perpetual
Noncumulative
Preferred Securities Series A2
iii Washington
Mutual Preferred Funding Trust FixedtoFloating Rate Perpetual
Noncumulative Trust Securities
iv Washington
Mutual Preferred Funding
Trust
I
I
FixedtoFloating
Rate Perpetual
v Washington Mutual Preferred Funding Trust I
l
l
FixedtoFloating
Rate Perpetual
vi Washington
Trust IV FixedtoFloating
Rate Perpetual
vii Washington Mutual Preferred Funding
LLC FixedtoFloating
Rate Perpetual
Noncumulative Preferred Securities Series 2006A
viii Washington
LLC 725 Perpetual
Noncumulative
Preferred Securities Series 2006B
ix Washington
LLC FixedtoFloating
Rate Perpetual
Noncumulative Preferred Securities Series 2006C
x Washington
Mutual Preferred Funding LLC FixedtoFloating
Rate Perpetual
Noncumulative Preferred Securities Series 2007A
xi Washington
LLC FixedtoFloating
Rate Perpetual
Noncumulative Preferred Securities Series 2007B
ii Any
and all right
title and interest of the Washington Mutual Inc i
n and to
Washington
I Ltd WaMu Cayman Washington
Trust WaMu Delaware I Washington Mutual
Preferred Funding
Trust
I
I
WaMu Delaware Iln Washington
Mutual Preferred
Funding
Trust
I
I
I
WaMu Delaware Ill
and Washington
Mutual Preferred
Funding
Trust IV WaMu
Delaware IV and together
with WaMu Cayman
VJaMu Delaware I WaMu Delaware
1
1 and WaMu Delaware III the Trusts
including any
interests of the Trusts i
n
any
of the Securities
17535196 05129267
CONFIDENTIAL
Return
.-
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;urrem market anxietv limits access to markets
Strateaic investors "frozen" market and developments
Sufficient liquidity to withstand short-term pressure on depo:sits
insurance
Uninsured consumer deposits
- 20 million customers:
approximately Obn
seeing erosion of customer base
JrrF!ntlv have $20 bn of near-term available liquidity and incremental collateral available to
pledge

September charge-off trends improving for all
Delinauencies showina of
Aaaressive loss itigation and loan modification programs in
New
committed to reauclr and balance sheet size
Proposed stand-alone recapitalization provides alternative approach without intervention
3
Rp"tridprl F'nr II"" in r.nnnpdinn with PI:>n r.nnfirm:>tinn Onlv \l\lMIPr. "innnn1 qcm nnnrn
R
e
t
u
r
n

Del:lOs;it are down 7% from VA"r-Anrl
- Cost of down costs down 11 Obps
- Retail deposits as a % of assets to 46.6% from 43.8% at 12131/07
143.6
148.3
142.9
" Consumer Noninterest-Bearina
" CD
.. Interest-Bearing Transaction
2Q'08 JulOB Aug 'DB 9/19
Retail Cost of Deposits 2.82% 2.23% 2.00% 209
CD Cost of 4.56 3.94 3.37 3.46
CD as % of Total 34.4 29.1 29.7 32.3 35.8
------------ -------
Retail DeD as % of Total Assets 43.8 47.9 45.0 46.6
4
Rp"tri/Olprl For I J"P in r.nnnpr:tinn with PI"n r.nnfirm::.tinn On Iv \I\II\IJ J pr. <;nnnn HIAn nnn04
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e
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n

delJOS;it base more stable before IndyMac
- Mix of accounts from July 11th - shifting to lower balance mix.
$500K
- Accounts over exoerienced almost the decrease of accounts $1
:ouonlv two-thirds of over last several from uninsured depo:sits
Balance> $100K for
$24.0
07111/08 08/01/08 08129108 09/12108
R.,,,trid.,ri Fnr II"" in f':nnnpdinn with PI"n f':nnfirm"tinn Onl"
98% of accounts are under
09/19/08
vs.45%)
II
+
OOK-
75% Decrease
since 07/11
45% Decrease
since 07/11
5
INMIPf': Finnnn1 qqn nnnnFi
R
e
t
u
r
n
DENTIAL
i
.
I
In 1% of all balance HH's ended their WaMu relatinn"hin
14% withdrew more but kept their rc!latinn"hin
- As of 9/11 41 % of these customers back$10K+
Balance
/ Actions between 7125 and 9111
Total
Households (>$100kl Total HHLDs %ofTolal HHLDs %ofTotal
/
HHLDs end ina WaMu
5,594 1.7%
/
I
Back $10k-$100k
$100k+ but
,
44,760 13,7
(
\ Brought Back $10k+ 14,0 41
All Other 275,189 84.5
\ 1 Other
20.2 59
\1 TOTAL 34.2K 100%
TOTAL 325,543 100,0%
6
Rp"trir.tpr1 Fnr 11<::" in r.nnnpr.tinn with PI"n r.nnfirm"tinn On Iv INMIPr. <;nnnnH1Qn nnnnR
R
e
t
u
r
n
r
WaMu demonstrated the to raise DOst-lndvMac
$2.00
$1.00
___
7/15 -
7/14- _--,- _______ _
'"
"3
35% to $3.23

"'-
""
no
E'2 Ii'
8/29 last day a' first S%
CD ptOl't'llC'Jbo.n,
one-dIIIy irn:reas.e
$1.38
9/5 - Rrst day 0( second
5% CO prorrto!;i.on
9/10 - WaMu shares declines
30'% to $2.32
WaMu Share Price
___________________ 0 ______ _
:nil n4
9/17 - Will"lu
"",,,,,,,
9/15 - LehlTIiln flie:! for for wle
W<lMu shares
to $2,0{)
7/11 7/14 7/17 7/20 7/13 7/] 7/29 8/1 8/4 8{7 8/10 8/13 8/16 8/19 8/22 8/25 8/28 8/31 9/3 9/6 9/9 9/12 9/15 9/18
7
Rp<::tridpri Fnr 11<:" in r:nnnpdinn with PI;m r:nnfirm",tinn Onlv WMIPr: "innnnHIQn nnnn7
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Total Residential Mortgage 30 89

$!\,J(JO ____ _

'l'l.J(lO
/Ul/' /
PLw
_ l

I

$O,;roo
---n----n------
.1t1t1t1t1bntu,uu,U,u_,1 II II II II II
$1,J(lO _

"II'" & &.' jP'.;> jP lif .;Ifi -.j" $ df .;,# <I' ,.i' ,,@ #' #' ,i' ,.t'
Sub prime 30 89 nlPlin,
l_a

,,.

0"
""

.,

I
i'

4"'"
,,.
I
rLU,U.LLUUUU U_LL",

,ff "p' " .. <f ,.r ,..> 'l'"
,,.
, ,.
Prime Loans 30 - 89

-----

Ji;;;_00IJ ___ ____ ______________________ ____ ,..,

. m
'ft
-

to._U_._LJ ___ U __LLJ I !! I! t I [I !! I I !! j 1 !! !! !! !! !! I I g_
<to 1- ,;. r>' :/' ,<$ <1 e d" if' ;t !P
,.". ,'- -,-S }f .,.f' ..," ci' ,;!o' <I' j/I' \J' $' ,$ ,f "t ,.fo
Home Equity Loans 30 - 89 Day n,,'I,
!l,NJ
1
1'''"" "=:=' "'-<'-' ,..i>--'. _. __ /,P'_.W'/>,,,,,,
"' ,. /f nH Jl H]llu f1 '"
/
$6(<) /.,./.1. n
....,..-
$-!IX, $--." --.

Jllill
' .
i
L
I
.,I i ? ,vs!i>
"""
'"
'"
These statistics are not adjusted for the effects of loan modification programs that result In Troubled Debt Restructuring (TOR) classifications of loans as non-
Derformino_ By skipping some loans forward to that later-stage, non-performing status, such activITY can reduce the amounts recorded as early-stage
8
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Return
Downstream cash from holding company to bank
Conversion of REIT Preferred to Holding Company Preferred frees up pledge-able collateral
Restructuring of bank and holdoo debt with lower notional and I or preferred instruments
Sale of loans to reduce risk and enhance liquidity
Additionalliquiditv sourced throuah collateral initiatives
._--
Same actions as
Sale of East coast I deposit franchise with selected assets
$500mm to bn investment sourced from with additional pos,slble from
other investors
Potential to source liquidity from acquiror to lost deposits
Same actions as
secured loan
receives

Washinaton Mutual sells significant portion of risk assets to new
Recent indications pricing will be based on intrinsic value of assets
Resulting pro forma company has capital, significant liquidity and would be very
attractive for potential acauirors
10
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1) I
Downstream
Cash
I
II Downstream
$4bn of cash
WM8
I I
WMlto
Conversion of RE!T III REIT Preferred converts to Collateral
Preferred Holding Company preferred
with occurrence of exchange
event
Bank Liq'Jidily Bank Callilal
Common EquITY + $4bn
$600
Debt I Preferred
Restructuring
II Public tender to exchange Reduced debt $1.5bn Preferred Stock + S10bn
Asset
Sale
Total
existing debt/preferred into maturiiies
more subordinated Of reduced
notional securities
II Given capita! generation from Cash
orevious strategies, seH high
loans J NPLs to reduce
overall portfolio exposure
II Restructured
an
a
more focused business model,
and a de-risked portfolio
RA<::tridArl For II<:A in r.onnpdinn with PI",n r.nnfirm"tinn nnl\l
in 2009 maturities
$5-10bn Depending on price Uke!y negative
$13-$18bn Up to $14 bn
12
WMIPr. o;nnnn1QQn nnn1?
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III Public exchanae offer to holders of debt and preferred
2 weeks to document
4 weeks business to execute
III Holders offered an exchanoe for a reduced notional value of preferred stock
III Holders also granted common stock a significant portion of the company
- Shares allocated proportional to discount surrendered holder

Offer contingent on 80% success rate
New
Security Restructure Estimated Notional Preferred
Haidee Subdebt Haldeo Preferred 25 80 % $1,299 $325
Haidee Senior Holdeo Preferred 30 80 3,297 989
Bank Subdebt Bank Preferred 35 80 4,520 1,582
Bank Senior Bank Preferred 50 80 6,452 3,226
REIT Preferred Haldeo Preferred 20 80 3,200 640
WM INCDRD Haldeo Preferred 20 80 400 80
WM INC Convertible Pref Haldeo Preferred 20 80 2,400 480
WM INC PIERS Haldeo Preferred 20 80
T etal Potential $22,168 $7,442
r. Does oollnclilde impact of remaining REfT pmferreds exchanged into holdco prere/7'ed or dlscoont to par teafi7ed by DRD and converlib/e prefem3d hoiders.
2 Represents common stock granted to holders pm rat.1 fl<1sed on discoont to par accepted In exchange.
Rp"trid"rl For II"" in r.onnpdinn with PI,'ln r.nnfirm",tion nnlv
Net Common
Common Shares
$633 86
1,500 204
1,910 259
2,097 285
2,560 226
320 28
1,920 170
$11,420 1,301
13
IIIIMIPr. "iOOnOHlqn noon
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::ash & In","",1'T1er:s
Net cf Reserves
Other Assets
T olal Assets
"''''''',
Other Oorrowings
fHLB
0:her
EqJfty
('..ash & nYe5lments
Loans Ne': of Riffie'ves
GoodWill
Ot:Jf {1'1v&1r:'1errlln Subs
Total Assets
Other
Other liabilities

;::treferred
Equty
R InYE>S1r:'1e'1ts
Net rff Re$ef\/l;;S
Ot'1er Assets
Assets
E:quty
I
I

08/31108
S

7,284
34,-50$
S 307,007
$ 174,894
31,911
68,420
3,914
3,138
s
S 301,OG7
iDownstMam
WMICash
so
so
s-j
VIIMI lI"re1'errnd
so
so
(2,240)
2,240
so
Consolidated WaMu
COft'M>liid;l(e-d
T I!!:r 1 Ll!'lvl!'lr<ll\jle
T er 1 RstiG
""" Tier L.everage
Tier
WMBOebt
$5----- SO
(5,196) (10,972)
(3,912)
HoIdco(WM1)
5(4,000) $ 1,36:)

o 0
27.470 4,000 3912 35382
$ 32_597 '$ ;) $ 0 $3-,912"- SO S J6 ana
,
1,352
'111MB Con-wiidatJe<:j
$
229,733
7,28-4
37,574
S 3[Y-,924 $ 4,008 - - - lS'j-- $ 8 S C SO - - -S 31",)8,924
S 179,636 S 179,838
25,556 (10,972) 14,584
68,420
(3_912) 0
0
7,912
$'3,fn2
$(5,196)
1,149
7,414
-$3-if12
ctHill19f!
${COO'
$ 4,Q')O
(10,972)
(3,912)

$(1'2,726)
4,800

$ 4,000
14
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Downstream Cash
from Holding
Company
Conversfon of REIT
Preferred to Haldeo
Preferred
Debt f Preferred
Restructuring
Non-Performing Loan
Sale
Other Asset Sale
j Roducfion of debt matw1tfes in 6 }t'I8rs
+ .. .., ~ ....
I
Immediate
Rp<:lrir:tArl Fnr II"", in r.nnnpr:tinn with PI::m r.nnfirm"tinn nnlv
30 Days 60 Days
Bank Bank
S4
$6
$10' $13
$6
Sl2J
TBD TBD
15
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R
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1) I I
Securities j Other Earning Assets
Total Loans
Alll
GoodlN'lll and Intangibles
Other Assets
Total Assets
Uabilities
Standalone
$ 29,738
238,807
(9,050)
7,604
39,908
$ 307,007
Debt
NPl-Sale
(15,000)
6000
(3,306) 1,050
$(3,30S) , __ $(1,9501
Pro-Forma
$ 29,738
223,007
(3,050)
7,604
37,652
$ 303,701
Deposits $ 174,894 $ 174,894
Public Debt 20,610 (16,168) 4,442
Govemmerrl lend'mg Facility 0 0
Borrowed Funds 79,121 (6,000) 73,721
other Liabilities 3,138 3,138
Shareholder's Equity
Preferred Stock
Common Equity
AOCI
Tota! Shareholder's Eql!!t)'
Tangible Common Equity
Key Ratios:
TEiTA
TeE ITA
Tier 1 Rae
Tier 1 Leverage Ratio
Total R8G
TBVPS
Ending Shares Outstanding
Exce to Well 1 RBC
2
$ 3,392 $ 5,353 $ 8,745
23,021 11,420 (1,950) 32,491
(1,683)(1,683)
$ 24,730 $ 18,773 $(1,950) $ 39,553
$ 15,417 $ 11,420 $(1,950) $ 24,887
7.59% 443 bps -46 bps 11.36 %
5.15 391 -53 8.41
9.11 535 -81 14.32
7,47 422 -54 11,06
1368 268 -81 t6.32
9.07 $(0.11 ) $(115) 8.31
1.699 2,994
-
16
R""trir;tprl Fflr II"" in r.nnnpr;tinn with PI",n r.nnfirm"'tinn Onlv INMIPr. "i00001 QQO nn01 R
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18.00 %
15.00 % 1,4.32"
12.00 %
9.00 %
9.11 % 9JJ(J % 8.92 % 8.82 % 8,74 % 8.53 % ~ L 5 1 % 8.25 % 824 % 8.20 %
6.00 %
3.00 %
o 00 %
PfIW COF Nee JPM \,\1M SOV 001 HBAN C KEY ATB Me lNFC PNC we IMI MTB RF 511 ZION CMA
Tiff 1
11.00% 944%10.3.3% 6"'3% 7.47% 8.34% 7,1]% 7.58% 5.04% 9.34% 9.00% 6.09% 7.3-5% 725% 6.57% 7.34% 710% 6.78% 7,54% 7.20% 8.53%
LB\-'II!h1il9O
NPLs/ Loans
500 %
4.00 %
3.00%
2.00 %
1.00 %
__ 0,00%
0.00 %
WM FITS WB Nee HBAN STI MI RF C KEY CMA ZION MTB BAC 8BT WFC PNC JPM sov COF PF
WM
RI5l'I-(l(YM
3.7'::!% 1.83% 21:5% 291% 164% 1_..:.0% 2,05% 1.48% 253% H!3% 1.28% 158% 1.31% 182% 1.31% 1.73% 131% 2-34% 13()% 3.39% 1.36%
{Loon!!;
~ : IoVMdat88Sot8l31.
17
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Bank Bank
Downstream II! Downstream approximately Common Equity ,., $4bn
Cash $4bn of cash from WMI to
VllMB
Conversion of REIT
"
REIT Preferred converts top Collateral $abn
Preferred Holding
with occurrence
event
Debt I Preferred
"
Public tender to exchange Reduced debt $105bn Preferred Stock ,.., $tObn
Restructuring existing debt/preferred into maturrties in 2009 maturities
more subordinated or reduced
notional securities
Asset
"
Given capital generation from Cash $5-10bn Depending on price Likely negative
Sale previous strateoies, sell high
to reduce
overall
Sell East Coast
"
Transfer of approximately
"
Assumption of -$30bn Reduced Footings $1 o5bn - $200bn
Branches $30bn of depOSITS and 12431 deposits
Premium Paid S2bn
l1li Asset transfer + 270n
"
Premium paid + 3bn
"
Current discussions with
II Lost borroVlfing - [5]bn
Toronto Dominion
Strategic II Investment of $500mm of Cash $SOOmm - $ tbn Preferred Stock $SOOmm $1bn
Investors bank level preferred stock by
East Coast
II Ruver of East Coast branches Line of Credit $Sbn None None
into a $Sbn [t8] month
secured lending facility
Total $14-$190n Up to $19bn
19
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CO'nsQlidated Balance Sheet
Assets
Securities f Other Earning Assets
Total Loans
ALLL
Goodwill and Intangibles
Liabilities
Standalone
31-Aug..{)8
:$ 29,738
238,807
(9,OSO)
7,604
Debt
Restructuring NPL Sale
Branch
Sale
$(27,792)
o
Pro-forma
31 .A,ug..oo
$ 1,946
223,007
(3,050)
7,004
D e p o s ~ $ 174,894 $(30,880) $ 144,014
Public Debt 20,610 (16,168) 4,442
Government Lending Facility 0 0
Borrowed Funds 79,721 (6,OOO) 73,n1
Other Liabilities 3,138 3,138
Preferrod Slock
Common Equity
$ 3,392 $ 5,353 $ 8,745
23.021 11,420 (1,950) 2,007 34,498
Tangible Common Equity $ 15,417 $11,420 $(1,950) $ 2,007 $ 26,894
Key RatIOS; Impact to standalone RatiO's
TEtrA 7.59% 443 bps -46 bpS 155 13.34%
TeE I TA 5.15 391 -53 129 11106
Tier1RBC 911 535 ..-81 165 15.68
Tier 1 Ullwrage Ralio 7.47 422 -54 105 12.28
Total RBC 13.68 268 -81 20J 11-73
TBVPS 9.07 $(0.11) $(1.15) $ 118 8.:00
Ending Shares Owtstarn:ling 1.699 2,994
R",,,tri,,h'rl Fnr II"" in r.nnnpdinn with PI"n r.nnfirm"tinn Onlv INMIPr. "00001 qqn nnn?O
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Downstream Cash
from Holding
Company
Conversion of REIT
Preferred to Haldeo
Preferred
Debt I Preferred
Restructuring
Non-Performing Loan
Sale
Other Asset Sale
Branch
Sale
Investment
Liquidity
Facility
Ri!lduction or debt matutitf$>$ in 3 )19afS
Rp<::trirJprl i=nr I I"", in r.nnnp('.tinn with PI"n r.nnfirm"linn On Iv
30 Days _ so [)alI'S
Bank Bank
$4
$6
$10' $13
$6 $121
TBD TBD
($5) $4
$1
$'
$5
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Securities I Other Earning Assets
Total Loans
ALLL
Uabmties
Standalone
$ 29,738
238,807
(9,050)
7,604
i
!lebt Government Pro-forma
$ 29,738
238,807
(9,050)
7,604
Deposits $ 174,894 $ 174,894
Public Deb'! 20,610 (16,168) 4,442
Govemment lending Facility 0 20,000 20,000
Borrowed Funds 79,721 (20,000) 59,721
Preferred Stock
Common EquHy
AOCI
Total Shareholder's Equity
Key Ratios:
TEITA
TeE ITA
Tier 1 ReC
Total RBC
TBVPS
2
$3,392 $5,353 $8,745
23,021 11,420 34,441
(1 ,683) (1,68:31
'-$ 16,n3 $ 41,503
$ 15,417 $11,420 $0 $ 26,837
7_59 % 443 bps 0 1202 %
5.15 391 0 9.06
9.11 535 0 14.46
747 422 0 11.69
13.68 268 0 1636
9.07 $(0.11 ) $(7,94) 1.79
< =0
Ending Shares Outstanding ,,. ......... ~ 14,970
~
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Securities I Other Earning Ass.ets
Total loans
AlLL
Good\'ViIJ and Jntmgibles
Other Assets
Tota! Assets
liabilities

$ 29,738
238,807
(9,050)
7,604
39,908
$ 301,001
FI
Debt
Loan Sale
(60,000)
3,600
(3,3()6) 3,990
-
Pro-Forma
$ 50,038
158,507
(5,450)
7,604
40,592
$ 251)291
Deposits $ 174,894 $ 174,894
Debt 20,610 (16,168) 4,442
Govemment lending Facility 0 0
Borrowed Funds 79,721 (45,000) 34,721
Preferred Stock $ 3,392
Common Equity 23,021
AOel (1,683)
$ 5,353
11,420 (7,410)
Total Shareholdor's EqullJl $ 24,130 _$(1,410)
Tangible Common Equity $ 15,417 511,420 $(7,410)
Key Ratios: Ratios
TEITA 7.59 % 443 bps
TeE ITA 515 391
Tier 1 RBC 9,11 535
Tier 1 leverage Ratio 7.47 422
Total RBC 13,68 268
TBVPS 9D7 $(0,11)
Ending Shares Outstanding 1,699
RAdrirt",rl Fnr 11<::", in r.nnn",dinn with PI",n r.nnfirm"tinn Onlv
$ 8]45
27,031
(1,683)
$ 34,093
$ 19,427
11,56 %
797
14,00
10,15
17.39
6,49
2,994
$ 16,325
INMIPr. e;OOnOH1>:lO nOn?')
R
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Prime ARM
30+ Days Past Due
Total Prime ARM
Home -1st lien
30+ Days Past Due
Total Home Equity - 151 Uen
Home 2nd Lien
30+ Days Past Due
Total Home Equity - 2nd lien
Option ARMs
Performing
30+ Days Past Due
Total Option ARMs
Multi-Family
Performing
Due
30+ Days Past Due
Total Subprime
CredN Card I Other Consumer
Performing
30+ Days Past Due
Total Credit Card I Other Consumer
O1her Real Estate I Commercial
Periorming
30+ Days Past Due
Total Other Real Esta1e J Commercial
Total
30+ Days Past Due
Total
R""tridpr/ I"nr II"" in r.nnn"dinn with PI"n r.nnfirm"tinn nnlv
$
less: Pro
$ 38,731 $0 $ 38,731
$ 15,065 $0 $ 15,065
$ 49,366 $ 11.483
$33,412 $0 $ 33.412
$ 10,267 $0 $ 10,267
$ 12,785 $0 $ 12,785
$ 14,494 $0 $ 14,494
INMIPr. "innnn1QQO OOO?R
R
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I
pvtr.::tnrriin::!nl actions
allows company to weather credit
- Capital generation for
asset reauctlon
Pro forma company in excess of well -capitalized with 14,4% Tier 1 ratio
LlqUiOlty manageable if provided with against eligible collateral and expressions of suppon
Avoids policy debate

Stclbilize,s consumer banks
lim its risk

Rp<::tril'.t"rl Fnr I J<::p in r.nnn"dinn with PI"n r.nnfirm"tinn Onlv
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-
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;urrem market anxietv limits access to markets
Strateaic investors "frozen" market and developments
Sufficient liquidity to withstand short-term pressure on depo:sits
insurance
Uninsured consumer deposits
- 20 million customers:
approximately Obn
seeing erosion of customer base
JrrF!ntlv have $20 bn of near-term available liquidity and incremental collateral available to
pledge

September charge-off trends improving for all
Delinauencies showina of
Aaaressive loss itigation and loan modification programs in
New
committed to reauclr and balance sheet size
Proposed stand-alone recapitalization provides alternative approach without intervention
3
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R
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Del:lOs;it are down 7% from VA"r-Anrl
- Cost of down costs down 11 Obps
- Retail deposits as a % of assets to 46.6% from 43.8% at 12131/07
143.6
148.3
142.9
" Consumer Noninterest-Bearina
" CD
.. Interest-Bearing Transaction
2Q'08 JulOB Aug 'DB 9/19
Retail Cost of Deposits 2.82% 2.23% 2.00% 209
CD Cost of 4.56 3.94 3.37 3.46
CD as % of Total 34.4 29.1 29.7 32.3 35.8
------------ -------
Retail DeD as % of Total Assets 43.8 47.9 45.0 46.6
4
Rp"tri/Olprl For I J"P in r.nnnpr:tinn with PI"n r.nnfirm::.tinn On Iv \I\II\IJ J pr. <;nnnn HIAn nnn04
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delJOS;it base more stable before IndyMac
- Mix of accounts from July 11th - shifting to lower balance mix.
$500K
- Accounts over exoerienced almost the decrease of accounts $1
:ouonlv two-thirds of over last several from uninsured depo:sits
Balance> $100K for
$24.0
07111/08 08/01/08 08129108 09/12108
R.,,,trid.,ri Fnr II"" in f':nnnpdinn with PI"n f':nnfirm"tinn Onl"
98% of accounts are under
09/19/08
vs.45%)
II
+
OOK-
75% Decrease
since 07/11
45% Decrease
since 07/11
5
INMIPf': Finnnn1 qqn nnnnFi
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In 1% of all balance HH's ended their WaMu relatinn"hin
14% withdrew more but kept their rc!latinn"hin
- As of 9/11 41 % of these customers back$10K+
Balance
/ Actions between 7125 and 9111
Total
Households (>$100kl Total HHLDs %ofTolal HHLDs %ofTotal
/
HHLDs end ina WaMu
5,594 1.7%
/
I
Back $10k-$100k
$100k+ but
,
44,760 13,7
(
\ Brought Back $10k+ 14,0 41
All Other 275,189 84.5
\ 1 Other
20.2 59
\1 TOTAL 34.2K 100%
TOTAL 325,543 100,0%
6
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WaMu demonstrated the to raise DOst-lndvMac
$2.00
$1.00
___
7/15 -
7/14- _--,- _______ _
'"
"3
35% to $3.23

"'-
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no
E'2 Ii'
8/29 last day a' first S%
CD ptOl't'llC'Jbo.n,
one-dIIIy irn:reas.e
$1.38
9/5 - Rrst day 0( second
5% CO prorrto!;i.on
9/10 - WaMu shares declines
30'% to $2.32
WaMu Share Price
___________________ 0 ______ _
:nil n4
9/17 - Will"lu
"",,,,,,,
9/15 - LehlTIiln flie:! for for wle
W<lMu shares
to $2,0{)
7/11 7/14 7/17 7/20 7/13 7/] 7/29 8/1 8/4 8{7 8/10 8/13 8/16 8/19 8/22 8/25 8/28 8/31 9/3 9/6 9/9 9/12 9/15 9/18
7
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Total Residential Mortgage 30 89

$!\,J(JO ____ _

'l'l.J(lO
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I

$O,;roo
---n----n------
.1t1t1t1t1bntu,uu,U,u_,1 II II II II II
$1,J(lO _

"II'" & &.' jP'.;> jP lif .;Ifi -.j" $ df .;,# <I' ,.i' ,,@ #' #' ,i' ,.t'
Sub prime 30 89 nlPlin,
l_a

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Prime Loans 30 - 89

-----

Ji;;;_00IJ ___ ____ ______________________ ____ ,..,

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-

to._U_._LJ ___ U __LLJ I !! I! t I [I !! I I !! j 1 !! !! !! !! !! I I g_
<to 1- ,;. r>' :/' ,<$ <1 e d" if' ;t !P
,.". ,'- -,-S }f .,.f' ..," ci' ,;!o' <I' j/I' \J' $' ,$ ,f "t ,.fo
Home Equity Loans 30 - 89 Day n,,'I,
!l,NJ
1
1'''"" "=:=' "'-<'-' ,..i>--'. _. __ /,P'_.W'/>,,,,,,
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....,..-
$-!IX, $--." --.

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These statistics are not adjusted for the effects of loan modification programs that result In Troubled Debt Restructuring (TOR) classifications of loans as non-
Derformino_ By skipping some loans forward to that later-stage, non-performing status, such activITY can reduce the amounts recorded as early-stage
8
Rp<:trir:tpri Fnr 11<::1" in r.nnnpdinn with PL:,n r.nnfirm"tinn Onlv WMIPr. Finnnn1 qqn nnnnR
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Return
Downstream cash from holding company to bank
Conversion of REIT Preferred to Holding Company Preferred frees up pledge-able collateral
Restructuring of bank and holdoo debt with lower notional and I or preferred instruments
Sale of loans to reduce risk and enhance liquidity
Additionalliquiditv sourced throuah collateral initiatives
._--
Same actions as
Sale of East coast I deposit franchise with selected assets
$500mm to bn investment sourced from with additional pos,slble from
other investors
Potential to source liquidity from acquiror to lost deposits
Same actions as
secured loan
receives

Washinaton Mutual sells significant portion of risk assets to new
Recent indications pricing will be based on intrinsic value of assets
Resulting pro forma company has capital, significant liquidity and would be very
attractive for potential acauirors
10
R"",trid",; Fnr II",,, in r.nnnp"tinn with PI"n r.nnfirm"tinn On Iv \MJII pr. "nnnn 1 QQn nnn 1 n
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Return
1) I
Downstream
Cash
I
II Downstream
$4bn of cash
WM8
I I
WMlto
Conversion of RE!T III REIT Preferred converts to Collateral
Preferred Holding Company preferred
with occurrence of exchange
event
Bank Liq'Jidily Bank Callilal
Common EquITY + $4bn
$600
Debt I Preferred
Restructuring
II Public tender to exchange Reduced debt $1.5bn Preferred Stock + S10bn
Asset
Sale
Total
existing debt/preferred into maturiiies
more subordinated Of reduced
notional securities
II Given capita! generation from Cash
orevious strategies, seH high
loans J NPLs to reduce
overall portfolio exposure
II Restructured
an
a
more focused business model,
and a de-risked portfolio
RA<::tridArl For II<:A in r.onnpdinn with PI",n r.nnfirm"tinn nnl\l
in 2009 maturities
$5-10bn Depending on price Uke!y negative
$13-$18bn Up to $14 bn
12
WMIPr. o;nnnn1QQn nnn1?
R
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I
III Public exchanae offer to holders of debt and preferred
2 weeks to document
4 weeks business to execute
III Holders offered an exchanoe for a reduced notional value of preferred stock
III Holders also granted common stock a significant portion of the company
- Shares allocated proportional to discount surrendered holder

Offer contingent on 80% success rate
New
Security Restructure Estimated Notional Preferred
Haidee Subdebt Haldeo Preferred 25 80 % $1,299 $325
Haidee Senior Holdeo Preferred 30 80 3,297 989
Bank Subdebt Bank Preferred 35 80 4,520 1,582
Bank Senior Bank Preferred 50 80 6,452 3,226
REIT Preferred Haldeo Preferred 20 80 3,200 640
WM INCDRD Haldeo Preferred 20 80 400 80
WM INC Convertible Pref Haldeo Preferred 20 80 2,400 480
WM INC PIERS Haldeo Preferred 20 80
T etal Potential $22,168 $7,442
r. Does oollnclilde impact of remaining REfT pmferreds exchanged into holdco prere/7'ed or dlscoont to par teafi7ed by DRD and converlib/e prefem3d hoiders.
2 Represents common stock granted to holders pm rat.1 fl<1sed on discoont to par accepted In exchange.
Rp"trid"rl For II"" in r.onnpdinn with PI,'ln r.nnfirm",tion nnlv
Net Common
Common Shares
$633 86
1,500 204
1,910 259
2,097 285
2,560 226
320 28
1,920 170
$11,420 1,301
13
IIIIMIPr. "iOOnOHlqn noon
R
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::ash & In","",1'T1er:s
Net cf Reserves
Other Assets
T olal Assets
"''''''',
Other Oorrowings
fHLB
0:her
EqJfty
('..ash & nYe5lments
Loans Ne': of Riffie'ves
GoodWill
Ot:Jf {1'1v&1r:'1errlln Subs
Total Assets
Other
Other liabilities

;::treferred
Equty
R InYE>S1r:'1e'1ts
Net rff Re$ef\/l;;S
Ot'1er Assets
Assets
E:quty
I
I

08/31108
S

7,284
34,-50$
S 307,007
$ 174,894
31,911
68,420
3,914
3,138
s
S 301,OG7
iDownstMam
WMICash
so
so
s-j
VIIMI lI"re1'errnd
so
so
(2,240)
2,240
so
Consolidated WaMu
COft'M>liid;l(e-d
T I!!:r 1 Ll!'lvl!'lr<ll\jle
T er 1 RstiG
""" Tier L.everage
Tier
WMBOebt
$5----- SO
(5,196) (10,972)
(3,912)
HoIdco(WM1)
5(4,000) $ 1,36:)

o 0
27.470 4,000 3912 35382
$ 32_597 '$ ;) $ 0 $3-,912"- SO S J6 ana
,
1,352
'111MB Con-wiidatJe<:j
$
229,733
7,28-4
37,574
S 3[Y-,924 $ 4,008 - - - lS'j-- $ 8 S C SO - - -S 31",)8,924
S 179,636 S 179,838
25,556 (10,972) 14,584
68,420
(3_912) 0
0
7,912
$'3,fn2
$(5,196)
1,149
7,414
-$3-if12
ctHill19f!
${COO'
$ 4,Q')O
(10,972)
(3,912)

$(1'2,726)
4,800

$ 4,000
14
RI'<:tridpri Fnr 11<:1' in r.nnnpdinn with PI",n r.nnfirm",tinn nnh, INMIPr. <;nnnn1qqn nnn1A
R
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Downstream Cash
from Holding
Company
Conversfon of REIT
Preferred to Haldeo
Preferred
Debt f Preferred
Restructuring
Non-Performing Loan
Sale
Other Asset Sale
j Roducfion of debt matw1tfes in 6 }t'I8rs
+ .. .., ~ ....
I
Immediate
Rp<:lrir:tArl Fnr II"", in r.nnnpr:tinn with PI::m r.nnfirm"tinn nnlv
30 Days 60 Days
Bank Bank
S4
$6
$10' $13
$6
Sl2J
TBD TBD
15
IIVIIIIIPr. 1)00001 QQO 0001 I)
R
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1) I I
Securities j Other Earning Assets
Total Loans
Alll
GoodlN'lll and Intangibles
Other Assets
Total Assets
Uabilities
Standalone
$ 29,738
238,807
(9,050)
7,604
39,908
$ 307,007
Debt
NPl-Sale
(15,000)
6000
(3,306) 1,050
$(3,30S) , __ $(1,9501
Pro-Forma
$ 29,738
223,007
(3,050)
7,604
37,652
$ 303,701
Deposits $ 174,894 $ 174,894
Public Debt 20,610 (16,168) 4,442
Govemmerrl lend'mg Facility 0 0
Borrowed Funds 79,121 (6,000) 73,721
other Liabilities 3,138 3,138
Preferred Stock
Common Equity
AOCI
Tota! Shareholder's Eql!!t)'
Key Ratios:
TEiTA
TeE ITA
Tier 1 Rae
Total R8G
TBVPS
Ending Shares Outstanding
Exce to Well 1 RBC
2
$ 3,392 $ 5,353 $ 8,745
23,021 11,420 (1,950) 32,491
(1,683)(1,683)
$ 24,730 $ 18,773 $(1,950) $ 39,553
$ 15,417 $ 11,420 $(1,950) $ 24,887
7.59% 443 bps -46 bps 11.36 %
5.15 391 -53 8.41
9.11 535 -81 14.32
7,47 422 -54 11,06
1368 268 -81 t6.32
9.07 $(0.11 ) $(115) 8.31
1.699 2,994
-
16
R""trir;tprl Fflr II"" in r.nnnpr;tinn with PI",n r.nnfirm"'tinn Onlv INMIPr. "i00001 QQO nn01 R
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TIer 1
18.00 %
15.00 % 1,4.32"
12.00 %
9.00 %
9.11 % 9JJ(J % 8.92 % 8.82 % 8,74 % 8.53 % ~ L 5 1 % 8.25 % 824 % 8.20 %
6.00 %
3.00 %
o 00 %
PfIW COF Nee JPM \,\1M SOV 001 HBAN C KEY ATB Me lNFC PNC we IMI MTB RF 511 ZION CMA
Tiff 1
11.00% 944%10.3.3% 6"'3% 7.47% 8.34% 7,1]% 7.58% 5.04% 9.34% 9.00% 6.09% 7.3-5% 725% 6.57% 7.34% 710% 6.78% 7,54% 7.20% 8.53%
LB\-'II!h1il9O
NPLs/ Loans
500 %
4.00 %
3.00%
2.00 %
1.00 %
__ 0,00%
0.00 %
WM FITS WB Nee HBAN STI MI RF C KEY CMA ZION MTB BAC 8BT WFC PNC JPM sov COF PF
WM
RI5l'I-(l(YM
3.7'::!% 1.83% 21:5% 291% 164% 1_..:.0% 2,05% 1.48% 253% H!3% 1.28% 158% 1.31% 182% 1.31% 1.73% 131% 2-34% 13()% 3.39% 1.36%
{Loon!!;
~ : IoVMdat88Sot8l31.
17
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Return
Bank Bank
Downstream II! Downstream approximately Common Equity ,., $4bn
Cash $4bn of cash from WMI to
VllMB
Conversion of REIT
"
REIT Preferred converts top Collateral $abn
Preferred Holding
with occurrence
event
Debt I Preferred
"
Public tender to exchange Reduced debt $105bn Preferred Stock ,.., $tObn
Restructuring existing debt/preferred into maturrties in 2009 maturities
more subordinated or reduced
notional securities
Asset
"
Given capital generation from Cash $5-10bn Depending on price Likely negative
Sale previous strateoies, sell high
to reduce
overall
Sell East Coast
"
Transfer of approximately
"
Assumption of -$30bn Reduced Footings $1 o5bn - $200bn
Branches $30bn of depOSITS and 12431 deposits
Premium Paid S2bn
l1li Asset transfer + 270n
"
Premium paid + 3bn
"
Current discussions with
II Lost borroVlfing - [5]bn
Toronto Dominion
Strategic II Investment of $500mm of Cash $SOOmm - $ tbn Preferred Stock $SOOmm $1bn
Investors bank level preferred stock by
East Coast
II Ruver of East Coast branches Line of Credit $Sbn None None
into a $Sbn [t8] month
secured lending facility
Total $14-$190n Up to $19bn
19
R,,<:trir:tprl Fnr I I"", in r.nnn",dinn with PI",n r.nnfirm",tinn Onlv WlV!IPr. <;nnnnH1Qn nnnHl
R
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CO'nsQlidated Balance Sheet
Assets
Securities f Other Earning Assets
Total Loans
ALLL
Liabilities
Standalone
31-Aug..{)8
:$ 29,738
238,807
(9,OSO)
7,604
Debt
Restructuring NPL Sale
Branch
Sale
$(27,792)
o
Pro-forma
31 .A,ug..oo
$ 1,946
223,007
(3,050)
7,004
D e p o s ~ $ 174,894 $(30,880) $ 144,014
Public Debt 20,610 (16,168) 4,442
Government Lending Facility 0 0
Borrowed Funds 79,721 (6,OOO) 73,n1
Preferrod Slock
Common Equity
$ 3,392 $ 5,353 $ 8,745
23.021 11,420 (1,950) 2,007 34,498
Tangible Common Equity $ 15,417 $11,420 $(1,950) $ 2,007 $ 26,894
Key RatIOS; Impact to standalone RatiO's
TEtrA 7.59% 443 bps -46 bpS 155 13.34%
TeE I TA 5.15 391 -53 129 11106
Tier1RBC 911 535 ..-81 165 15.68
Tier 1 Ullwrage Ralio 7.47 422 -54 105 12.28
Total RBC 13.68 268 -81 20J 11-73
TBVPS 9.07 $(0.11) $(1.15) $ 118 8.:00
Ending Shares Owtstarn:ling 1.699 2,994
R",,,tri,,h'rl Fnr II"" in r.nnnpdinn with PI"n r.nnfirm"tinn Onlv INMIPr. "00001 qqn nnn?O
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Downstream Cash
from Holding
Company
Conversion of REIT
Preferred to Haldeo
Preferred
Debt I Preferred
Restructuring
Non-Performing Loan
Sale
Other Asset Sale
Branch
Sale
Investment
Liquidity
Facility
Ri!lduction or debt matutitf$>$ in 3 )19afS
Rp<::trirJprl i=nr I I"", in r.nnnp('.tinn with PI"n r.nnfirm"linn On Iv
30 Days _ so [)alI'S
Bank Bank
$4
$6
$10' $13
$6 $121
TBD TBD
($5) $4
$1
$'
$5
\I11I\II1 pr. "nnnn HIQO non? 1
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Return
Securities I Other Earning Assets
Total Loans
ALLL
Uabmties
Standalone
$ 29,738
238,807
(9,050)
7,604
i
!lebt Government Pro-forma
$ 29,738
238,807
(9,050)
7,604
Deposits $ 174,894 $ 174,894
Public Deb'! 20,610 (16,168) 4,442
Govemment lending Facility 0 20,000 20,000
Borrowed Funds 79,721 (20,000) 59,721
Preferred Stock
Common EquHy
AOCI
Total Shareholder's Equity
Key Ratios:
TEITA
TeE ITA
Tier 1 ReC
Total RBC
TBVPS
2
$3,392 $5,353 $8,745
23,021 11,420 34,441
(1 ,683) (1,68:31
'-$ 16,n3 $ 41,503
$ 15,417 $11,420 $0 $ 26,837
7_59 % 443 bps 0 1202 %
5.15 391 0 9.06
9.11 535 0 14.46
747 422 0 11.69
13.68 268 0 1636
9.07 $(0.11 ) $(7,94) 1.79
< =0
Ending Shares Outstanding ,,. ......... ~ 14,970
~
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Return
Securities I Other Earning Ass.ets
Total loans
AlLL
Good\'ViIJ and Jntmgibles
Other Assets
Tota! Assets
liabilities

$ 29,738
238,807
(9,050)
7,604
39,908
$ 301,001
FI
Debt
Loan Sale
(60,000)
3,600
(3,3()6) 3,990
-
Pro-Forma
$ 50,038
158,507
(5,450)
7,604
40,592
$ 251)291
Deposits $ 174,894 $ 174,894
Debt 20,610 (16,168) 4,442
Govemment lending Facility 0 0
Borrowed Funds 79,721 (45,000) 34,721
Preferred Stock $ 3,392
Common Equity 23,021
AOel (1,683)
$ 5,353
11,420 (7,410)
Total Shareholdor's EqullJl $ 24,130 _$(1,410)
Tangible Common Equity $ 15,417 511,420 $(7,410)
Key Ratios: Ratios
TEITA 7.59 % 443 bps
TeE ITA 515 391
Tier 1 RBC 9,11 535
Tier 1 leverage Ratio 7.47 422
Total RBC 13,68 268
TBVPS 9D7 $(0,11)
Ending Shares Outstanding 1,699
RAdrirt",rl Fnr 11<::", in r.nnn",dinn with PI",n r.nnfirm"tinn Onlv
$ 8]45
27,031
(1,683)
$ 34,093
$ 19,427
11,56 %
797
14,00
10,15
17.39
6,49
2,994
$ 16,325
INMIPr. e;OOnOH1>:lO nOn?')
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r
n
Prime ARM
30+ Days Past Due
Total Prime ARM
Home -1st lien
30+ Days Past Due
Total Home Equity - 151 Uen
Home 2nd Lien
30+ Days Past Due
Total Home Equity - 2nd lien
Option ARMs
Performing
30+ Days Past Due
Total Option ARMs
Multi-Family
Performing
Due
30+ Days Past Due
Total Subprime
CredN Card I Other Consumer
Performing
30+ Days Past Due
Total Credit Card I Other Consumer
O1her Real Estate I Commercial
Periorming
30+ Days Past Due
Total Other Real Esta1e J Commercial
Total
30+ Days Past Due
Total
R""tridpr/ I"nr II"" in r.nnn"dinn with PI"n r.nnfirm"tinn nnlv
$
less: Pro
$ 38,731 $0 $ 38,731
$ 15,065 $0 $ 15,065
$ 49,366 $ 11.483
$33,412 $0 $ 33.412
$ 10,267 $0 $ 10,267
$ 12,785 $0 $ 12,785
$ 14,494 $0 $ 14,494
INMIPr. "innnn1QQO OOO?R
R
e
t
u
r
n

I
pvtr.::tnrriin::!nl actions
allows company to weather credit
- Capital generation for
asset reauctlon
Pro forma company in excess of well -capitalized with 14,4% Tier 1 ratio
LlqUiOlty manageable if provided with against eligible collateral and expressions of suppon
Avoids policy debate

Stclbilize,s consumer banks
lim its risk

Rp<::tril'.t"rl Fnr I J<::p in r.nnn"dinn with PI"n r.nnfirm"tinn Onlv
\/lIIVIIPr. <;nnn01 QQO nOn?7
R
e
t
u
r
n
Capital Level Review
Treasury
Board Update
Robert Williams, SVP Treasurer
CONFIDENTIAL
Return
Capital overview
Proactive steps
t
o enhance balance sheet strength
A
s
credit conditions continue
t
o deteriorate, management
i
s recommending two
critical steps
t
o enhance capital strength through this stressed economic cycle
Raise additional equity capital
t
o enhance balance sheet strength
Our baseline target
i
s
t
o raise $5.0 billion
i
n common equivalents
Rating agencies have indicated that a failure
t
o meaningfully increase the tangible
common base will result
i
n downgrades
t
o below investment grade
We demonstrate that even
i
n our current high provision scenario, $5.0 billion
i
n
additional capital leaves substantial additional capital
t
o ensure against continuing
credit market weakness
Rating agencies have signaled that this level
o
f
capital raise will
b
e
viewed
favorably
Reduce dividend
t
o $0.01 per share
Management recommends reducing the current dividend from $0.15 per quarter
Cutting dividend
t
o zero would send punitive message, particularly
t
o retail and
income oriented shareholders
Given the increase
i
n share count due
t
o the capital raise, lowering the dividend
i
s
prudent
t
o conserve liquidity and further demonstrate conservative capital stance
Treasury Liquidity Update 2
CONFIDENTIAL
Return
Key assumptions and changes
Dividends are assumed
t
o drop
t
o $0.01 per quarter starting
i
n 2Q 2008
Preferred dividends
f
o
r
Series K and Series R are assumed
t
o
b
e
$
6
6
million per quarter
Share count
i
s assumed
t
o increase based
o
n
$8 share price
i
n capital raise
i
n each capital raise scenario
Full FP&A income model

f
o
r
each scenario
Note that investor materials provided elsewhere use assumed a fixed $4.0 billion after-tax operating
earnings
i
n
a
l
l
scenarios
These scenarios include variable NIM, expense, and fee income numbers reflective
o
f
each scenario and
managements expectations regarding external conditions
$306 billion ending year balance sheet size
A
l
l
scenarios use a $247 billion ending period risk- weighted asset total, based
o
n
mid-case provision and
credit charge scenario
Depending
o
n
timing
o
f
loan chargeoffs, nonaccrual asset totals could increase
o
r
decrease risk weighted
assets modestly
Changes
i
n risk- weighted assets versus assumption only affect Tier I Capital, Total Capital, and Moodys
Adjusted Asset ratios
WMB ratio assumptions
I
n No Capital Raise scenario, we assume
n
o
additional capital contributions
t
o WMB
I
n each capital raise scenario, we assume $2.0 billion
o
f
additional equity capital
i
s contributed
Ratios which fail
t
o meet minimumtargets are highlighted
i
n each scenario
CONFIDENTIAL
Return
Low provision scenario
2008 capital ratio comparisons
12/ 31/
0
8
estimates
Targets /
Minimums
3
/
31/
0
8
actuals*
No capital raise $4.0 billion $5.0 billion $6.0 billion
TCE/
T
A
4.00% 4.09% 3.74% 5.07% 5.41% 5.74%
TE/
T
A
5.50% 6.45% 6.18% 7.51% 7.85% 8.18%
Tier I Leverage 5.00% 6.51% 6.20% 7.56% 7.89% 8.23%
Tier I Capital 6.00% 7.39% 6.89% 8.54% 8.94% 9.35%
Total Capital 10.00% 11.91% 11.33% 12.96% 13.36% 13.76%
Moodys ATE / Adj.
Assets
6.50% 6.50% 5.90% 7.83% 8.31% 8.71%
S
&
P /
T
A
5 50% 5 57% 5 10% 6 87% 7 32% 7 76%
W
M
I
ACE 5.50% 5.57% 5.10% 6.87% 7.32% 7.76%
Fitch Capital / RWA 7.50% 7.74% 6.97% 9.35% 9.76% 10.16%
Tier I Leverage 5.00% 6.87% 6.17% 6.84%
Tier I Capital 6.00% 7.88% 8.18% 7.64%
W
M
B
Total Capital 10.00% 11.89% 12.12% 11.53%
* March 2008 actuals based
o
n
earnings reported
a
s
o
f
3
/
31/ 08, and
i
s subject
t
o minor adjustment
a
s
final segment data becomes available
CONFIDENTIAL
Return
Baseline / medium provision scenario
12/ 31/
0
8
estimates
Targets /
Minimums
3
/
31/
0
8
actuals*
TCE/
T
A
4.00% 4.09% 3.33% 4.66% 4.99% 5.33%
TE/
T
A
5.50% 6.45% 5.77% 7.10% 7.43% 7.76%
Tier I Leverage 5.00% 6.51% 5.65% 7.14% 7.48% 7.81%
Tier I Capital 6.00% 7.39% 6.22% 8.03% 8.44% 8.84%
Total Capital 10.00% 11.91% 10.84% 12.45% 12.86% 13.26%
Moodys ATE / Adj.
Assets
6.50% 6.50% 5.31% 7.23% 7.71% 8.19%
S
&
P /
T
A
5 50% 5 57% 4 55% 6 32% 6 76% 7 21%
W
M
I
ACE 5.50% 5.57% 4.55% 6.32% 6.76% 7.21%
Tier I Leverage 5.00% 6.87% 6.00% 6.67%
Tier I Capital 6.00% 7.88% 6.62% 7.44%
W
M
B
Total Capital 10.00% 11.89% 10.52% 11.33%
o
n
earnings reported
a
s
o
f
3
/
31/ 08, and
i
s subject
t
o minor adjustment
a
s
CONFIDENTIAL
Return
High provision scenario
12/ 31/
0
8
estimates
Targets /
Minimums
3
/
31/
0
8
actuals*
TCE/
T
A
4.00% 4.09% 2.70% 4.03% 4.37% 4.70%
TE/
T
A
5.50% 6.45% 5.14% 6.47% 6.81% 7.14%
Tier I Leverage 5.00% 6.51% 4.82% 6.52% 6.85% 7.19%
Tier I Capital 6.00% 7.39% 5.21% 7.28% 7.68% 8.08%
Total Capital 10.00% 11.91% 10.07% 11.69% 12.10% 12.50%
Moodys ATE / Adj.
Assets
6.50% 6.50% 4.41% 6.33% 6.81% 7.29%
S
&
P /
T
A
5 50% 5 57% 3 71% 5 49% 5 93% 6 38%
W
M
I
ACE 5.50% 5.57% 3.71% 5.49% 5.93% 6.38%
Tier I Leverage 5.00% 6.87% 5.37% 6.05%
Tier I Capital 6.00% 7.88% 5.86% 6.68%
W
M
B
Total Capital 10.00% 11.89% 9.76% 10.57%
Note: WMB ratios could stay within well-capitalized
minimums with $750mm
o
f
additional equity downstreamed,
o
r
risk- weighted asset reduction
o
f
approximately $5.0
billion scenario
o
n
earnings reported
a
s
o
f
3
/
31/ 08, and
i
s subject
t
o minor adjustment
a
s
billion,
i
n High Provision
CONFIDENTIAL
Return
Other issues and considerations
WMB dividend capacity remains limited due
t
o tax issues
Dividend capacity capped due
t
o 1986 bad debt reserve recapture risk
Through 1Q 2008,
i
t
i
s estimated that we have roughly $2.9 billion
i
n cushion
f
o
r
additional dividends
b f b before breaching accumulated after- tax earnings &profits
(
E&P) test
A
s
E&P
i
s based
o
n
chargeoffs and taxable recognition
o
f
servicing revenue, this cushion may erode
depending
o
n
chargeoff timing
Accumulated
E
&
P are projected
t
o again allow
f
o
r
dividends
i
n
a
l
l
scenarios
b
y
mid 2009
Regulatory considerations
f
o
r
WMB dividends
Unless regulatory approval
i
s obtained, dividends
t
o WMI are generally limited
t
o the maximum
o
f
prior
two years GAAP earnings less dividends
Due
t
o large 1Q 2007 dividend associated with balance sheet sales, and expected GAAP losses due
t
o
provisioning
i
n 2008, we expect
t
o
b
e
unable
t
o release non-preapproved dividends
t
o WMI prior
t
o 2010
OTS approval may
b
e
obtained even
i
f prior two years earnings are not sufficient
t
o allow normal
dividend payments
Preferred dividend payment capacity
i
s not under threat
WM Preferred Funding, Series K and Series R dividends are factored into the analysis
o
n
prior pages with
n
o
assumed gap
i
n payment, although
a
l
l
series dividends are noncumulative
CONFIDENTIAL
Return
Document Not Linked At Request of WMI
Return
Return
Return
Return
Return
Return
Case
March 25, 2008
Equity
CONFIDENTIAL
Return
Long Range Forecast Low Credit
$4B Capital, w/
Normalized Business Model
INCOME STATEMENT BALANCE SHEET
(
$
i
n millions) 2008 2009 2010 2011 2012
(
$
i
n billions) 2008 2009 2010 2011 2012
Net Interest Income 8,979 8,269 8,037 8,268 8,630 Assets
Provision 11,050 3,655 1,949 2,127 2,148 Cash &Investments 38,540 36,598 36,166 36,277 36,679
Noninterest Income 5,778 6,939 7,485 8,184 9,025 Loans 239,268 230,274 227,553 228,259 230,785
Non Interest Expense 8,220 7,850 7,977 8,236 8,503 ALLL ( 8,000) (7,000) (5,031) ( 3,788) (2,627)
Minority Interest Expense 305 305 305 305 305 Other Assets 37,105 35,698 35,339 35,563 35,778
Net Income Before Tax ( 4,819) 3,398 5,290 5,783 6,699 Total Assets 306,912 295,571 294,026 296,311 300,615
Tax ( 2,075) 943 1,755 1,940 2,284
Net Income ( 2,744) 2,455 3,535 3,843 4,415 Liabilities:
Preferred Dividends 260 260 260 260 260 Deposits 189,855 187,791 198,306 209,524 221,504
Net Income Attrib.
t
o Common ( 3,004) 2,195 3,275 3,583 4,154 Borrowed Funds 79,455 71,155 59,125 50,006 42,042
EPS $ (2.57) $ 1.82 $ 2.81 $ 3.22 $ 3.91 Other Liabilities 8,052 8,052 8,052 8,052 8,052
Avg Diluted Shares
(
$
M
)
1,171 1,347 1,258 1,193 1,130 Total Liabilities 277,362 266,998 265,483 267,582 271,598
Minority Interest 3,917 3,917 3,917 3,917 3,917
Select Details Total Shareholders' Equity 25,633 24,656 24,627 24,812 25,101
GOS 497 170 188 206 225 Total Liabilities and Equity 306,912 295,571 294,026 296,311 300,615
Retail Banking Fees %Growth 10% 8% 12% 12% 12%
Total Revenue 14,756 15,208 15,522 16,452 17,655
NIM 3.21% 3.09% 3.06% 3.12% 3.19% Managed Card Receivables: 27,810 28,644 32,933 37,873 43,553
Fed Funds 1.75% 3.00% 3.50% 3.50% 3.50% Tang. Common Equity 14,788 13,736 13,631 13,742 13,955
2008 2009 2010 2011 2012 2008 2009 2010 2011 2012
$ $ $ $ $
FINANCIAL METRICS CAPITAL METRICS
ROA -0.87% 0.81% 1.20% 1.30% 1.48% Dividend/ Share ( Annual) 0.20 0.73 1.12 1.29 1.56
ROCE -13.9% 10.1% 15.4% 16.8% 19.2% Buyback/( Equity Issue)
(
$
B
)
( 4,000) 2,490 2,190 2,160 2,400
Efficiency Ratio 55.7% 51.6% 51.4% 50.1% 48.2% TE/
T
A
7.4% 7.3% 7.4% 7.4% 7.4%
Expense Growth ( Decline) -6.9% -4.5% 1.6% 3.2% 3.2% TCE/
T
A
4.9% 4.8% 4.7% 4.7% 4.8%
Revenue Growth 3.8% 3.1% 2.1% 6.0% 7.3% Tier I Leverage 7.4% 7.3% 7.3% 7.3% 7.2%
Loan
t
o Deposit Ratio 126% 123% 115% 109% 104% Tier I RWA 9.0% 9.0% 9.0% 9.0% 9.0%
Washington Mutual Confidential Materials 2
CONFIDENTIAL
Return
$4B Capital, w/
Long Range Forecast Mid Credit
(
$
i
n millions) 2008 2009 2010 2011 2012
(
$
i
n billions) 2008 2009 2010 2011 2012
Provision 13,050 5,550 3,699 2,668 2,148 Cash & Investments 38,540 36,598 36,166 36,277 36,679
Non Interest Expense 8,220 7,977 8,045 8,236 8,503 ALLL (8,450) (8,550) (6,581) (3,788) (2,627)
Net Income Before Tax (6,819) 1,601 3,848 5,393 6,699 Total Assets 306,462 294,021 292,476 296,311 300,615
Tax (2,829) 322 1,213 1,794 2,284
Net Income (3,989) 1,279 2,634 3,599 4,415 Liabilities:
Net Income Attrib.
t
o Common (4,250) 1,019 2,374 3,339 4,155 Borrowed Funds 80,251 69,682 57,642 50,009 42,054
Avg Diluted Shares
(
$
M
)
Total Revenue 14,756 15,433 15,897 16,602 17,655
2008 2009 2010 2011 2012 2008 2009 2010 2011 2012
$ $ $ $ $
ROA -1.27% 0.43% 0.90% 1.22% 1.48% Dividend/ Share (Annual) 0.20 0.31 0.76 1.09 1.40
(
$
B
)
(4,000) 720 1,640 1,950 2,410
T
A
7.0% 7.3% 7.4% 7.4% 7.4%
Expense Growth - 6.9% - 3.0% 0.8% 2.4% 3.2% TCE/
T
A
4.5% 4.8% 4.8% 4.7% 4.7%
Loan
t
CONFIDENTIAL
Return
$4B Capital, w/
Long Range Forecast High Credit
(
$
i
n millions) 2008 2009 2010 2011 2012
(
$
i
n billions) 2008 2009 2010 2011 2012
Non Interest Expense 8,220 8,105 8,113 8,236 8,503 ALLL (8,900) (10,100) (8,131) (3,788) (2,627)
Net Income Before Tax (9,819) 2,193 4,105 5,003 6,699 Total Assets 306,012 292,471 290,926 296,311 300,615
Tax (3,961) 526 1,310 1,647 2,284
Net Income (5,857) 1,667 2,795 3,356 4,415 Liabilities:
Net Income Attrib.
t
o Common (6,118) 1,407 2,535 3,096 4,155 Borrowed Funds 81,669 68,745 56,175 50,008 42,043
Avg Diluted Shares
(
$
M
)
Total Revenue 14,756 15,658 16,272 16,752 17,655
2008 2009 2010 2011 2012 2008 2009 2010 2011 2012
ROA -1.86% 0.56% 0.96% 1.14% 1.48% Dividend/ Share (Annual) $ 0.20 $ 0.20 $ 0.71 $ 0.98 $ 1.35
(
$
B
)
(4,000) - 1,310 1,720 2,400
T
A
6.3% 7.2% 7.4% 7.4% 7.4%
Expense Growth - 6.9% - 1.4% 0.1% 1.5% 3.2% TCE/
T
A
3.9% 4.6% 4.7% 4.7% 4.8%
Loan 126% 123% 115% 109% 104% Tier 7 8% 8 7% 8 9% 9 0% 9 0%
t
o Deposit Ratio I RWA 7.8% 8.7% 8.9% 9.0% 9.0%
CONFIDENTIAL
Return
Reconciliation Stress Case
t
o
Equity Case
$
4
B
Capital Normalized Business Model - MID
P
&
L I t
$4B Capital, w/
Impacts
2008 2009 2010 2011 2012
EPS - Prior Mid Case with $
4
B
i
n capital ( 3.71) 0.79 1.57 2.25 2.77
Retail Banking fees
t
o 12% from 8% - 138 303 499
Deposits ( Retail +5.5% and Comm'l +15%
>
'
09) @ 75bps
1
8
5
7
100
MFL Growth ( 10% from 5%
a
t
200bps)
1
7
5
4
9
6
Fed Cuts 1.75%
b
y
year end 150
Deposit Pricing Unstressed
b
y
(10bps NIM) 256 255 258
Card Mgd grow
t
h
:
3%' 09; 15% ' 10, ' 11,
&
'
1
2
/ Sec
t
o 60%
a
t
2012 272 383 617
Total Change 150 - 701 1,052 1,571
EPS - New Mid Case with $
4
B
i
n Capital ( 3.63) 0.78 1.89 2.71 3.50
Balance Sheet Impacts
Deposits ( Retail +5.5% and Comm'l +15%
>
'
09) 4,881 10,296 16,299
MFL Growth ( 10% from 5%
a
t
200bps) 1,715 3,687 5,946
Card Mgd growth: 3% '
0
9
;
15% ' 10, '
1
1
,
&
'
1
2
/ Sec
t
o 60%
a
t
2012
Managed 3,429 7,484 12,253
Securitized (2,860) (5,877) (9,950)
GAAP 570 1,608 2,303
Securitization% 55% 57% 60%
CONFIDENTIAL
Return
Confidential
3
/
1
8
/
0
8
Update
1
.
Process Overview
2
.
Oak Hill
(
Oxygen)
3
.
Blackstone Capital Partners V
L
.
P
.
(
Boron)
4
.
Cerberus Capital Management,
L
.
P
.
(
Carbon)
5
.
TPG Capital,
L
.
P
.
(
Titanium)
CONFIDENTIAL
Return
Board
PresentationMarch
5
,
2008
CONFIDENTIAL
Return
Equity Offering
CONFIDENTIAL
Return
2
Considerations Regarding $4bn Equity Offering
Provides strong statement
t
o
a
l
l
constituencies that the Companyis acting
t
o
protect
i
t
s
franchise
Reduces risk and improves likelihood that Company can bridge
t
o
more
stable
environment
Allows Company
t
o
exceed relevant rating agency and regulatory capital
thresholds under High Loss
scenario
I
n
combination with business restructuring and other actions positions
Company
t
o
minimizemagnitude
o
f
ratings
downgrade
Consistent with need
t
o
plan for
downside
Potential for additional negative impact
o
f
broader
recession
Possibility for adverse credit development
i
n excess
o
f
High Loss
Scenario
Potential for limitedfuture access
t
o
equity markets
CONFIDENTIAL
Return
3
Overview
Raise common equity
i
n a private placement fromprivate equity investors and
potentially wall-crossed traditional public
investors
Contact potential investors and execute transaction prior
t
o
Q1 earnings
announcement
Wall cross potential anchor public investors (may include existing anchors and
selected other investors) prior
t
o announcement and offer opportunity
t
o join
transaction
Announce offering contemporaneous with Q1 earnings
announcement
Magnitude
o
f
private equity raise potentially subject
t
o NYSE and regulatory
ownership limitations
Target amount
~
$
1.5bn
-
$
2.0bn
Immediately following Q1 earnings announcement, launch public offering
o
f
common equity (and potentially convertible preferred)
Private equity investors potentially backstop
a
l
l
o
r
a portion
o
f
public
offering
May
b
e
required
t
o offer warrants
t
o compensate for
backstop
Form
o
f
public offering could
b
e
rights offering
Target amount
~
$
2.0bn
-
$
2.5bn
CONFIDENTIAL
Return
4
Potential Investor
ListPrivate
Equity / Hedge Funds Public
InvestorsTier
1Tier2 Substantial Holders
Others/
Eton Park
CONFIDENTIAL
Return
5
Financial Impact
o
f
Capital Raise
Management Forecast, 1 Notch Downgrade, $4bn Capital Raise
@ $
1
0
per Share@ $8 per
ShareLow
Credit
C
a
s
e
H
i
g
h
C
r
e
d
i
t
Case$
11.67$
11.36$ 10.94$
11.55$ 15.92$
11.68$
3.04$ 2.50$
2.67$
1
.
3
4
(
$
2.46)
(
$ 0.11)
200720082009201020112012TBVPSEPS26.9%
discount
t
o
2009
TBVPS36.2%
I
R
R
$
9.84$
9.68$ 9.45$
10.15$
15.92$
9.85$
2.50$ 1.19$
2.05($
0.16)
(
$ 3.46)
(
$ 0.11)
200720082009201020112012TBVPSEPS15.3%
discount
t
o
2009
TBVPS28.8%
IRR$
12.76$
12.28$ 11.75$
12.33$ 15.92$
12.72$
3.32$ 2.69$
2.89$
1
.
4
4
(
$
2.62)
(
$ 0.11)
200720082009201020112012TBVPSEPS14.9%
discount
t
o
2009
TBVPS31.9%
I
R
R
$
10.67$ 10.39$
10.11$
10.83$ 15.92$
10.64$
2.70$ 1.28$
2.20($
0.17)
(
$ 3.68)
(
$ 0.11)
200720082009201020112012TBVPSEPS1.1%
discount
t
o
2009
TBVPS24.6%
IRRNote:
IRR assumes 9.0x 2012 earnings exit multiple
CONFIDENTIAL
Return
Change
o
f
Control
CONFIDENTIAL
Return
7
NameMarket Cap
(
$ bn) 2008
P
/
E%
o
f
52-Week HighTier One RatioTCE /
TA$
134.110.3x74.8% 8.4% 4.9%
95.211.176.07.66.0109.67.975.57.74.259.66.559.07.81.255.212.188.38.34.749.48.074.49.52.116.97.955.210.17.6A
L
i
s
t
B
-
L
i
s
t
Potential Acquirors/ Partners for
WaMuOverview
o
f
Potential
PartnersSource:
FactSet, Company Filings. Market data
a
s
o
f
March
4
,
2008.
A
L
i
s
t
B
L
i
s
t
CONFIDENTIAL
Return
8
Change
o
f
Control Valuation Range
An acquisition valuation range
o
f
$
1
5
-
$
2
0
per WaMu share implies a modest price / tangible book valuation
and core deposit premium
t
o tangible book adjusted for further estimated credit
losses
Price / earnings metrics will
b
e
a secondary focus for acquirorsgiven the uncertainty regarding timing
o
f
WaMus return
t
o
profitability
WaMu needs
t
o
b
e
prepared
t
o consider proposals below $
15
An acquirer will likely deduct the value
o
f
any capital raise necessary
t
o ensure adequate pro forma
capitalization from the deposit premium and value
o
f
synergies
The use
o
f
a structured security linked
t
o the credit performance
o
f
certain collateral could potentially provide
valuation upside should credit performance exceed
expectationsPurchase
Price Ratio
AnalysisImplied
Franchise
ValueNet
o
f
Buyer Capital
RaiseNote:
WaMu projections based
o
n
company provided Base Case: High Credit scenario.
1
.
Based
o
n
Pre- tax Writedownof $22.0bn
-
$
25.0bn.
WaMuPrice Per WaMu
SharePer
ShareData$
15.00$
20.00Price
/ Tangible
BookYear
End 2008 (High Credit Case)$
11.221.34x1.78xYear
End 2009 (High Credit Case)$
10.151.481.97Market
Premium03/
04/ 2008 Closing Price$13.3912.0% 49.4%
Price / 2010
EPSHigh
Credit Case$
1
.
0
3
1
4
.
6
x
1
9
.
4
x
(
$
i
n billions except per share)
LowHighTangible
Book Value$13.5$
13.5(+)
Deposit Premium (14%)
22.622.6Franchise
Value$36.1$
36.1(+)
Present Value
o
f
Synergies8.08.0(-
) Estimated After- tax Writedown
(
1)(16.3)( 14.1)
Adjusted Franchise Value$27.8$30.0(-
) Required Capital Raise(14.8)( 12.6)
Total Value
t
o Shareholders$ 13.0$
17.4Per
Share Value$15.00$ 20.00
CONFIDENTIAL
Return
9
Pro FormaMerger Analysis
Based
o
n
current earnings analysis, buyersability
t
o pay will
b
e
constrained
b
y
impact
t
o
2009 EPS; low likelihood
a
t
this time
o
f
buyers looking only
a
t
2010 EPS
Transaction purchase accounting adjustments, including potentialasset valuation
impairments, put stress
o
n
tangible common ratios
Acquirorsmay need
t
o raise additional capital depending
o
n
impairment magnitude
However, adjustments will result
i
n lower loss provisions for anacquirer, improving
transaction economics over
timeSummary
o
f
Pro Forma
AnalysisNote:
WaMu projections based
o
n
company provided Base Case: High Credit scenario. Does not include purchase accounting adjustments.
JPMorganWells
FargoStock
/ Cash Consideration Mix100%Stock100%
StockCost
Savings35% 45%
EPS Impact @ $15.00 per
Share2009(
1.7%) 4.4%
20106.6% 17.0%
EPS Impact @ $20.00 per
Share2009(
4.6%) 0.2%
20103.3% 12.0%
Pro Forma Tangible Common Ratio4.51% 4.61%
Decrease
i
n Tangible Common Ratio ( bps)
5
5
bps174 bps
CONFIDENTIAL
Return
1
0
TimelineMarchApril3/
3 -
3
/
73/
1
0
-
3
/
143/
1
7
-
3
/
213/ 24-
3
/
283/
3
1
-
4
/
44/ 7 -
4
/
114/ 14-
4
/
18Capital
RaisingPrepare
Data Room / Management Presentation3/ 33/
14Contact
Investors3/
6Confidentiality
Agreement3/ 6 -
3
/
7Management
Meetings3/ 8 -
3
/
12Preliminary
Indications
o
f
Interest3/
14Due
Diligence3/ 174/
4Final
Proposals Due4/
7Negotiate
Terms3/ 314/
15Announce
Transaction Concurrently with EarningsOno
f
before4/
15Contact
/ Wall Cross Public
InvestorsNegotiate
Public Capital
RaiseRaise
Additional Public Capital4/
1
6
-
4
/
18M&
AContact
Investors3/ 63/
14Confidentiality
Agreement3/ 6 -
3
/
7Management
Meetings3/ 63/
14Preliminary
Indications
o
f
Interest3/
14Due
Diligence3/ 174/
4Final
Proposals Due4/
7Negotiate
Terms3/ 314/
15Announce
TransactionOn
o
f
before4/
1
5
CONFIDENTIAL
Return
April
8
,
2008
For Immediate Release
WaMu
t
o
Strengthen Capital Position, Raising
$
7
Billion
Anchored
b
y
a TPG Capital Investment
TPG Founding Partner David Bonderman
t
o Join WaMu Board
Company Expects First Quarter Net Loss
o
f
Approximately $1.1 Billion
Board Intends
t
o
Reduce Quarterly Dividend Rate
t
o
$0.01 Per Common Share
SEATTLE Washington Mutual, Inc. NYSE:WM) announced today that
i
t entered into
definitive agreements
t
o raise
a
n
aggregate
$
7
billion through direct sale
o
f
equity securities
t
o
a
n
investment vehicle managed
b
y
TPG Capital TPG), and
t
o other investors, including
many
o
f
WaMus top institutional shareholders. TPGs investment vehicle,
a
s
anchor
investor, will purchase
$
2
billion
i
n newly-issued WaMu securities. With the proceeds
o
f
the
offering, the companys capital ratios are expected
t
o
remain well above
i
t
s
targeted levels
during the period
o
f
elevated credit costs
i
n
i
t
s
loan portfolios
i
n 2008 and 2009.
A
t
the
same time, the company will continue
t
o grow
i
t
s
leading, national banking franchise.
We're very pleased that TPG and these major investors have expressed their confidence
i
n
WaMus underlying value and
i
t
s
growth potential, said WaMu Chairman and CEO Kerry
Killinger. This substantial new capitalalong with the other steps we are announcing
today will position
u
s
for a return
t
o profitability
a
s
these elevated credit costs subside.
With the support
o
f
these investors, we have every confidence
i
n our ability
t
o
deal with
todays market conditions and restore shareholder value.
CONFIDENTIAL
Return
WaMus board
o
f
directors intends
t
o appoint TPG Founding Partner David Bonderman
t
o
the board.
I
n
addition, Larry Kellner, chairman and chief executive officer
o
f
Continental
Airlines and former executive vice president and chief financial officer
o
f
American Savings
Bank, will become a board observer
a
t
TPGs request.
In TPG we have found a great partner with a terrific investment track record, said Killinger.
We are particularly pleased that David will rejoin our board. He has a long history with the
company having previously served
a
s
a WaMu director and we are privileged
t
o once
again benefit from his insight and experience.
Bonderman
i
s a founder and principal
o
f
TPG and TPG Asia formerly Newbridge Capital).
Before founding TPG
i
n 1992, Bonderman was Chief Operating Officer
o
f
the Robert
M
.
Bass Group, Inc. now Keystone, Inc.)
i
n Fort Worth. Prior
t
o that,
h
e
was a partner
i
n the
law firm
o
f
Arnold Porter
i
n Washington, D.C. Bonderman serves
a
s
director
o
n
seve ral
public company boards, including Burger King Holdings, Inc.; CoStar Group, Inc.; Gemalto
NV.; and Ryanair Holdings, plc,
o
f
which
h
e
i
s Chairman. He served
a
s
a director
o
n
WaMus board from 1996
t
o
2002.
I
n
addition
t
o
raising capital, the company announced the following actions:
Dividend
To further strengthen the companys capital position, the board
o
f
directors intends
t
o
reduce the quarterly dividend rate
t
o
$0.01 per common share from
i
t
s
most recent quarterly
dividend rate
o
f
$0.15 per common share, which will preserve approximately $490 million
o
f
capital annually.
CONFIDENTIAL
Return
Advancing
i
t
s
Retail-focused Business Strategies
Last year, WaMu took steps
t
o
realign
i
t
s
home lending business primarily into
i
t
s
core retail
banking network and
t
o reduce the size
o
f
i
t
s
other home lending operations. Today, the
company announced plans
t
o
further
i
t
s
retail-focused strategy by:
Investing
i
n and growing
i
t
s
retail bank branch and call center production;
closing
a
l
l
o
f
i
t
s
freestanding home loan offices; and
exiting wholesale lending
i
t
s
loan broker channel.
The company expects the closures
o
f
i
t
s
freestanding home loan offices and wholesale
channel
t
o
b
e
completed
b
y
the end
o
f
the second quarter.
First Quarter 2008 Results
WaMu also today announced preliminary, abbreviated results for the 2008 first quarter,
a
s
follows:
a net loss
o
f
approximately $1.1 billion,
o
r
$1.40 per diluted share;
a provision for loan losses for the quarter
o
f
approximately $3.5 billion and expected
first quarter net charge-offs
o
f
approximately $1.4 billion;
a
1
9
basis point increase
i
n net interest margin for the quarter from the prior quarter
t
o approximately 3.05 percent reflecting significantly lower wholesale borrowing
costs following the 200 basis point reduction
i
n the Federal Funds rate;
a
n
increase
i
n total deposits
o
f
approximately
$
6
billion, including
a
n
approximate
$
8
billion increase
i
n retail deposits; and
a
1
5
percent increase
i
n total noninterest income
t
o
approximately $1.6 billion from
the prior quarter.
WaMu expects
t
o
announce full first quarter earnings results
o
n
April 15, 2008.
CONFIDENTIAL
Return
Terms
o
f
the Capital Raising Transaction
I
n
the capital raising transaction, the company sold approximately 176 million shares
o
f
i
t
s
common stock
a
t
a purchase price
o
f
$8.75 per share.
I
n addition, the company issued
a
n
aggregate
o
f
approximately 55,000 shares
o
f
contingently convertible, perpetual non-
cumulative preferred stock
a
t
a purchase price and liquidation preference
o
f
$100,000 per
share. After receipt
o
f
certain approvals, including approval
o
f
the companys shareholders,
the convertible preferred stock will automatically convert into the Companys common stock
a
t
a
n
initial exercise price
o
f
$8.75 per share, subject
t
o adjustment.
I
n addition, certain investors who agreed
t
o transfer restrictions
o
n
their shares will receive
warrants, which, upon obtaining certain approvals, will become exercisable for common
stock based
o
n
a post-closing reference price. These warrants have a term
o
f
five years.
The company intends
t
o call a special shareholders meeting
t
o increase the number
o
f
common shares available for issuance under
i
t
s
articles
o
f
incorporation and
t
o
approve
conversion
o
f
the preferred stock into common stock. Further details about the private
offering and the terms
o
f
the securities will
b
e
available
i
n the companys Form 8-K
t
o
b
e
filed with the SEC.
I
n
addition
t
o
reporting first quarter results, the companys annual shareholders meeting will
b
e
held
o
n
April 15, 2008 and a conference call
t
o discuss the company's financial results
will
b
e
held
o
n
Wed., April 16, 2008,
a
t
10:00 a.m. ET. The call will
b
e
hosted
b
y
Kerry
Killinger, chairman and chief executive officer and Tom Casey, executive vice president and
chief financial officer. The conference call
i
s available
b
y
telephone
o
r
o
n
the Internet. The
dial-in number for the live conference call
i
s 888-391-7808. Participants calling from outside
the United States may dial 630-395-0029. The passcode WaMu"
i
s required
t
o access the
CONFIDENTIAL
Return
call. Via the Internet, the conference call
i
s available
o
n
the Investor Relations portion
o
f
the
company's web site
a
t
www.wamu.com/ir. A recording
o
f
the conference call will
b
e
available one hour following the end
o
f
the call through midnight ET
o
n
Friday, April 25. The
recorded message will
b
e
available
a
t
866-360-3314. Callers from outside the United States
may dial 203-369-0168.
Advisors
Goldman, Sachs Co. and Lehman Brothers served
a
s
placement agents and
Simpson Thacher Bartlett LLP served
a
s
legal advisors
t
o
Washington
Mutual
i
n the transaction. Credit Suisse and Cleary Gottlieb Steen Hamilton LLP acted
a
s
financial and legal advisers
t
o TPG.
About TPG Capital
TPG Capital
i
s the global buyout group
o
f
TPG, a leading private investment firm founded
i
n
1992 with more than $50 billion
o
f
assets under management and offices
i
n San Francisco,
London, Hong Kong, New York, Minneapolis, Fort Worth, Melbourne, Menlo Park, Moscow,
Mumbai, Beijing, Shanghai, Singapore and Tokyo. TPG Capital has extensive experience
with global public and private investments executed through leveraged buyouts,
recapitalizations, spinouts, joint ventures and restructurings. TPG Capitals investments
span a variety
o
f
industries including financial services, technology, industrials, retail,
consumer, travel and entertainment, media and communications and healthcare. Please
visit www.tpg.com.
CONFIDENTIAL
Return
About WaMu
WaMu, through
i
t
s
subsidiaries,
i
s one
o
f
the nation's leading consumer and small business
banks. On Dec. 31, 2007, WaMu and
i
t
s
subsidiaries had assets
o
f
$327.91 billion. The
company has a history dating back
t
o
1889 and
i
t
s
subsidiary banks currently operate
approximately 2,500 consumer and small business banking stores throughout the nation.
WaMu's news releases are available
a
t
www.wamu.com.
Cautionary Statements
This document contains forward-looking statements, which are not historical facts and
pertain
t
o
future operating results. These forward-looking statements are within the meaning
o
f
the Private Securities Litigation Reform Act
o
f
1995. These forward-looking statements
include, but are not limited
t
o
,
statements about our plans, objectives, expectations and
intentions and other statements contained
i
n this document that are not historical facts.
When used
i
n this presentation, the words expects, anticipates, intends, plans,
believes, seeks, estimates,
o
r
words
o
f
similar meaning,
o
r
future
o
r
conditional verbs,
such
a
s
will, would, should, could,
o
r
may are generally intended
t
o
identify forward-
looking statements. These forward-looking statements are inherently subject
t
o significant
business, economic and competitive uncertainties and contingencies, many
o
f
which are
beyond our control.
I
n
addition, these forward-looking statements are subject
t
o
assumptions with respect
t
o
future business strategies and decisions that are subject
t
o
change. Actual results may differ materially from the results discussed
i
n these forward-
looking statements for the reasons, among others, discussed under the heading Factors
That May Affect Future Results
i
n Washington Mutuals 2007 Annual Report
o
n
Form 10-K.
CONTACT: Washington Mutual, Inc.
Media Contact
Derek Aney
206-500-6094 Seattle)
212-326-6075 New York)
derek.aney@wamu.net
o
r
Investor Relations Contact
Alan Magleby
206-500-4148 Seattle)
212-702-6955 New York)
alan.magleby@wamu.net
CONFIDENTIAL
Return
March 2008
Management Presentation
0
CONFIDENTIAL
Return
Agenda
Situation Overview
Company Overview
Business Line Overview
Credit Analysis
Financial Outlook
1
CONFIDENTIAL
Return
Management Team
Title Age Years
a
t
Years
i
n
Firm Industry
Kerry Killinger Chairman &CEO
5
8
2
6
3
2
Steve Rotella President &COO
5
4
3
2
5
Tom Casey EVP &CFO
4
5
6
2
4
John McMurray Chief Credit Officer
4
9
<1
2
6
2
CONFIDENTIAL
Return
Offering Summary
Targeted size
o
f
private capital raise: $1.5-2.0
b
n
Capital Raise
o
f
~
$
4.0
b
n
g p p
Common stock
Subsequent public offering: $2.0-2.5
b
n
Common stock (and potentially convertible preferred)
Initial Indications:
3
/
1
6
Timing
Due Diligence: commences
o
n
3
/
1
7
Final Proposals: early April
3
Announcement: mid April
CONFIDENTIAL
Return
Investment Highlights
Strong retail and small business banking franchise with leading share
i
n strategic, high-growth markets
Recognized and prominent national brand
Diverse
s
e
t
o
f
core consumer products including deposits, mortgages,
credit cards and investment products
Uniquely positioned and growing multi-family platform
Core business lines generate significant stable earnings
a
s
credit cycle
normalizes
Diversified funding anchored
b
y
strong branch- based deposit franchise
Strong management team with deep experience
Attractive valuation
4
CONFIDENTIAL
Return
Company Overview
5
CONFIDENTIAL
Return
Summary Fact Sheet
Total Assets: $328
b
n
Total Loans: $244
b
n
Stock Price (Mar.11): $11.88
Market Capitalization: $10.5
b
n
Total Deposits: $182
b
n
p
%
o
f
5
2
Week High: 26%
1
.
Citigroup $2,188
B
y
Deposits
(
$
bn)
B
y
Assets
(
$
bn)
Rankings1
1
.
Bank
o
f
America $689 g p
2
.
Bank
o
f
America 1,716
3
.
JPMorgan Chase 1,562
4
.
Wachovia 783
5 W
l
l F 575
2
.
JPMorgan Chase 506
3
.
Wachovia 423
4
.
Wells Fargo 293
5 Citi 266
5
.
Wells Fargo
6
.
7
.
U
.
S
.
Bancorp 238
8
.
SunTrust 180
5
.
Citigroup
6
.
7
.
U
.
S
.
Bancorp 121
8
.
SunTrust 114
6
Source: Deposit data
a
s
per SNL Financial regulatory data
a
s
o
f
12/ 31/ 07, except
f
o
r
WM which
i
s per 2007 10-
K
.
Asset data per SNL Financial
a
s
o
f
12/ 31/
0
7
CONFIDENTIAL
Return
Leading Retail Franchise
A Leader
i
n Consumer and Small Business Banking
#6 depository, with over 2,200 retail banking stores
Growth footprint: population growth
o
f
11%
v
s
.
national average
o
f
6%
#6 largest bank card issuer
#1 multi-family lender
#6 home lender
b
y
origination
Washington
#2
U
.
S
.
Deposits
i
n deposits
#2
i
n stores
Oregon
#3
i
n deposits
Nevada1
#
i
n
New York
# 5
i
n deposits
# 7
i
n stores
3 deposits
California
#3
i
n deposits
#3
i
n stores
Texas
#6
i
n deposits
Florida
#5
i
n deposits
#5
i
n stores
7
#4
i
n stores
Source: SNL Financial
a
s
o
f
6
/
30/
0
7
1
Excludes
a
l
l
Henderson home office deposits except online, Enterprise Customer Care (ECC) and branch deposits.
CONFIDENTIAL
Return
Leader
i
n Key Markets
Top
1
0
MSAs Ranked
b
y
Total Deposits
(
$
i
n millions)
$33,258
$ 18,859
$ 11,377
$8,871 $ 8,804
$7,284
$5,115 $ 4,916 $4,789
$ 4,192
Rank 2 9 4 2 3 3 7 3 2 3
Los Angeles,
CA
New York,
N
Y
San
Francisco,
CA
Seattle -
Tacoma -
Bellevue, WA
Miami,
F
L
San Diego,
CA
Houston,
T
X San Jose, CA Riverside, CA Portland, OR
8
Source: SNL Financial. Data
a
s
o
f
6
/
30/
0
7
CONFIDENTIAL
Return
Stable Core Earnings
Pre- Continuing Operations (Pre-Provision)
$1.6
$1 5
$1.6
$1.6
Pre tax Income from Pre
(
$
i
n billions)
$1.61
$
2
$1 0
$1.1
1.5
$1.4
$1.3 $
1
.
3
1.6
1.52
1.03
4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07
9
1
Excludes $404 mmpre-tax negative impact from market valuation losses.
2
Excludes $538 mmpre-tax negative impact from market valuation losses.
3
Excludes $1.78
b
n
pre-tax goodwill writedown associated with home loan segment.
CONFIDENTIAL
Return
Stable Funding Base
Majority
o
f
funding
D
i
t
through
FHLB
Advances
core retail
deposits
Diversified wholesale
Deposits
19%
funding with staggered
maturity profile
Substantial FHLB excess
14%
56%
Other
Borrowings and
Liabilities
capacity
2%
Holding company liquid
2%
7%
Common Stockholders
Equity
Repos and Fed g p y q
through 2010
Total: $328bn
Preferred Stock1
Funds
1
0
Note: As
o
f
12/ 31/
0
7
1
Includes minority interests (REIT Preferreds).
CONFIDENTIAL
Return
Strategic Priorities
Drive top-tier growth through retail distribution
Deliver strong household growth
Continue rapid growth
o
f
small business
Proactively manage store network
Enhance cross-sell initiatives through retail channel
Continue
t
o take aggressive actions
t
o right size Home Loans
while maintaining flexibility
t
o capitalize
o
n
future opportunities
Continue
t
o move towards best-
i
n
-
class productivity
Aggressively manage credit through difficult environment
1
1
CONFIDENTIAL
Return
Business Line Overview
1
2
CONFIDENTIAL
Return
Retail Banking Driven Strategy
Leading Retail Banking Brand
Innovative Products
Unique and Valuable Retail Banking Franchise
Powerful Distribution
Industry- Leading Service
1
3
CONFIDENTIAL
Return
Summary
o
f
Business Lines
Retail
Banking
Card
Services
Commercial
Banking
Home
Loans
Description: 2,257 retail Multi and Nationwide
branches
i
n
1
5
states
Nationwide credit
card lending
business
Multi- family
commercial real
estate lending
business
i
n
single-family
residential real
estate lending
selected markets and servicing
0
7
Revenue $8,444 mm $3,0401 mm $855 mm $1,891 mm
0
7
Expenses $4,567 mm $1,337 mm $282 mm $2,164 mm2
Employees 28,784 2,860 1,406 11,323
President James Brooks
1
4
Corcoran Tony Vuoto
A
l
David Schneider
1
Card services revenue
i
s reported
o
n
a GAAP basis.
2
Excludes
4
Q

0
7
$1.78
b
n
goodwill writedown.
CONFIDENTIAL
Return
Retail Focused Strategy
Retail Banking Card Services Home Loans Commercial
Optimize new store
leading
expansion and
existing store
performance
Pursue balanced
growth strategy
Migrate
t
o retail
production
channels
Expand
multi-family
business
Leverage leading
Expand small
business
Leverage retail
bank distribution
Leverage retail
bank distribution
g g
efficiency position
Expand
relationships
Drive deposit
growth
Grow small
business
receivables
Drive operating
efficiency
p
through deposit-
gathering products
and services
Delivering
o
n
cross-business
opportunities
1
5
CONFIDENTIAL
Return
Retail Banking
1
6
CONFIDENTIAL
Return
Retail Banking Overview
Strong performance delivers top-tier operating leverage
Significant household growth driven
b
y
free checking
Growing success
i
n deepening customer relationships through a
wide mix
o
f
products and services
Aggressively pursuing sizeable small business opportunity
Increased focus
o
n
deposit growth coupled with disciplined
margin management
Optimizing store and internet distribution networks
Highly experienced management team
1
7
CONFIDENTIAL
Return
Retail Banking Team
James Corcoran
President
Years
o
f
Experience:
2
1
Years
a
t
WaMu: 2
Frank Vella
Small Business
Nandita Bakhshi
Payments and Deposits
James Livesay
Operations and ECC
Ken Kido
Store Distribution
Years
o
f
Experience:
3
5
Years
a
t
WaMu: 2
Years
o
f
Experience:
2
0
Years
a
t
WaMu: 2
Years
o
f
Experience:
2
5
Years
a
t
WaMu: 2
Years
o
f
Experience:
3
0
Years
a
t
WaMu: 6
Diana Grahan
Chief Risk Officer
Years
o
f
Experience:
2
2
Scott Maw
Chief Financial Officer
Years
o
f
Experience:
1
8
1
8
Years
a
t
WaMu: 1 Years
a
t
WaMu: 5
CONFIDENTIAL
Return
Business Model
Great stores
i
n right locations
Household
growth
v
i
a
free
checking
Low-cost
producer
High-performance
l
Attractive mix
o
f
additional
Great
culture products
1
9
service
CONFIDENTIAL
Return
Retail Banking Segment Contribution
millions)
Card
(
$
i
n
%2007 WM Total Revenues Retail Banking Revenues
Commercial
Group
6
%
Services
21%
$8,173
$8,444
Home
Loans
13%
,
Retail
Banking
59%
2006 2007
Total Revenues: $14.2bn
2
0
Note: %
o
f
Total Revenue excludes Corporate Support / Treasury / Other. Card Services revenue growth
i
s net
o
f
securitization adjustments
CONFIDENTIAL
Return
Top-Tier Operating Leverage
Funding Growth
1
1
2%
YOY Growth
11.2%
7.8%
3.8%
3.9%
1.2%
2006
(0.4)%
2007
Revenue Expense Expense excl
2
1
(excl. site openings/ closures)
Note: Excludes discontinued operations and contribution from home loan portfolio
CONFIDENTIAL
Return
Strong Position
i
n Attractive Markets
Washington
#2
i
n deposits
#2
i
n stores
New York
#5
i
n deposits
#7
i
n stores
Oregon
#3
i
n deposits
Nevada
#3
i
n deposits
California
#3
i
n deposits
#3
i
n stores
Texas
#6
i
n
Florida
#5
i
n deposits
2
2
deposits
#4
i
n stores
p
#5
i
n stores
CONFIDENTIAL
Return
Attractive Footprint
f
o
r
Growth
Household Growth
b
y
Footprint State
4%
3.20%
3.66%
3%
h)
2.22%
2.04%
1.91%
2.31%
2.40%
2%
s
e
h
o
l
d
G
r
o
w
t
h
WaMu Average
1.67%
1.60%
1.44%
1.00%
1%
(
H
o
u
s
High- Density Markets
US Average
0.54% 0.54%
0.36%
0%
0.15%
NV
A
Z
UT GA
I
D
F
L
T
X
CO WA OR CA
I
L
N
J
C
T
NY
2
3
Source: Economy. com. Household growth defined
a
s
CAGR from 4Q
0
2
t
o 4Q
0
7
(
5
-
year CAGR)
CONFIDENTIAL
Return
Proven, Successful Retail Banking Model
Net Household 12-Month Growth Rate
Total WaMu Households (Period End)
(12-Month Period End)
2
5
1
9
3 1
9
6
19.9
19.8
10%
WaMu
3.0
3.0
2.9 2
.
9
2
.
9
2
.
8
2
0
19.0
19.3
19.3
19.6
8%
Large Bank Average
National Average
9.4
9.8
9.8
10.1
10.5 10.5
1
0
1
5
Home Loans
Card Services
(
in
m
i
l
l
i
o
n
s
)
4%
6
%
5
9
.
2
9.4 9.6
9
.
8
10.0
1
0
Retail
2
%
0
3
Q
0
6
4
Q

0
6
1
Q

0
7
2
Q

0
7
3
Q

0
7
4
Q
'
0
7
0%
11/
0
4
0
5
/
0
5
11/
0
5
0
5
/
0
6
1
1
/
0
6
0
5
/
0
7
Cumulative New Checking
2
4
Note: Households
b
y
segment
d
o
not add
u
p
t
o total WaMu households due
t
o overlapping households.
Source: BAI
Accounts:
1
.
5
mm
CONFIDENTIAL
Return
Strong Fee Income Growth
(
$
i
n millions)
$900
Depositor and Other Retail Banking Fees
Securities Fees and Commissions
)
$790
$807
$832
$600
$700
$800
$633
$630
$697
$707
$746
$725
$641
$655
$692
$665
$720
$740
$769
$400
$500
$586 $578
$200
$300
$
4
7
$
5
2
$
5
6
$
5
2
$
5
4 $
6
0
$
7
0
$
6
7
$
6
3
$0
$100
4
Q
'
0
5
1
Q
'
0
6
2
Q
'
0
6
3
Q
'
0
6
4
Q
'
0
6
1
Q
'
0
7
2
Q
'
0
7
3
Q
'
0
7
4
Q
'
0
7
2
5
Note: Includes
a
l
l
WMI fee income; excludes results from discontinued operations.
Cross-sell ratio 6.46 6.53 6.55 6.66 6.78 7.07 7.13 7.20
CONFIDENTIAL
Return
Strategically Growing Deposits while
Spreads
Retail Banking Deposits
(
$
i
n billions)
Cost
o
f
Interest Bearing Deposits
(weighted average)
Widening
$
1
7
$
2
0 $
2
3
$
2
3
$132
$140
$143 $144
5.37%
5.03%
6%
CAGR
11%
$
6
2
$
5
3 $
5
1
$
3
9
3.48%
3.35%
4.34%
2.22%
4%
3M LIBOR
(15)%
Retail IBD
$
5
3
$
6
7 $
7
0
$
8
1
1.63%
2.49%
0%
2%
15%
4
Q
0
4
4
Q

0
5
4
Q

0
6
4Q
0
7
Non- interest Bearing
Platinum
Interest Bearing
4
Q
0
4
4
Q

0
5
4
Q

0
6
4
Q

0
7
2
6
g
CONFIDENTIAL
Return
Growing Small Business Rapidly
But Significant Opportunity Remains
1 200
1
0
000
Total Small Business Accounts
(
i
n thousands)
Small Business Deposits
(
$
i
n millions)
8,000
9,000
10,000
1,000
1,200
5,000
6,000
7,000
600
800
3,000
4,000
400
0
1,000
2,000
4
Q
'
0
5
1
Q
'
0
6
2
Q
'
0
6
3
Q
'
0
6
4
Q
'
0
6
1
Q
'
0
7
2
Q
'
0
7
3
Q
'
0
7
4
Q
'
0
7
0
200
4
Q
'
0
5
1
Q
'
0
6
2
Q
'
0
6
3
Q
'
0
6
4
Q
'
0
6
1
Q
'
0
7
2
Q
'
0
7
3
Q
'
0
7
4
Q
'
0
7
2
7
Current market share: 1%
CONFIDENTIAL
Return
Proactively Managing Store Network
R
E
FOCUS
DeNovo Store Decision Matrix Performance Improvement Plan1
1
.
Grow aggressively
i
n
established markets
2
.
Manage critical
v
e
n
e
s
s
RE-
Attractive site,
poor performance
LEVERAGE
Attractive site,
high performance
underperforming markets
3
.
Stabilize remaining markets
S
i
t
e
a
t
t
r
a
c
t
i
v
RECONSIDER
Unattractive site,
poor performance
OPTIMIZE
Less attractive site,
high performance
Impact
t
o date
f
o
r
DeNovo Stores
Performance (variance from net income after tax target)
YOY
3Q
0
7
Net checking accounts +54%
Households +42%
Deposits +42%
2
8
Revenue +37%
1
De Novo market plan
f
o
r
stores built since 2004.
CONFIDENTIAL
Return
Measured Growth
o
f
Store Portfolio
210
260
250
300
15%
20%
New Stores
New Stores
a
s
a
%
o
f
Total Stores
100-150
144
200
10%
100
5%
7
7
0
2003 2004 2005 2006 2007 2008E
0%
1
Store Closures
1
0
8
1
1
8
5
4
5
4
0
%
o
f
New Stores
Opened
i
n
Established
48% 52% 66% 76% 84% 90%
2
9
Market
1
WaMu also consolidated
7
9
grocery store locations into larger, existing retail banking stores
i
n 2004.
CONFIDENTIAL
Return
Rapidly Growing Online Sales
350
$4 142
400
Online CD
$5,000
One Click Savings
I t tCh
k
i
4,142
$3,218
300
a
n
d
s
)
$4,000
B
a
l
a
Instant Checking
Online Deposit Balances
$1,952
200
250
c
o
u
n
t
s
(
t
h
o
u
s
a
$2 000
$3,000
a
n
c
e
($
in
m
i
l
l
i
100 $991
150
A
c
c
$1,000
2,000
o
n
s
)
$
3
0
$123
$400
0
5
0
Q206 Q306 Q406 Q107 Q207 Q307 Q407
$0
3
0
CONFIDENTIAL
Return
WaMus Brand Outperforms Competitors
40
D
o
not ' nickel and dime' customers
Socially responsible D
o
what's best for customers
20
30
Human &approachable
On their way
u
p
Easy
t
o understand product
Setting the trends
0
10
Excellent customer service
Policies simple and easy
t
o understand
Make banking easier
Great deal
o
n
checking
Straightforward fees
Great deal
o
n
home loans
Convenient branch &ATM locations
Great online banking
Expertise beyond basics
3
1
Base: Aware
o
f
brand and
a
t
least one other
Q6.Onthefollowingscreensareanumber ofstatements andsomebanks, lenders, andcredit unions youve heard of. Pleasegiveyourimpressions
ofthesebanks, lenders, andcreditunions, whether ornotyouarefamiliarwiththem.
WaMu BofA Wells Fargo Citi Chase Wachovia
CONFIDENTIAL
Return
Industry Leading Service
Only Retail Bank
o
n
list
#
1
4
Retail Bank Customer
Satisfaction
#1 W t 8
5
ACSI Satisfaction Ratings
West
#1 California1
#1 Midwest
7
5
#3 Mid-Atlantic
#3 Southwest
#4
6
5
2004 2005 2006 2007
3
2
Southeast
1
For large banks.
Wachovia WaMu JPMorgan Bank
o
f
America
CONFIDENTIAL
Return
Key Takeaways and Opportunities
Strong performance with upside opportunity
Stable and growing retail deposit base
Top- tier player
i
n checking and household growth
Sizable opportunities
t
o
deepen relationships with deposits,
cards and home loans
Small business expansion still
i
n early stages
Optimizing store and internet distribution networks
t
o capture
f
u
l
l
potential
3
3
CONFIDENTIAL
Return
Card Services
3
4
CONFIDENTIAL
Return
Card Services Overview
Proven track record
o
f
acquiring and managing receivables
i
n
the mass middle market
Leveraging multiple distribution channels with emphasis
o
n
retail
stores
Strong receivables growth fueled
b
y
access
t
o WaMu brand and
customers with risk premium
Continue
t
o
leverage information based marketing and strong
risk management capabilities
Managing balance between growth and risk cautiously
i
n
weakening economic environment
Deep and
3
5
experienced management team
CONFIDENTIAL
Return
Card Services Team
Tony Vuoto
President
Years
o
f
Experience:
2
5
Years
a
t
WaMu: 6
Susan Gleason
Chief Operations Officer
Years
o
f
Experience:
3
1
Years
a
t
WaMu: 6
Michele Iversen
Years
o
f
Experience:
2
0
Years
a
t
WaMu: 6
David Tomlinson
Chief Marketing
Officer
Years
o
f
Experience:
2
0
Chaomei Chen
Chief Risk Officer
Years
o
f
Experience:
2
0
Years
a
t
WaMu: 6
Years
a
t
WaMu: 6
3
6
CONFIDENTIAL
Return
Card Services Segment Contribution
(
$
i
n millions)
%2007 WM Total Revenues Card Services Revenues
$3,081
$3,040
Commercial
Group
6%
Card
Services
21%
Home
Loans
13%
R t
i
l
2006 2007
Total Revenues: $14.2bn
Retail
Banking
59%
3
7
Note: %
o
f
i
s net
o
f
securitization adjustments and
i
s reported
o
n
a GAAP basis
CONFIDENTIAL
Return
Balanced Growth Strategy
Continued focus
o
n
target
market new
Underserved
Expansion
with products
and Simpler Banking
Current initiatives underway
H
i
g
h
Core
Middle Market
Universe
Middle
Expansion
t
o
expand beyond core
middle market
R
e
t
u
r
n
Prime
Expansion
L
o
w
G l E dA
i
b
l
M k
t
f
1
2
t
2
0
Risk
Low
High
3
8
Goal: Expand Accessible Market from mm
t
o mm
CONFIDENTIAL
Return
Operating
i
n between the Super-Prime and
Sub-PrimeCategories
(
$
i
n billions)
Average Managed Receivables $50.3 $140.6 $149.3 $25.1
Net Interest Income 10.4% 10.3% 8.2% 10.6%
Non- Interest Income 7.2
2
.
3
2.0
6
.
3
Total Managed Revenues 17.6 12.6 10.2 16.9
Managed Card Losses (4.3) (4.7) (3.7) (6.5)
Risk Adjusted Margin 13.3% 7.9% 6.5% 10.4%
Non- Interest Expense (6.6) (4.5) (3.3) (5.3)
Pre-Tax Return
o
n
Receivables1 6.8% 3.4% 3.2% 5.1%
3
9
Note: Financial data
a
s
o
f
2007
1
Pre-
t
a
x
return
o
n
receivables calculated
a
s
risk adjusted margin less noninterest expense using actual credit losses, not provision.
CONFIDENTIAL
Return
A
n
Industry Leader
6th largest Visa/ MasterCard
bank card issuer
Approximately $27.2
b
n
i
n
managed receivables
Over 12.4 mmcustomer
accounts
Large, information-driven direct
marketer (500 mmcontacts
annually)
4
0
Note:
A
l
l
data
a
s
o
f
1
2
/
31/
0
7
except
f
o
r
Card Issuer Ranking which
i
s
a
s
o
f
06/ 30/
0
7
CONFIDENTIAL
Return
Balanced Business Model
National Retail Partnership Small Business
Direct response program
Full spectrum focus
Broad product array
Existing customer lists
Physical channels (stores
and call center)
New customer enrollment
Co-branded and affinity
Cooperative issuance
Limited number
o
f
select
partners
Direct response channels
Retail cross-sell
Specialized product
features
Customer Management
New Account Acquisitions
Enhancement Services
Marketing
4
1
Services
CONFIDENTIAL
Return
Significant Benefits fromWaMu Brand
$
3
0
Managed Portfolio Balances
a
t
Period End
(
$
i
n billions)
$23.6
$25.0
$26.2
$27.2
$
2
4
$23.5
$
2
6
$
2
8
$18.5
$20.1
$21.1
$22.2
$19.3
$18.1
$18.6
$20.0
$
1
8
$
2
0
$
2
2
$
1
4
$
1
6
$
1
0
$
1
2
4
Q
0
4
1
Q

0
5
2Q
0
5
3Q
0
5
4Q
0
5
1Q
0
6
2Q
0
6
3Q '
0
6
4
Q
'
0
6
1
Q
'
0
7
2
Q
'
0
7
3Q '
0
7
4Q '
0
7
Providian WaMu
4
2
Note: WaMu acquired Providian
o
n
10/
1
/
0
5
CONFIDENTIAL
Return
Leveraging Retail Distribution
22%
2,500
23%
25%
Cum. New Card Accts
2006 / 2007 Retail Account Growth
1 633
1,889
2,067
16%
18%
19%
21%
2,000 20%
Retail Household Penetration
1,137
1,377
1,633
13%
14%
1,500
u
n
t
s
(
0
0
0
s
)
15%
t
i
o
n
R
a
t
e
(
%
)
413
683
920
500
1,000
A
c
c
o
u
5%
10%
P
e
n
e
t
r
a
0 0%
4
3
Q
1
2006
Q
2
2006
Q
3
2006 Q4 2006 Q1 2007 Q2 2007
Q
3
2007 Q4 2007
CONFIDENTIAL
Return
Balanced Customer Targeting
20%
National programs Partnership Programs Retail programs
FICO Bands
o
f
Targeted Customers - 2007
15%
10%
5%
0%
600 620 640 660 680 700 720 740 760 780 800
4
4
600- 619 620- 639 640- 659 660- 679 680- 699 700- 719 720- 739 740- 759 760- 779 780- 799 800- 819
Note: Estimate based
o
n
Card Services prospect database
CONFIDENTIAL
Return
Increasing Credit Quality
40%
2004 2007
FICO Bands
o
f
Portfolio - 2004 and 2007
30%
33%
27%
35%
30%
35%
24%
20%
18%
19%
25%
12%
10%
15%
0
%
5
%
<600 600- 659 660- 719 720+
4
5
Note: Estimate based
o
n
Card Services prospect database
CONFIDENTIAL
Return
Credit Card Delinquency Rates
6 47%
$2,000
8
%
30+ 30+ Rate
30+ Day DQ Rates
5.73%
7.36%
6.44%
6.27%
6.16%
4.84%
5.07%
5 18%
5.23%
5.53%
5.25% 5.15%
6.47%
5.11%
$1 200
$1,600
l
i
o
n
s
)
6
%
e
(
%
)
Delinquency Delinquency
5.16%
5.00%
5.18%
$800
1,200
B
a
l
a
n
c
e
($
in
m
i
l
l
4
%
D
e
l
i
n
q
u
e
n
c
y
R
a
t
e
$
1
,
7
6
2
$
1
,
5
0
3
$
1
,
2
7
7
$
1
,
2
1
6
$
1
,
2
3
4
$
1
,
2
1
2
$
1
,
1
0
2
$
1
,
0
4
2
$
1
,
0
1
3
$
9
6
4
$
8
9
9
$
9
3
3
$
1
,
1
4
1
$
1
,
1
2
2
$
1
,
1
1
0
$
1
,
2
2
7
$0
$400
Q1'
0
4
Q2'
0
4
Q3'
0
4
Q4'
0
4
Q1'
0
5
Q2'
0
5
Q3'
0
5
Q4'
0
5
Q1'
0
6
Q2'
0
6
Q3'
0
6
Q4'
0
6
Q1'
0
7
Q2'
0
7
Q3'
0
7
Q4'
0
7
B
0
%
2
%
Delinquency rates showing upward pressure
a
s
economy slows
Card Services performance line
4
6
delinquency
i
s
i
n with industry metrics
Note:
A
l
l
numbers are
o
n
a Managed Non-GAAP basis
CONFIDENTIAL
Return
Credit Card Loss Rates
$525
$600 $580 15%
Net LossDollars Net LossRate
Net Credit Losses
$464
$413
$392
$367
$287
$306
$311
$331
$343
$357
$379 $377
$454
$446
%
.
9
8
%
0
.
3
9
%
1
2
.
5
3
%
1
3
.
8
8
%
$300
$400
$500
n
m
i
l
l
i
o
n
s
)
9%
12%
L
o
s
s
e
s
(
%
)
Credit Loss Dollars Credit Loss Rate
6
.
9
0
%
6
.
3
7
%
6
.
4
9
%
6
.
3
1
%
5
.
8
4
%
5
.
6
8
%
5
.
9
9
%
5
.
7
9
%
7
.
2
8
%
7
.
2
9
%
8
.
3
1
%
8
.
4
3
%
9. 1
$100
$200
B
a
l
a
n
c
e
($
i
3%
6%
N
e
t
C
r
e
d
i
t
L
$0
Q1'
0
4
Q2'
0
4
Q3'
0
4
Q4'
0
4
Q1'
0
5
Q2'
0
5
Q3'
0
5
Q4'
0
5
Q1'
0
6
Q2'
0
6
Q3'
0
6
Q4'
0
6
Q1'
0
7
Q2'
0
7
Q3'
0
7
Q4'
0
7
0%
Data from 1Q
0
4
t
o 3Q
0
5
represents Providian performance prior
t
o merger with WaMu
o
n
10/
1
/
0
5
Strong net credit loss (NCL) performance since 2005. NCL rate reached unsustainably
low levels
i
n 2006 following 2005 Bankruptcy reforms
2007 net loss rate increased driven
b
y
normalizing credit environment and rapid growth
i i
b
l
4
7
i
n receivables
Note:
A
l
l
numbers are
o
n
a Managed Non-GAAP basis
CONFIDENTIAL
Return
Increasing Risk
i
n Selected Geographies
Cardholders
i
n
F
L
and CA have shown significant deterioration
i
n delinquency
F
L
showed 60% deterioration from Jan
0
6
t
o Dec
0
7
CA showed 78% deterioration
i
n the same period
(
% Rate) 31+ $Delinquency Rate CA, FL,
I
L
,
NY, TX, WA)
Total portfolio showed 23% deterioration
i
n the same period
31+ Delinquency Rate (CA, FL,
I
L
,
NY, TX, WA)
q y ( )
6
0
%
6.5%
7.0%
7.5%
8.0%
F
L
CA
4.0%
4.5%
5.0%
5.5%
6.0%
3.0%
3.5%
J
a
n
'
06
F
e
b
'
06
M
a
r
'
06
A
p
r
'
06
M
a
y
'
06
J
u
n
'
06
J
u
l
'
06
A
u
g
'
06
S
e
p
'
06
O
c
t
'
06
N
o
v
'
06
D
e
c
'
06
J
a
n
'
07
F
e
b
'
07
M
a
r
'
07
A
p
r
'
07
M
a
y
'
07
J
u
n
'
07
J
u
l
'
07
A
u
g
'
07
S
e
p
'
07
O
c
t
'
07
N
o
v
'
07
D
e
c
'
07
CA
F
L
I
L NY
T
X
WA
4
8
%
o
f
Total (18.97%) (8.52%) ( 3.94%) ( 7.39%) ( 7.13%) ( 2.81%)
Note:
A
l
l
numbers are
o
n
a Managed Non- GAAP basis
CONFIDENTIAL
Return
Risk Control Initiatives
Actions taken
t
o
minimizethe impact
o
f
the mortgage and
economic downturn
Map negative HPA regions into marketing program suppressions
Suppression
o
f
WaMu subprime mortgages
i
n retail channels
Suppression
o
f
2
+
mortgage positions
i
n
a
l
l
new account channels,
i
n
credit line increase programs, and
i
n relationship marketing programs
Tighten the prescreen score cut offs
i
n
a
l
l
acquisition programs
Suspended line increases
i
n Q4
0
7
Tighten underwriting score cut-offs
Tighten high credit line assignment criteria
Close excessive inactive accounts. Stop authorization expansions
Risk- Based Re-pricing
4
9
Remove 660 FICO cap
o
n
Risk
R
e
pricing eligible populations
CONFIDENTIAL
Return
Unique expertise
i
n mass middle market that delivers high risk-
adjusted returns
WaMu brand and customer base fuels receivables growth with
upside opportunity
Targeting and acquisitions continue
t
o migrate
t
o higher FICO
mix
Proactively balancing growth and risk
i
n a softening environment
5
0
CONFIDENTIAL
Return
Commercial Group
5
1
CONFIDENTIAL
Return
Commercial Group Overview
Leading multi-family lending business
Operates
i
n select markets with stable demand and supply
constraints
Targets small balance customers with competitive pricing and
best-
i
n
-
class efficiency
(
$
1.3 mmaverage loan balance)
Rigorous focus
o
n
pristine credit quality
Management team with deep industry experience
5
2
CONFIDENTIAL
Return
Commercial Group Team
A
l
Brooks
President
Years
o
f
Experience:
2
5
Years
a
t
WaMu:
1
0
E
d
Ely David Williams
C
Sandy Boa
Risk
Sue Krahling
C O
Troy Applegate
Term Lending
GOS &
Years
o
f
Experience:
2
4
Years
a
t
WaMu: 9
CREL
Years
o
f
Experience:
2
0
Years
a
t
WaMu: 6
Management
Years
o
f
Experience:
2
6
Years
a
t
WaMu: 1
CFO
Years
o
f
Experience:
2
3
Years
a
t
WaMu:
2
3
Underwriting
Years
o
f
Experience:
2
2
Years
a
t
WaMu: 4
5
3
CONFIDENTIAL
Return
Focused Operating Strategy
Unique Value Proposition
Target Market
Select markets
with stable
Target Customer
Small balances
box
Market
Differentiators
Local presence
demand and
natural supply
constraints
Moderately
I
n the box
transactions
Value shoppers
Moderate
p
Competitive
pricing
Fast &simple
priced, less
volatile buildings
Renters
b
y
i
t
leverage
a
t
a fair
price
process
Targeted
product
solutions
necessity
Certainty
o
f
execution
Direct borrower
relationships
5
4
CONFIDENTIAL
Return
Commercial Group Segment Contribution
(
$
i
n millions)
%
o
f
2007 WM Total Revenues Commercial Group Revenues
$855
Commercial
Group
Card
6%
Services
21%
$818
Home
Loans
13%
Retail
2006 2007
T t l R $
1
4
2
b
Banking
59%
5
5
Total Revenues: 14.2bn
Note: %
o
f
i
s net
o
f
CONFIDENTIAL
Return
Portfolio Composition
Portfolio Breakdown Historical Breakdown
(
$
i
n billions)
$
1
1
$
3
8
$
4
3
Other
Commercial
26%
$
$
1
2
$
1
1
$9
$7
$8
$
2
2
$
2
6
$
3
0
$
3
1
$
3
1
$
3
3
$
1
6
$
1
6
$
1
8
$
2
0
$
2
2
$
2
6
$
3
0 $
3
2
$6
1
0
Multi-
F
i
l
2000 2001 2002 2003 2004 2005 2006 2007
Multi- Family Lending Other Commercial
Family
Lending
74%
5
6
Note: Portfolio breakdown
a
s
o
f
12/ 31/ 2007. Other Commercial consists
o
f
Other Real Estate, Retail Small Business and Commercial Loans.
CONFIDENTIAL
Return
Leading Share
i
n Select Markets
Seattle # 2
Portland #1
Boston #1
New York
Minneapolis #1
Milwaukee # 3
Sacramento #1
San Francisco #1
Denver # 2
Chicago # 1
#1
Philadelphia # 7
Washington,
D
C
#6
Los Angeles #1
San Diego # 1
Phoenix
Existing markets
New market (2006)
New market (2007)
Miami #7
Tampa # 1
Orlando
Source: 2006 HMDA data
5
7
CONFIDENTIAL
Return
Largest Multi-FamilyPortfolio
i
n Banking
WaMu
$31.1
Multi-Family Portfolio Holdings
(
$
i
n billions)
$10.3
N
Y
Community Bancorp $13.5
Citigroup
$5 0
$7.6
Wachovia Corporation
$
8
.
0
Bank
o
f
America
Capital One
$3.1
$3.9
5.0
Sovereign Bank
LaSalle Bank
1
$
3
.
0
$2.5
Astoria Federal Savings
Wells Fargo &Company
5
8
Source: FDIC and OTS, per SNL DataSource. Balances may differ slightly
t
o filings reported
o
n
a GAAP basis
Note: As
o
f
June 30, 2007; rankings for banks and thrifts only (most recent data available)
1
Bank
o
f
America acquired LaSalle Bank
o
n
October
1
,
2007.
CONFIDENTIAL
Return
Strong Multi-FamilyGrowth
(
$
i
n billions)
Loan Volume1 Portfolio1 (Ending Balance)
$ 31.8
$3.2
$ 21.5
$
2
.
1
4
Q
'
0
4
1
Q 2Q
'
0
5
3
Q 4Q
'
0
5
1
Q
2
Q
'
0
6
3Q
4
Q
'
0
6
1Q
2
Q
'
0
7
3
Q
4
Q
'
0
7
4
Q
'
0
4
1
Q
2
Q
'
0
5
3
Q
4
Q
'
0
5
1
Q
2
Q
'
0
6
3
Q
4
Q
'
0
6
1
Q
2
Q
'
0
7
3
Q
4
Q
'
0
7
5
9
Source: HMDA Data
1
Loan volumes and balances consist
o
f
Commercial Group multi-family only; exclude Community Lending & Investments (CL&
I
)
,
which resides under Corporate Support/ Treasury &
Other.
CONFIDENTIAL
Return
Conservative Underwriting Philosophy
Typically
D
o
not originate large
Conservative Metrics What We Dont
D
o
Typically, maximum 75% LTV and
minimum 1.15x debt service coverage
(
DSC), with 680 minimum FICO

score
construction
loans; average loan size
i
s $1.3mm
N
o
condo conversions
Higher DSC
f
o
r
office (1.20 DSC)
DSC requirements increase based
o
n
N
o
conduit lending
N
o
corporate banking
property age, quality and cash flow

stability
Collateral focused underwriting
Exited tract and condo development
financing business
i
n 2004
D
o
not focus
o
n
structured finance
D i i i
i
d
t
i
l
l
d
l
d
i
Proceeds based
o
n
property net
operating income
Recourse
t
o
a
n
individual
i
s common
D
e
minimisresidential land lending
6
0
o
n
the majority
o
f
our loans
CONFIDENTIAL
Return
Strong Asset Quality
62%
Multi-FamilyNPAs
a
s
%
o
f
Loan-
t
o
-
Value Ratio1
Multi-FamilyLoans
%
1.2%
1.4%
1.5%
58.06%
60%
59.43%
0.78%
0.8%
0.9%
1.1%
56%
58%
0.41%
0.30%
0.3%
0.5%
0.6%
52%
54%
0.05%
0.0%
0.2%
4Q
'
0
4
1Q 2Q
'
0
5
3Q 4Q
'
0
5
1Q 2Q
'
0
6
3Q 4Q
'
0
6
1Q
2
Q
'
0
7
3
Q
4Q
'
0
7
50%
4Q
'
0
4
1Q 2Q
'
0
5
3Q 4Q
'
0
5
1Q
2
Q
'
0
6
3
Q
4Q
'
0
6
1Q 2Q
'
0
7
3Q 4Q
'
0
7
6
1
WaMu Industry Avg. NPAs
1
Weighted average LTV based
o
n
permanent multi-family loans; current unpaid principal balance; value
a
t
origination.
2
Most recent data available. Source: FDIC
2
CONFIDENTIAL
Return
Leading small-balance multi-family business with competitive
advantage
i
n efficiency and service
Strong growth opportunities primarily
i
n existing and selected
new markets
Maintaining focus
o
n
conservative credit philosophy with good
results
Significant opportunity
t
o
expand relationships through deposit
gathering products and services
6
2
CONFIDENTIAL
Return
Home Loans
6
3
CONFIDENTIAL
Return
Home Loans Overview
Significantly restructured and refocused the business model
over the last two years
Proactively responding
t
o structural changes
i
n industry
volumes, mix, and secondary markets
Positioned
f
o
r
production success
Significant opportunity
t
o
grow retail store production and cross sell WaMu
bank products
Strong call center capabilities
Completed transition
t
o
state
o
f
the
a
r
t
production systems
i
n retail
Best
i
n class servicing and default management capabilities
Built strong, veteran management team
6
4
g g
CONFIDENTIAL
Return
Home Loans Team
David Schneider
President
Years
o
f
Experience:
2
1
Years
a
t
WaMu: 3
Arlene Hyde
Wholesale
Years
o
f
Experience:
2
5
Years
a
t
WaMu: 2
John Berens
Servicing
Years
o
f
Experience:
2
5
Years
a
t
WaMu: 3
John Schleck
Consumer Direct
Years
o
f
Experience:
2
3
Years
a
t
WaMu: 7
Steve Stein
Retail
Years
o
f
Experience:
2
5
Years
a
t
WaMu: 3
John Woods Cheryl
David Beck
Years
o
f
Experience:
2
2
Years
a
t
WaMu: 2
Feltgen
Chief Risk Officer
Years
o
f
Experience:
2
9
Years
a
t
WaMu: 3
Capital Markets
Years
o
f
Experience:
2
5
Years
a
t
WaMu: 6
Mike Zarro
Chief Admin. Officer
Years
o
f
Experience:
2
7
Years
a
t
WaMu: 7
6
5
CONFIDENTIAL
Return
Home Loans Segment Contribution
(
$
i
n millions)
%
o
f
2007 WM Total Revenues Home Loan Revenues
$2,403
Commercial
Group
6%
Card
Services
21%
$1,891
Home
Loans
13%
%
2006 2007
Retail
Banking
59%
T t l R $
1
4
2 b
6
6
Total Revenues: 14.2
b
n
Note: %
o
f
i
s net
o
f
CONFIDENTIAL
Return
Restructured Business Model
Actions
t
o Date
Consolidated
a
l
l
residential lending and servicing activities under
common management and infrastructure (2006)
Reduced market risk through large MSR sale
(
$
140B) and enhanced
hedging capabilities (2006)
Migrating production focus
t
o
retail distribution with strong growth
opportunity
i
n stores (2007 forward)
Shut lower margin correspondent, government and conduit production
Significant cost cutting through major systems and staffing reductions,
and facilities consolidations
Implemented state
o
f
the
a
r
t
production systems
i
n retail channels
(2007 2008)
6
7
CONFIDENTIAL
Return
Industry Transition
Industry origination volumes declined
b
y
over 40%
i
n 2007
Non- conforming production has been particularly affected
Transition toward conforming originations benefits lenders with scale and superior efficiency
Industry Origination Volume
$705
$800
$755
$720
$680
$730
$600
$570
$700
$800
$900
$450
$300
$400
$500
1
Q
0
6
2
Q

0
6
3
Q

0
6
4
Q

0
6
1
Q

0
7
2
Q

0
7
3
Q

0
7
4Q
0
7
Conforming
HELOC
15%
Industry
Q
4
2006 Industry
Q
4
2007
HELOC
Subprime
13%
3%
Alt-A
32%
Jumbo
Alt-A
14%
Subprime
19%
6%
FHA / VA
7%
Jumbo
10%
Conforming
61%
6
8
FHA / VA
17%
3%
Source: Inside Mortgage Finance
CONFIDENTIAL
Return
Home Loans Transition
Retail stores
Q
4
2005
Retail stores
Q
4
2007
Retail stores
2008 Consolidation Plan
Distribution
Channels
Home Loan centers
Consumer direct
Wholesale
Correspondent
Home Loan centers
Consumer direct
Wholesale
Consumer direct
Products
Full range
o
f
products
Conforming, option ARM,
subprime, home equity
Exited subprime, conduit, and
capital markets businesses
Substantial reduction
i
n home
equity, option ARMs
Prime conforming focus
Headcount
Standalone
Home Loan
Centers
17,651
352
11,3231
158
~7,500
0
4
5
8 2
Loan
Fulfillment
Centers
6
9
1
Prior
t
o fourth quarter restructuring.
A
s
o
f
1
/
31/ 2008, approximately 9,000
CONFIDENTIAL
Return
Product Mix Evolution
Originations
b
y
Product1
Q
4
2006
Q
4
2007
Home
Equity
17%
Option
Home
Equity Loan
21%
Option
ARMs
11%
Fixed Rate
ARMs
23%
18%
Hybrid
T t l $
4
1
1 b T t l $
2
1
9 b
ARMs
42%
Fixed Rate
34%
Hybrid
ARMs
34%
7
0
Total: 41.1
b
n
Total: 21.9
b
n
1
Excludes CRE, Multi-Family and Other Real Estate.
CONFIDENTIAL
Return
Production Channel Evolution
Originations
b
y
Channel1
Q
4
2006
Q
4
2007
Purchased
14%
Correspondent
0.4%
Purchased
2
%
Wholesale
35%
Retail
49%
Wholesale
37%
Retail
63%
T t l $
4
1
1 b T t l $
2
1
9 b
7
1
Total: 41.1
b
n
Total: 21.9
b
n
1
Excludes CRE, Multi-Family and Other Real Estate.
CONFIDENTIAL
Return
Building Store Focused Production
Aggressively building
1,000 25%
store focused production
Lower cost
t
o
originate
Targeting
u
p
t
o
1
:
1 store
18.1%
coverage
750
20.6% 20.6%
20%
g
809
947
873
1
0
9%
1
0
9
%
1
0
9%
13.3%
15.7%
500
10%
15%
556
585
593
680
10.9% 10.9% 10.9%
250
5%
0
0
1
Q
0
6
2Q
0
6
3
Q

0
6
4
Q

0
6
1
Q

0
7
2
Q

0
7
3
Q

0
7
4
Q

0
7
0%
Bank Loan Consultants (period end)
7
2
Total Store Origination Volume
a
s
a %
o
f
Home Loans Volume
CONFIDENTIAL
Return
Cost Reduction Continues
t
o
b
e
Top Priority
(
$
i
n millions)
$3,000 20,000
Home Loans Non Interest Expense
$2,590
$2,295
$2,164
17,651
1
2
934
$2,500
1
4
000
16,000
18,000
1
12,934
11,323
$1,500
$2,000
10,000
12,000
14,000
$500
$1,000
4,000
6,000
8,000
$0
2005 2006 2007
0
2,000
Non Interest Headcount
7
3
Expense
1
Excludes $1.78
b
n
goodwill writedown associated with home loan segment.
CONFIDENTIAL
Return
Leading Servicer
Total 12/ 31/
0
7
Third-Party Servicing Portfolio: $456bn
Top
1
0
Servicers Q4 2007
(
$
i
n billions) Portfolio Overview
Rank Servicer Servicing
1 Countrywide Financial $1,476
2 Wells Fargo 1,473
3 C 800
Subprime
7
%
CitiMortgage
4 Chase Home Finance 776
5 Washington Mutual 623
6 B k fA i 517
Private
Bank
o
f
America
7 Residential Capital 430
8 IndyMac 197
9 Wachovia 193
39%
1
0
National City Mortgage 188
Conforming
54%
7
4
Source: Inside Mortgage Finance. Bank
o
f
America acquisition
o
f
Countrywide pending
CONFIDENTIAL
Return
Leading Servicing Capability
Highly experienced servicing management team
Leading Servicing Franchise
Average over
1
9
years
o
f
industry experience
Strong background
i
n subprime servicing
Efficient, consolidated operations
State
o
f
t
h
e
a
r
t
technology
Strong default performance
Highly Rated
b
y
Third Parties
Moodys SQ2 Above Average
Standard & Poors Above Average
Fitch RPS2+ Full Approval (with Noted Strengths)
Freddie Mac (FHLMC) Tier
1
Platinum Servicer
f
o
r
both Default and Investor
7
5
)
Fannie Mae (FNMA) Highest Servicer rating
f
o
r
both Default and Investor
CONFIDENTIAL
Return
Default Management Operations
Jacksonville,
F
L
Collections
Collections Research
Loss Mitigation
Analysis
803
FTE
Loss
Foreclosure Referral Unit
Claims
Bankruptcy
Foreclosure
REO
Support
Charge- Recoveries
Melbourne,
F
L
8
1
Bangalore, India
2
6
Outsource
Dallas, TX
REO
Charge
o
f
f
Chatsworth, CA
Collections
Loss Mitigation
Support
Collections Default Research
Foreclosure Review
280
Loss Analysis
FTE
FTE FTE
9
FTE
Outsource
San Jose, Costa Rica
Early Stage Collections
225
FTE
Core operations primarilyconsolidated
a
t
Jacksonville site
Additional
y g
Skip Tracing
7
6
consolidation opportunities after environment normalizes
Increasing offshore capability
t
o improve efficiency
f
o
r
support functions
CONFIDENTIAL
Return
Loss Mitigation and REO Initiatives
Significant investment
i
n Loss Mitigation and REO Capabilities have resulted
i
n industry
leading Default Management
Increased Loss Mitigation staff
b
y
120%
i
n 2007 resulting
i
n 400% increase
i
n work outs
Servicing facilities located
i
n strong labor markets
Staffing model integrated with default forecasting
t
o anticipate workload spikes
Outsourcing arrangements smooth out peaking issues
Industry leading loss mitigation per employee: 100 / person
REO performance
a
t
highest level
i
n industry
REO turnover over 20%
f
o
r
available inventory
Less than 5%
o
f
inventory aged past 180 days from listing
Recent Credit Suisse study identified WaMu
a
s
leader
i
n foreclosure and REO timeline
management
Upgraded robust dialer capabilities
t
o state
o
f
the
a
r
t
Avaya
i
n third quarter providing virtual
agent pools across the enterprise
Installed Back
i
n the Black web- based application
i
n 2006
t
o automate work out decisioning
7
7
CONFIDENTIAL
Return
2008 Restructuring Plan
Q4
0
7
actions deliver
~
$
540 mm
o
f
annualized savings
Additional Opportunities
Target eliminating ~4,000 positions
i
n total
Estimate $150 mm
i
n restructure expense
Estimated 2008 costs savings
o
f
$300 mm, net
o
f
restructure
Estimated annualized cost savings
o
f
~
$
650 mm
Exit Wholesale Channel Target eliminating ~1,200 positions
Close remaining Loan Fulfillment Centers ( LFCs)
C
l
i i
2
4
l
f
f
i
Action Impact
Close remaining sales offices
Consolidate Retail Channel Target eliminating ~2,000 positions
Close remaining 158 Home Loan Centers (HLCs)
Invest
i
n Bank Loan Consultants (BLCs) and call centers
Reduce Capital Markets Functions Target eliminating ~
5
0
positions
Reduce Support Groups Target eliminating ~700 positions
7
8
CONFIDENTIAL
Return
Efficient production platform migrating
t
o
" retail- only
t
o
capitalize
o
n
strong
WaMu name and extensive retail platform
Scaled cost effective servicing platform
Competitive cost structure
Extensive default management systems and expertise
Significant investment
i
n technology over the last two years will allow WaMu
t
o
maintain a competitive cost structure through the next cycle
Seasoned management team well equipped
t
o
maximize opportunities
i
n the
current mortgage environment
Recent restructuring will allow a return
t
o
profitability
i
n the core business while
still having the ability
t
o
maximizeprofits
a
s
the mortgage market improves
7
9
CONFIDENTIAL
Return
Credit Outlook
8
0
CONFIDENTIAL
Return
Agenda
Credit Philosophy
Overview
o
f
Loan Portfolio
Recent Performance
Loss Forecast
Appendices
Impact
o
f
Home Price Appreciation
Market Analysis
8
1
Recent Credit Performance
CONFIDENTIAL
Return
Key Drivers
o
f
Loan Performance
More than Just Home Prices
Loan attributes
Collateral values
Economic environment
Market liquidity
Interest rates
Spreads (OAS, credit)
Competitor actions
Government actions
Special hazards (natural disasters, fraud)
8
2
CONFIDENTIAL
Return
Differentiating the Portfolio
Bank
v
s
.
retail
v
s
.
wholesale distribution
Underwriting guidelines
Line utilization reductions
Loss mitigation strategies
Loan modification programs
Increased servicing
t
o
accommodate non-performers
REO management
Differentiated approach
t
o Home Equity
Emphasis
o
n
Bank / Retail originations
Avoidance
o
f
Piggy-back transactions
8
3
Avoidance
o
f
High (
9
5
and 100%) Origination CLTVs
CONFIDENTIAL
Return
Agenda
Credit Philosophy
Overview
o
f
Loan Portfolio
Recent Performance
Loss Forecast
Appendices
Impact
o
f
Market Analysis
8
4
CONFIDENTIAL
Return
Portfolio Summary
MFL/ CRE
Composition Total Delinquency
18%
Card
Services
SFR Prime
45%
4.35%
0.70%
4.00%
0 36%
Other
Comm./Retail
Small Bus.
MFL/ CRE
1
Other
Comm./
Retail
Small Bus.
1%
4%
6.76%
3 10%
0.36%
5.75%
Card Services -
Managed
2
Home
Equity
25%
3.10%
22.28%
1.10%
11.25%
Home Equity
Subprime
Mortgage
Channel
Subprime
Mortgage
Channel
7
%
4.73%
1.74%
0.00% 5.00% 10.00% 15.00% 20.00% 25.00%
SFR Prime
08-Jan
07-Jan
T t l L B l $244 4 b
8
5
Total Loan Balance: 244.4
b
n
1
Calculated
o
n
a
n
owned basis..
2
Calculated
o
n
a managed basis.
CONFIDENTIAL
Return
Portfolio Overview
Nonperforming Loans and Net Charge-Offs
7 000
Charge
(
$
i
n millions)
$800 2 4%
Nonperforming Loans Total Net Charge- Off
$5 000
$6,000
$7,000
3
%
4
%
$645mm TDR nonaccruals
i
n
January 2008
$600
$700
1.8%
2.1%
2.4%
$3 000
$4,000
5,000
2% $400
$500
1.2%
1.5%
$1 000
$2,000
3,000
1%
$
$200
$300
0.6%
0.9%
$0
1,000
1
Q '
0
6
2
Q '
0
6
3
Q '
0
6
4
Q '
0
6
1
Q '
0
7
2
Q '
0
7
3
Q '
0
7
4
Q '
0
7
Jan '
0
8
0%
Nonaccruals Troubled Debt Restructures Nonaccrual Rate
$0
100
1
Q
'
0
6
2
Q
'
0
6
3
Q
'
0
6
4
Q
'
0
6
1
Q
'
0
7
2
Q
'
0
7
3
Q
'
0
7
4
Q
'
0
7
Jan '
0
8
0.0%
0.3%
NCO NCO Rate
8
6
Note: Card Services reported
o
n
a
n
on- balance- sheet basis
1
Annualized
CONFIDENTIAL
Return
Nonresidential Credit Exposures
Card
Experienced credit team with industry leading analytical capabilities
Losses are very sensitive
t
o unemployment
Losses will
b
e
higher than recent lows, but within expectations provided that economic conditions
(unemployment) remain benign
Securitization market creates provisioning uncertainty, but economically neutral
More pricing and line management alternatives
Commercial Real Estate
Unique time-tested strategy
Delinquencies and losses increasing though still within expectations
Multi-family less vulnerable than other Commercial Real Estate
Deep management and industry experience
Small Business
Balances are relatively low
(
$
1.4
b
n
drawn, $1.4
b
n
open
t
o buy)
Delinquencies and losses have been well above expected levels
Multiple actions underway
t
o address adverse performance; new volume down significantly
8
7
CONFIDENTIAL
Return
Card Services Portfolio
$
3
0
Managed Receivables
(
$
i
n billions)
$8.8
$8.8
$9.9
$8.6
$
2
0
$7.9
$8.5
$8.8
$10.9
$9.5
0
$12.2
$12.7
$13.4
$12.7
$14.1
$15.1
$17.4
$18.4 $18.4
$
1
0
$0
1
Q '
0
6
2
Q '
0
6
3
Q '
0
6
4
Q '
0
6
1
Q '
0
7
2
Q '
0
7
3
Q '
0
7
4
Q '
0
7
Jan '
0
8
Other Managed Card Services
O
n
Balance Sheet (HFI)
8
8
CONFIDENTIAL
Return
Card Services Portfolio
30+ Delinquencies and Net Charge-Offs
(
$
i
n millions)
2 000
30+ Delinquencies Total Net Charge-Offs
$500 20%
$1,600
$1,800
$2,000
8
%
10%
$400
$450
16%
$1,000
$1,200
$1,400
6%
$250
$300
$350
12%
$400
$600
$800
2
%
4%
$100
$150
$200
4%
8%
$0
$200
1
Q
'
0
6
2
Q
'
0
6
3
Q
'
0
6
4
Q
'
0
6
1
Q
'
0
7
2
Q
'
0
7
3
Q
'
0
7
4
Q
'
0
7
Jan '
0
8
0
%
T t
l
d
l
i b l T t
l
d
l
i t
$0
$
5
0
1Q'
0
6
2Q '
0
6
3
Q
'
0
6
4Q '
0
6
1Q '
0
7
2
Q
'
0
7
3Q '
0
7
4
Q
'
0
7
Jan '
0
8
0%
Total net chargeoffs Annualized rate
8
9
Note: Card Services reported
o
n
a managed basis
Total delinquency balance Total delinquency rate
charge
CONFIDENTIAL
Return
Commercial and Retail Small Business
Portfolio
(
$
i
n billions)
Portfolio Balance
$
1
0
2
$11.4
$11.7
$
4
0
$
5
0
$7.2
$
7
.
4 $
7
.
3
$7.7
$
8
.
4
$8.7
10.2
$8.5
$
2
0
$
3
0
$25.6 $26.1 $26.7
$27.4
$30.2 $29.5 $29.3
$30.8
$31.8 $32.0
$
1
0
$0
2005
1
Q
'
0
6
2
Q
'
0
6
3
Q
'
0
6
4
Q
'
0
6
1
Q
'
0
7
2
Q
'
0
7
3
Q
'
0
7
4
Q
'
0
7
Jan '
0
8
Multi- Family Lending Other Commercial
9
0
Note: Other Commercial consists
o
f
Other Real Estate, Retail Small Business and Commercial Loans.
CONFIDENTIAL
Return
Commercial and Retail Small Business Portfolio
(
$
i
n millions)
Nonperforming Loans Total Net Charge-Offs
$300 0.6%
$
3
0
$
3
5
0.30%
0.35%
$200 0.4%
$
2
0
$
2
5
0.20%
0.25%
$100 0.2%
$
$
1
0
$
1
5
0.10%
0.15%
$0
1
Q
'
0
6
2
Q
'
0
6
3
Q
'
0
6
4
Q
'
0
6
1
Q
'
0
7
2
Q
'
0
7
3
Q
'
0
7
4
Q
'
0
7
Jan '
0
8
0.0%
Total nonperforming loans Nonperforming loan rate
$0
5
1
Q
'
0
6
2Q '
0
6
3
Q
'
0
6
4Q '
0
6
1Q '
0
7
2
Q
'
0
7
3
Q
'
0
7
4Q -
0
7
Jan '
0
8
0.00%
0.05%
Total net chargeoffs Annualized charge-
o
f
f
rate
9
1
Note: Consists
o
f
Multi- family Lending, Other Real Estate, Retail Small Business and Commercial Loans
CONFIDENTIAL
Return
Residential Portfolio Overview
(
$
i
n billions)
$196
$199
$ 196
$190 $189
)
Portfolio Balance
$ 173
$167
$165
$185
1
Q
'
0
6
2
Q
'
0
6
3
Q
'
0
6
4
Q
'
0
6
1
Q
'
0
7
2
Q
'
0
7
3
Q
'
0
7
4
Q
'
0
7
Jan '
0
8
Single Family Residential Home Equity Subprime Mortgage Channel
9
2
Note: Includes Single Family Residential, Subprime Mortgage Channel and Home Equity loans. Excludes Custom and Builder Construction
CONFIDENTIAL
Return
Single-FamilyResidential Portfolio
(
$
i
n billions)
Portfolio Balance
$71.2
$69.2
$67.1
$63.6
$58.1
$53.5
$57.6
$58.8 $58.0
$52.6
$56.0
$54.0
$35.9 $35.4 $35.0
$48.6
$51.6 $52.0
1
Q
'
0
6
2
Q
'
0
6
3
Q
'
0
6
4
Q
'
0
6
1
Q
'
0
7
2
Q
'
0
7
3
Q
'
0
7
4
Q
'
0
7
Jan '
0
8
A
l
l
other loans Option ARM
9
3
Note: Excludes Custom and Builder Construction, home loans
i
n the Subprime Mortgage Channel and home equity. Beginning
i
n 3Q07, Option ARM balances include Multipay
loans.
CONFIDENTIAL
Return
Single-FamilyResidential Portfolio
(
$
i
n millions)
3 000 4 0%
$120 1 2%
$2,500
$3,000
3.0%
3.5%
4.0%
$100 1.0%
1.2%
$1,500
$2,000
2.0%
2.5%
$
6
0
$
8
0
0.6%
0.8%
$500
$1,000
1.0%
1.5%
$
2
0
$
4
0
0.2%
0.4%
$0
1
Q '
0
6
2
Q '
0
6
3
Q '
0
6
4
Q '
0
6
1
Q '
0
7
2
Q '
0
7
3
Q '
0
7
4
Q '
0
7
Jan '
0
8
0.0%
0.5%
$0
1Q'
0
6
2Q '
0
6
3Q '
0
6
4Q '
0
6
1Q '
0
7
2Q '
0
7
3Q '
0
7
4Q '
0
7
Jan '
0
8
0.0%
Net chargeoffs Annualized rate
9
4
Nonperforming loans Nonperforming loan rate
charge
Note: Excludes Custom and Builder Construction, home loans
i
n the Subprime Mortgage Channel and home equity. Beginning
i
n 3Q07, Option ARM balances include Multipay
loans.
CONFIDENTIAL
Return
Single-FamilyResidential Portfolio1
Portfolio
b
y
Vintage
a
s
o
f
1
/
3
1
/
0
8
UPB
(
$
MM) 2004 &Prior 2005 2006 2007 Total $
2
Total %
<
=
50% $3 761 $1 256 $829 $2 941 $8 787 8%
Loan-
t
o
-
Value
a
t
Origination
3,761 1,256 2,941 8,787
>50-60% $4,089 $1,798 $1,448 $4,048 $11,382 11%
>60-70% $9,303 $5,204 $3,843 $7,868 $26,218 24%
>70-80% $16,052 $11,126 $10,179 $17,837 $55,194 51%
>80-90% $1,812 $681 $602 $1,610 $4,704 4%
>90% $821 $181 $202 $419 $1,623 2%
Total $
2
$35,837 $20,244 $17,103 $34,723 $107,908 100%
Total % 33% 19% 16% 32%
Average
O i i l LTV
69% 71% 72% 70% 70%
Original
Avg Estimated
Current LTV3
47% 68% 77% 72% 64%
Average
Original FICO
700 705 703 721 709
9
5
1
Excludes Custom and Builder Construction, FHA/
V
A
loans, and home loans
i
n the Subprime Mortgage Channel.
2
Excludes accounting adjustments and invalid vintage and OLTV values; negative amortization
i
s included
i
n
t
h
e
loan balances.
3
Estimated loan-
t
o
-
value calculation based
o
n
OFHEO 4th Quarter 2007 data (released February 2008).
CONFIDENTIAL
Return
Single-FamilyResidential Option ARMs1
Portfolio
b
y
Vintage
a
s
o
f
1
/
3
1
/
0
8
UPB
(
$
MM) 2004 &Prior 2005 2006 2007 Total $
2
Total %
<
=
50% $1 175 $694 $444 $751 $3 064 6%
Loan-
t
o
-
Value
a
t
Origination
1,175 3,064
>50-60% $1,407 $1,049 $869 $1,351 $4,675 8%
>60-70% $4,246 $3,447 $2,787 $3,336 $13,816 24%
>70-80% $8,333 $7,275 $8,252 $8,502 $32,361 56%
>80-90% $1,000 $490 $494 $944 $2,929 5%
>90% $282 $
9
0
$149 $127 $648 1%
Total $
2
$16,442 $13,045 $12,995 $15,011 $57,493 100%
Total % 28% 23% 23% 26%
Average
Original LTV
71% 71% 73% 72% 72%
Avg Estimated
Current LTV3
49% 71% 79% 75% 68%
Average
Original FICO
689 701 699 713 701
9
6
1
Excludes Custom and Builder Construction, FHA/ VA loans, and home loans
i
n the Subprime Mortgage Channel. Includes Multipay & Hybrid Flex loans
i
n
t
h
e
adjustable period.
2
Excludes accounting adjustments and invalid vintage and OLTV values; negative amortization
i
s included
i
n the loan balances.
3
Estimated loan- to-value calculation based
o
n
CONFIDENTIAL
Return
Subprime Mortgage Channel Portfolio
(
$
i
n billions)
$
2
5
)
Portfolio Balance
$1.5
$2.1
$2.8 $
2
.
9
$2.7
$2.5
$0.4
$0.1
$2.5
$
2
0
$20.2 $20.5
$20.1
$
1
8
7
$
1
0
$
1
5
18.7
$17.6 $17.6
$17.3
$16.1
$15.7
$5
$0
1
Q
'
0
6
2
Q
'
0
6
3
Q
'
0
6
4
Q
'
0
6
1
Q
'
0
7
2
Q
'
0
7
3
Q
'
0
7
4
Q
'
0
7
Jan '
0
8
1
s
t
Lien Loans 2nd Lien Loans
9
7
Note: Comprised
o
f
mortgage loans purchased from recognized subprime lenders and mortgage loans originated under the Long Beach Mortgage name and held
f
o
r
investment.
CONFIDENTIAL
Return
Subprime Mortgage Channel Originations
(
$
i
n millions)
Originations
$9,000
$6,403
$7,678
$6,523
$6 000
$7,000
$8,000
$4,387
$4,000
$5,000
6,000
$2,819
$2,438
$1 000
$2,000
$3,000
$471
$
2
2
$0
1,000
1
Q '
0
6
2Q '
0
6
3
Q '
0
6
4Q '
0
6
1Q '
0
7
2
Q '
0
7
3Q '
0
7
4
Q '
0
7
Jan '
0
8
1st Lien Loans 2nd Lien Loans Purchases
9
8
Note: Comprised
o
f
f
o
r
investment.
CONFIDENTIAL
Return
Subprime Mortgage Channel Residuals
(
$
i
n millions)
$ 216
)
Residual Balance
$ 159
$168
$
9
5
$105
$
5
2
$
7
9
$
3
7
$
1
6
2005
1
Q
0
6
2
Q
0
6
3
Q
0
6
4
Q
0
6
1Q
0
7
2Q
0
7
3
Q
0
7
4
Q '
0
7
9
9
Note: Comprised
o
f
f
o
r
investment.
January
0
8
residual balance not readily available.
CONFIDENTIAL
Return
Subprime Mortgage Channel Portfolio
(
$
i
n millions)
$3 000
1
8
0%
$300
1
0
0%
$2,500
3,000
14.0%
16.0%
18.0%
$250
8.0%
9.0%
10.0%
$1,500
$2,000
8 0%
10.0%
12.0%
$150
$200
5.0%
6.0%
7.0%
$500
$1,000
4.0%
6.0%
8.0%
$
5
0
$100
2.0%
3.0%
4.0%
$0
1
Q '
0
6
2
Q '
0
6
3
Q '
0
6
4
Q '
0
6
1
Q '
0
7
2
Q '
0
7
3
Q '
0
7
4
Q '
0
7
Jan '
0
8
0.0%
2.0%
$0
1
Q
'
0
6
2
Q
'
0
6
3Q '
0
6
4
Q
'
0
6
1
Q
'
0
7
2Q '
0
7
3
Q
'
0
7
4
Q
'
0
7
Jan '
0
8
0.0%
1.0%
Net chargeoffs Annualized rate
100
Nonperforming loans Nonperforming loan rate
charge
Note: Comprised
o
f
f
o
r
investment.
CONFIDENTIAL
Return
Subprime Mortgage Channel1 Portfolio
Portfolio
b
y
Vintage
a
s
o
f
1
/
31/
0
8
UPB
(
$
MM) 2004 & Prior 2005 2006 2007 Total $
2
Total %
<
=
50% $210 $109 $246 $
6
0
$625 3%
Loan-
t
o
-
Value
a
t
Origination
>50- 60% $253 $146 $225 $
8
7
$711 4%
>60- 70% $523 $332 $496 $206 $1,558 9%
>70- 80% $1,660 $2,450 $2,326 $824 $7,260 40%
>80- 90% $1,785 $1,215 $2,008 $650 $5,658 31%
>90% $
3
3
$130 $1,858 $239 $2,259 13%
Total $
2
$4,464 $4,382 $7,159 $2,066 $18,071 100%
Total % 25% 24% 40% 11%
Average Original
Combined LTV3
77% 79% 83% 80% 80%
Avg Est Current
Combined LTV3,4
58% 71% 82% 82% 74%
Average
Original FICO
624 630 660 632 641
1C i d f t l h
d
f
i d b i l d d t l
i
i td d
t
h L B hM t d h
l
d f i t t E l d
101
1
Comprised
o
f
f
o
r
investment. Excludes
FHA/ VA loans.
2
Excludes accounting adjustments and invalid vintage and CLTV values.
3
Origination loan- to-value used
f
o
r
1
s
t
liens and combined loan-
t
o
-
value used
f
o
r
2nd Liens.
4
Estimated loan-
t
o
-
o
n
OFHEO
4
t
h
Quarter 2007 data (released February 2008).
CONFIDENTIAL
Return
Home Equity Portfolio
(
$
i
n billions)
$
7
0
)
Portfolio Balances
$
1
5
8
$
1
4
8
$14.1
$14.6
$15.7
$16.2
$17.1
$
1
8
4
$16.1
$
5
0
$
6
0
18.4
15.8
14.8
$
3
0
$
4
0
$33.5
$35.5
$37.0 $38.1
$39.3
$41.2
$43.4
$44.8 $45.0
$
1
0
$
2
0
$0
1
Q
'
0
6
2
Q
'
0
6
3
Q
'
0
6
4
Q
'
0
6
1
Q
'
0
7
2
Q
'
0
7
3
Q
'
0
7
4
Q
'
0
7
Jan '
0
8
2nd Lien HEL/ HELOC
1
s
t
Lien HEL/ HELOC
102
Note: Excludes home equity loans included
i
CONFIDENTIAL
Return
Home Equity Portfolio
$1 000 18%
Charge
(
$
i
n millions)
Nonperforming Loans Total Net Charge- Off
$300 2 4%
$ 800
$ 900
1,000
1.4%
1.6%
1.8%
$250 2 .0%
.4%
$ 500
$ 600
$ 700
0.8%
1.0%
1.2%
$ 150
$200
1.2%
1.6%
$ 200
$ 300
$ 400
0.4%
0.6%
%
$
5
0
$ 100
0 .4%
0 .8%
$ 0
$ 100
1
Q ' 06 2Q ' 06 3Q '
0
6 4Q '
0
6
1
Q '
0
7 2Q '
0
7 3Q '
0
7 4Q ' 07 Jan '
0
8
0.0%
0.2%
No nperfo rming 2nds Nonperfo rming 1sts Nonperforming
l
o
a
n
rate
$0
1
Q '
0
6 2Q '
0
6 3Q '
0
6 4Q '
0
6
1
Q '
0
7
2
Q '
0
7 3Q '
0
7
4
Q '
0
7 Jan '
0
8
0 .0%
N
e
t
charge- o f f s ( 2 nds) N
e
t
c harge- o f
f
s (
1
s
t
s ) Annualized rate
103
Note: Excludes home equity loans included
i
CONFIDENTIAL
Return
1st &2nd Lien Home Equity Portfolio1
Portfolio
b
y
Vintage
a
s
o
f
1
/
31/
0
8
UPB
(
$
MM) 2004 &Prior 2005 2006 2007 Total $
2
Total %
<
=
50% $2 877 $1 335 $1 487 $1 512 $7 211 12%
Loan-
t
o
-
Value
a
t
Origination
2,877 1,335 1,487 1,512 7,211
>50-60% $1,831 $930 $978 $1,041 $4,781 8%
>60-70% $2,678 $1,517 $1,536 $1,728 $7,459 13%
>70-80% $6,055 $4,256 $3,962 $4,919 $19,191 32%
>80-90% $2,731 $4,050 $5,655 $6,641 $19,076 32%
>90% $624 $231 $262 $555 $1,672 3%
Total $
2
$16,796 $12,319 $13,879 $16,395 $59,389 100%
Total % 28% 21% 23% 28%
Average Original
Combined LTV
68% 74% 75% 76% 73%
Avg Est Current
Combined LTV3
50% 67% 75% 77% 67%
Average
Original FICO
737 733 729 734 733
104
1
Excludes FHA/ VA loans and home equity loans included
i
2
3
Estimated loan-
t
o
-
o
n
CONFIDENTIAL
Return
2nd Lien Home Equity Portfolio1
Portfolio
b
y
Vintage
a
s
o
f
1
/
31/
0
8
UPB
(
$
MM) 2004 & Prior 2005 2006 2007 Total $
2
Total %
<
=
50% $1 017 $651 $908 $739 $3 313 7%
Loan-
t
o
-
Value
a
t
Origination
1,017 3,313
>50-60% $914 $643 $823 $690 $3,070 7%
>60-70% $1,545 $1,158 $1,357 $1,167 $5,227 12%
>70-80% $3,836 $3,409 $3,552 $3,419 $14,216 33%
>80-90% $2,304 $3,688 $5,431 $5,219 $16,642 38%
>90% $343 $
9
9
$206 $490 $1,139 3%
Total $
2
$9,958 $9,648 $12,276 $11,724 $43,607 100%
Total % 23% 22% 28% 27%
Average Original
Combined LTV
73% 76% 77% 78% 76%
Avg Est Current
Combined LTV3
55% 70% 77% 79% 71%
Average
Original FICO
733 730 727 731 730
105
1
Excludes FHA/ VA loans and home equity loans included
i
2
3
Estimated loan-
t
o
-
o
n
CONFIDENTIAL
Return
Agenda
Credit Philosophy
Overview
o
f
Loan Portfolio
Recent Performance
Loss Forecast
Appendices
Impact
o
f
Market Analysis
106
CONFIDENTIAL
Return
WaMu Delinquencies vs. Industry Averages
Delinquencies 2005
t
o 2007 Vintage
6%
7%
Industry
6%
7%
Industry
W M HFI
q g
1
1
Single-FamilyResidential (excluding subprime)
Delinquency 90+
(
$ OTS)
Option ARM
Delinquency 90+
(
$ OTS)
1%
2%
3%
4%
5%
WaMu HFI
1%
2%
3%
4%
5%
WaMu
0%
Jan
0
5
Apr Jul Oct Jan
0
6
Apr
J
u
l
Oct Jan
0
7
Apr
J
u
l
Oct
0%
Jan
0
5
Apr Jul Oct Jan
0
6
Apr
J
u
l
Oct Jan
0
7
Apr
J
u
l
Oct
SFR 90+ return somewhat better than industry Option ARMs performance slightly better than industry
Home Equity
D
l
i 90+
Subprime
D
l
i 90+
Dec
Dec
15%
20%
Industry
WaMu HFI Subprime Mortgage Channel
4%
5%
6%
7%
Industry
WaMu HFI
2 1
2
Delinquency
(
$ MBA)
Delinquency
(
$ OTS)
0%
5%
10%
Jan Apr
J
u
l
Oct Jan Apr
J
u
l
Oct Jan Apr
J
u
l
Oct
0%
1%
2%
3%
Jan Apr
J
u
l
Oct Jan Apr
J
u
l
Oct Jan Apr
J
u
l
Oct Dec Dec
107
0
5
0
6
0
7
0
5
0
6
0
7
Home equity performance comparable
t
o industry Subprime performance somewhat better than industry
1
LoanPerformance
T
S
Securities through December 2007.
2
LoanPerformance HELOC/ Seconds through December 2007.
CONFIDENTIAL
Return
Roll Rates:
Current
t
o
1
+
PPD
11.0%
D
A
f
t
e
r
1
M
o
n
t
h
(
%
)
7.0%
9.0%
o
m
C
u
r
r
e
n
t
to
1+
P
P
D
5.0%
c
e
n
t
T
r
a
n
s
i
t
i
o
n
i
n
g
f
r
o
1.0%
3.0%
P
e
r
c
- 1.0%
D
e
c
-
05
J
a
n
-
06
F
e
b
-
06
M
a
r
-
06
A
p
r
-
06
M
a
y
-
06
J
u
n
-
06
J
u
l
-
06
A
u
g
-
06
S
e
p
-
06
O
c
t
-
06
N
o
v
-
06
D
e
c
-
06
J
a
n
-
07
F
e
b
-
07
M
a
r
-
07
A
p
r
-
07
M
a
y
-
07
J
u
n
-
07
J
u
l
-
07
A
u
g
-
07
S
e
p
-
07
O
c
t
-
07
N
o
v
-
07
D
e
c
-
07
J
a
n
-
08
SFR Prime Home Equity Option ARM SMC
108
Note: 3 Month Moving Average
CONFIDENTIAL
Return
Roll Rates:
1 PPD
t
o
2
+
PPD
35.0%
D
A
f
t
e
r
1
M
o
n
t
h
(
%
)
25.0%
30.0%
f
r
o
m
1
P
P
D
to
2+
P
P
D
15.0%
20.0%
r
c
e
n
t
T
r
a
n
s
i
t
i
o
n
i
n
g
f
5.0%
10.0%
Pe
0.0%
D
e
c
-
05
J
a
n
-
06
F
e
b
-
06
M
a
r
-
06
A
p
r
-
06
M
a
y
-
06
J
u
n
-
06
J
u
l
-
06
A
u
g
-
06
S
e
p
-
06
O
c
t
-
06
N
o
v
-
06
D
e
c
-
06
J
a
n
-
07
F
e
b
-
07
M
a
r
-
07
A
p
r
-
07
M
a
y
-
07
J
u
n
-
07
J
u
l
-
07
A
u
g
-
07
S
e
p
-
07
O
c
t
-
07
N
o
v
-
07
D
e
c
-
07
J
a
n
-
08
109
A A
CONFIDENTIAL
Return
Roll Rates:
2 PPD
t
o
3
+
PPD
70.0%
D
A
f
t
e
r
1
M
o
n
t
h
(
%
)
50.0%
60.0%
f
r
o
m
2
P
P
D
to
3+
P
P
D
30.0%
40.0%
e
r
c
e
n
t
T
r
a
n
s
i
t
i
o
n
i
n
g
10.0%
20.0%
Pe
0.0%
D
e
c
-
05
J
a
n
-
06
F
e
b
-
06
M
a
r
-
06
A
p
r
-
06
M
a
y
-
06
J
u
n
-
06
J
u
l
-
06
A
u
g
-
06
S
e
p
-
06
O
c
t
-
06
N
o
v
-
06
D
e
c
-
06
J
a
n
-
07
F
e
b
-
07
M
a
r
-
07
A
p
r
-
07
M
a
y
-
07
J
u
n
-
07
J
u
l
-
07
A
u
g
-
07
S
e
p
-
07
O
c
t
-
07
N
o
v
-
07
D
e
c
-
07
J
a
n
-
08
110
A A
CONFIDENTIAL
Return
Roll Rates:
3 PPD
t
o Nonaccrual
90.0%
al
A
f
t
e
r
1
M
o
n
t
h
(
%
)
6
0
0%
70.0%
80.0%
m
3
P
P
D
to
N
o
n
a
c
c
r
u
a
40.0%
50.0%
60.0%
e
n
t
T
r
a
n
s
i
t
i
o
n
i
n
g
f
r
o
m
20.0%
30.0%
P
e
r
c
e
0.0%
10.0%
D
e
c
-
05
J
a
n
-
06
F
e
b
-
06
M
a
r
-
06
A
p
r
-
06
M
a
y
-
06
J
u
n
-
06
J
u
l
-
06
A
u
g
-
06
S
e
p
-
06
O
c
t
-
06
N
o
v
-
06
D
e
c
-
06
J
a
n
-
07
F
e
b
-
07
M
a
r
-
07
A
p
r
-
07
M
a
y
-
07
J
u
n
-
07
J
u
l
-
07
A
u
g
-
07
S
e
p
-
07
O
c
t
-
07
N
o
v
-
07
D
e
c
-
07
J
a
n
-
08
111
M A M A
CONFIDENTIAL
Return
Agenda
Credit Philosophy
Overview
o
f
Loan Portfolio
Recent Performance
Loss Forecast
Appendices
Impact
o
f
Market Analysis
112
CONFIDENTIAL
Return
Triangulating Remaining Loss Forecasts
Rating agency models (
e
.
g
.
S&P Levels)
Competing risk model (LPRM)
Historical loss data from stressed geographies
Cognitive heuristics
113
CONFIDENTIAL
Return
Portfolio Analysis
Remaining Losses (Lifetime)
Pool Collateral Type Balance Low High B BB BBB A AA
Jan Remaining Losses S&P Levels Model
SFR
SFR: Option ARM 54,819 3,433 6.3% 5,552 10.1% 1,892 2,747 3,904 5,063 6,749
$ % $ %
SFR: Other 57,960 862
1
.
5
1,378 2.4 494 784 1,176 1,593 2,288
Home Equity
Home Equity: 1st Lien 16,062 317 2.0 557 3.5
8
5
135 203 274 388
Home Equity: 2nd Lien 44,495 4,806 10.8 7,383 16.6 2,107 3,192 4,558 5,615 6,875
Subprime Mortgage Channel
SubPrime:
1
s
t
Lien 15,756 2,085 13.2 2,846 18.1 1,221 1,684 2,338 2,978 3,927
Subprime: 2nd Lien 2,489 757 28.9 1,060 40.5 499 620 776 883 931
Total Home Loans &Home Equity 191,582 12,259 6.4% 18,776 9.8% 6,298 9,163 12,954 16,406 21,157
114
CONFIDENTIAL
Return
Portfolio Analysis
Remaining Lifetime Losses Compared
t
o S&P Levels Model
SFR Option ARM SFR Other Home Equity 1st Lien
2 000
3,000
4,000
5,000
6,000
7,000
1,000
1,500
2,000
2,500
100
200
300
400
500
600
H E
i
t 2dLi S b i 1 tLi S b i 2 dLi
1,000
2,000
B
B
B
BBB A
A
A
Levels High Low
500
,
B BB BBB A
A
A
Levels High Low
0
B
B
B
BBB A AA
Levels High Low
Home Equity 2nd Lien Subprime 1st Lien Subprime 2nd Lien
7,000
8,000
3,500
4,000
1,000
1,200
2,000
3,000
4,000
5,000
6,000
B BB BBB A
A
A
1,000
1,500
2,000
2,500
3,000
B
B
B
BBB A AA
400
600
800
B BB BBB A
A
A
115
Levels High Low Levels High Low Levels High Low
CONFIDENTIAL
Return
Financial Outlook
116
CONFIDENTIAL
Return
2007 Challenging Second- Half Environment
Net Income
(
$
i
n Millions, except per share)
$784
$186
$830
Pre-tax:
Non-card provision
u
p
~
$
500 mm from Q2
MTM $404 mm
Pre-tax:
Non- card provision
u
p
~
$
1.1bn from
Q2
MTM $538 mm
(
$
1,867)
Q
1
0
7
Q
2
'
0
7
Q
3
'
0
7
Q
4
'
0
7
Goodwill $1.8
b
n
Resizing $146 mm
Q
1
0
7
Q2
0
7
Q3
0
7
Q
4

0
7
Full Year
Revenue $3,621 $3,792 $3,395 $3,411 $14,219
Expenses1 2,105 2,139 2,191 2,2401 8,6741
Operating Earnings2 1,406 1,438 910 833 4,587
- Excl. MTM &
Restructuring
1,314 1,517 5,675
E i
S
h
$0
8
6
$0
9
2
$0
2
0
2 19) 0 12)
117
Earnings per Share 0.86 0.92 0.20
(
$ 2.19)
(
$ 0.12)
1
Operating expenses exclude Q4
0
7
Home Loans goodwill write-
o
f
f
o
f
$1.78
b
n
and resizing charges
o
f
$146 mm
2
Operating earnings defined
a
s
pre-tax income, excluding non- card provision, foreclosed asset expenses, and the Home Loans goodwill write-
o
f
f
CONFIDENTIAL
Return
Key Management Priorities
Proactive capital and liquidity management
Disciplined balance sheet management
Aggressively managing credit losses
Driving expense management
Continue growth
o
f
stable revenue streams
118
CONFIDENTIAL
Return
Q
1
2008 Environment
Net interest margin expands due
t
o
Fed cuts
Continued growth
i
n retail banking fees
Improving loan
t
o
deposit ratio
Strong deposit growth
o
f
3% from 12/ 31/
0
7
Assets decline
b
y
3%from 12/
3
1
/
0
7
a
s
real estate loans run
o
f
f
Strong Liquidity with $
4
2
b
n
o
f
highly reliable funding available
Productivity gains offset
b
y
higher foreclosed asset expenses
Provision, well
i
n excess
o
f
chargeoffs, projected
t
o
b
e
between $
3
-
$
4
B
Residential net chargeoffs
u
p
from $617 mm
i
n Q4
0
7
t
o $1.2-$1.3
b
n
i
n Q1
0
8
Earnings per share estimate
o
f
(
$
1.10)-($1.85), depending
o
n
provision
119
CONFIDENTIAL
Return
2008 Management Plan
Reduce annual dividend until capital levels recover
Consolidate Home Loans business
Exit wholesale lending channel
Consolidate retail channel into Retail Banking branch network
Target
~
$
650 mm
i
n annual run rate cost savings
Continue
t
o invest
i
n retail branch network
Issue capital
120
CONFIDENTIAL
Return
Long-Range Forecast Assumptions
Assumption Impact
Credit scenarios
(Low Medium
Increased loss provisioning negatively impacts income
Low, Medium, High)
Reflects expected range
o
f
cumulative losses
One notch downgrade
b
y
Moodys
Liquidity pressured Deposit balances decline through 2009
Lower net interest margin
Limited credit card securitizations
Retail fee income declines
Net interest margin expands
Increase receivables
o
n
balance sheet
Higher GAAP provision
Reduce noninterest income
Rate environment
Low Fed Funds declines
t
o 2.25% (mid 08) Net interest margin pressure offset
b
y
higher
then increases
t
o 3.50%
b
y
2012
High Fed Funds declines
t
o 2.25% ( mid 08),
remains
f
l
a
t
through 2010, then increases
t
o
g p y g
Card balances
Net interest margin expansion
Card
121
3.50%
b
y
2012
balances increase
CONFIDENTIAL
Return
Long Range Forecast Low Credit
(
$
i
n millions) 2008 2009 2010 2011 2012
(
$
i
n billions) 2008 2009 2010 2011 2012
N I t
t
E 8 220 7 850 7 977 8 236 8 503 ALLL (8 000) ( 7 000) (5 000) (3 700) (2 500)
Non Interest Expense 8,220 7,850 7,977 8,236 8,503 8,000) 7,000) 5,000) 3,700) 2,500)
Minority Interest Expense 305 305 3
0
5 305 305 Other Assets 37,105 35,698 34,922 34,565 34,499
Tax ( 2,131) 943 1,492 1,545 1,694
Preferred Dividends 260 260 2
6
0
260 260 Deposits 189,855 187,791 193,425 199,228 205,204
Net Income Attrib.
t
EPS $ (3.56) $ 2.39 $ 3
.
0
5
$ 3.28 $ 3.73 Other Liabilities 8,052 8,052 8,052 8,052 8,052
Avg Diluted Shares ( M) 871 1,026 1,015 972 920 Total Liabilities 281,396 267,764 262,588 260,870 261,407
Retail Banking Fees % Growth 10% 8% 8% 8% 8%
Total Revenue 14,606 15,209 14,772 15,283 15,939
2008 2009 2010 2011 2012 2008 2009 2010 2011 2012
ROA - 0.90% 0.81% 1.05% 1.08% 1.15% Dividend/ Share ( Annual) $ 0.20 $ 0.20 $ 1.22 $ 1.31 $ 1.49
ROCE - 15.9% 11.3% 13.6% 13.8% 15.0% Buyback/ Equity Issue
(
$
B
)
- - 1,300 1,960 2,000
Efficiency Ratio 56.3% 51.6% 54.0% 53.9% 53.3% TE/ TA 6.0% 7.1% 7.4% 7.4% 7.5%
Expense Growth (Decline) -6.9% - 4.5% 1.6% 3.2% 3.2% TCE/ TA 3.6% 4.5% 4.8% 4.8% 4.7%
Revenue Growth 2.7% 4.1% -2.9% 3.5% 4.3% Tier I Leverage 6.0% 7.0% 7.3% 7.3% 7.3%
Loan
t
122
CONFIDENTIAL
Return
Long Range Forecast Mid Credit
(
$
i
n millions) 2008 2009 2010 2011 2012
(
$
i
n billions) 2008 2009 2010 2011 2012
N I t
t
E 8 220 7 977 8 045 8 236 8 503 ALLL (8 450) ( 8 550) (6 550) (3 700) (2 500)
0
5
305 305 Other Assets 37,105 35,698 34,922 34,565 34,499
Tax ( 2,886) 322 9
5
0
1,396 1,694
6
0
260 260 Deposits 189,855 187,791 193,425 199,228 205,204
Net Income Attrib.
t
EPS $ (4.99) $ 1.12 $ 2
.
0
2
Avg Diluted Shares (
M
)
871 909 1,087 1,084 1,045 Total Liabilities 282,191 268,612 262,015 260,875 261,402
Total Revenue 14,606 15,434 15,147 15,433 15,939
2008 2009 2010 2011 2012 2008 2009 2010 2011 2012
(
$
B
)
- - - 840 1,990
Expense Growth -6.9% - 3.0% 0.8% 2.4% 3.2% TCE/ TA 3.2% 3.7% 4.4% 4.7% 4.8%
Loan
t
123
CONFIDENTIAL
Return
Long Range Forecast High Credit
(
$
i
n millions) 2008 2009 2010 2011 2012
(
$
i
n billions) 2008 2009 2010 2011 2012
N I t
t
E 8 220 8 105 8 113 8 236 8 503 ALLL (8 900) (
1
0
100) (8 100) (3 700) (2 500)
0
5
305 305 Other Assets 37,105 35,698 34,922 34,565 34,499
Tax ( 4,018) 527 1,047 1,247 1,694
6
0
260 260 Deposits 189,855 187,791 193,425 199,228 205,204
Net Income Attrib.
t
EPS $ (7.13) $ 1.55 $ 1
.
9
7
Avg Diluted Shares (
M
)
871 909 1,067 1,079 1,054 Total Liabilities 283,610 268,542 261,781 260,871 261,397
Total Revenue 14,606 15,659 15,522 15,583 15,939
2008 2009 2010 2011 2012 2008 2009 2010 2011 2012
(
$
B
)
- - -
7
0
1,990
Expense Growth -6.9% - 1.4% 0.1% 1.5% 3.2% TCE/ TA 2.5% 3.2% 4.0% 4.8% 4.8%
Loan
t
124
CONFIDENTIAL
Return
Pro Forma Capital Ratios
Assumes$4
b
n
Common Equity Raise
Tangible Common
o
f
$
1
4
1 $
1
4
1 $
1
4
1
Capital Roll Forward Impact
Capital Roll Forward Low Medium High
Equity
a
s
12/ 31/
0
7
Hybrid Capital + Preferred Stock1
Capital Issuance
2008 Estimated Net Income2
2008 E
t
i
t d
D
i
i
d d
14.1
7
.
0
4.0
(3.0)
(0
3
)
14.1
7.0
4.0
(4.3)
(0
3
)
14.1
7.0
4.0
(6.1)
Estimated Dividends (0
3
)
a
s
o
f
12/ 31/
0
8
Tangible common equity / tangible assets
a
s
o
f
1
2
/
31/
0
7
0.3)
$14.8
4.39
0.3)
$13.5
4.39
0.3)
$11.7
% % 4.39%
Tangible common equity / tangible assets
a
s
o
f
12/ 31/ 08E
Tangible equity / tangible assets
a
s
o
f
12/ 31/
0
7
Tangible equity / tangible assets
a
s
o
f
12/ 31/ 08E
Tier 1 Leverage
a
s
o
f
12/ 31/
0
7
4.94
6.67
7.38
6.84
4.53
6.67
6.98
6.84
3.91
6.67
6.36
6.84
Tier 1 Leverage
a
s
o
f
12/ 31/ 08E
Tier 1 RBC
a
s
o
f
12/ 31/
0
7
Tier 1 RBC
a
s
o
f
12/ 31/ 08E
7.31
8.56
9.07
6.91
8.56
8.57
6.30
8.56
7.81
125
Note: Assumes Management Plan which includes dividend reduction
t
o $0.20 per share per annum and range
o
f
Net Income based
o
n
low and high credit loss scenario.
Does not include compensation- related equity issuance
1
Hybrid Capital and Prefered Stock does not include trust preferreds
2
Assumes 4.0% pre-
t
a
x
cost
o
f
cash
o
n
equity raised
CONFIDENTIAL
Return
Business Model Outlook
Strong retail focused business model
Mortgage lending through low cost/ high franchise value distribution network
Financial center store count grows
t
o ~2,900
b
y
2012
Growing Retail Banking customer base
t
o 14-15M households
b
y
2012
Diversified asset mix
Higher mix
o
f
credit card and multi-family loans
Lower single-family and home equity balances
Declining MSR asset
a
s
a percent
o
f
equity reducing volatility
Higher value revenue stream
Noninterest income
a
s
a percent
o
f
total revenue mix improves from ~40%
i
n 2008
t
o ~50%
i
n 2012
Higher, less volatile net interest margin
More prime based assets
Lower reliance
o
n
wholesale funding
Improving loan
t
o deposit ratio
Generating excess capital annually
t
o
reinvest
126
CONFIDENTIAL
Return
Additional Financial
Information
Appendix A
127
CONFIDENTIAL
Return
Outstanding Capital Securities
Non Equity-Linked
Issue Date Issuer Structure Coupon Call Date
Size
(
$ mm)
Regulatory
Treatment
S&P
Treatment
Moodys
Treatment
2001 - 2005 Washington Mutual (various) Traditional TPS
5
8
25%
o
f
Tier 1
100%
u
p
t
o
12%
o
f
ACE
Basket A (0%)
2
/
24/ 2006 Washington Mutual Pfd Funding (Cayman) PerpNC5 ADP/ REIT 7.250%
3
/
15/ 2011 750 25%
o
f
Tier 1
100%
u
p
t
o
33%
o
f
ACE
Basket D (75%)
2
/
24/ 2006 Washington Mutual Pfd Funding PerpNC5 ADP/ REIT 6.534%
3
/
15/ 2011 1,250 25%
o
f
Tier 1
100%
u
p
t
o
33%
o
f
ACE
Basket D (75%)
9
/
11/ 2006 Washington Mutual PerpNC5 DRD L +
7
0
9
/
18/ 2011 500 50%
o
f
Tier 1
100%
u
p
t
o
33%
o
f
ACE
Basket D (75%)
12/ / W
h
i
M l F
d
i
T P NC10 ADP/ 6
6
6
% 1 /
0
0
2 % f
T
i
100%
u
p
t
o
5
/
2006 Washington Mutual Pfd Funding Trust
I
I PerpNC10 REIT 6.665% 12/ 15/ 2016 500 25%
o
f
Tier 1 B k D(
%
) 00% o
33%
o
f
ACE
Basket D (75%)
5
/
20/ 2007 Washington Mutual Pfd Funding Trust
I
I
I
PerpNC5 ADP/ REIT 6.895%
6
/
15/ 2012 500 25%
o
f
Tier 1
100%
u
p
t
o
33%
o
f
ACE
Basket D (75%)
10/ 18/ 2007 Washington Mutual Pfd Funding Trust
I
V PerpNC10 ADP/ REIT 9.750% 12/ 15/ 2012 1,000 25%
o
f
Tier 1
100%
u
p
t
o
33%
o
f
ACE
Basket D (75%)
Equity-Linked
Issue Date Issuer Structure Coupon Call/ Conversion Date Terms
Size
(
$ mm)
Regulatory
Treatment
S
&
P Treatment
Moodys
Treatment
4
/
24/ 2001 Washington
Mutual
PIERS Units 5.375% WM can force conversion
after
5
/
3
/
0
6
i
f stock price
Unit consists
o
f
trust preferred +
warrant
1,150
[ 755 TPS]
25%
o
f
Tier 1
[ TPS portion]
100%
u
p
t
o
12%
o
f
ACE
Basket A (0%)
[ TPS portion]
i
s above $49.33 Exercise price
o
f
warrant
i
s initially $32.33 accreting
t
o $
5
0
a
t
expiration date
]
[ TPS portion]
p ]
12/ 17/ 2007 Washington
Mutual
Optional
Convertible
Preferred
7.750% WM can force conversion
after 12/ 18/
1
2
i
f stock
price exceeds 130%
o
f
22% Premium
$21.25 Conversion
Price
3,000 50%
o
f
Tier 1 100%
u
p
t
o
33%
o
f
ACE
Basket D (75%)
128
conversion price
Optionally convertible
b
y
holder
a
t
any time
CONFIDENTIAL
Return
2007 Expense Overview
(
$
i
n millions)
Retail Banking Home Loans
Commercial
Group Card Services
Corporate / Treasury /
Other Total
Compensation & Benefits $ 1,677 $ 1,042 $ 156 $ 259 $ 631 $ 3,766
Occupancy & Equipment 7
9
0
219
2
9
4
3
5
0
9
1,589
Telecomm & Outsourced Info Svcs 97
5
4
2 151 2
2
6
5
3
0
Depositor &Oth Retail Bkg Losses 2
6
1
1 (
0
)
- 0 2
6
2
Advertising And Promotion 128
2
9
3 193 92 4
4
5
Professional Fees 24
3
7
4
1
2
1
5
7
2
3
3
Postage, Express Mail &Courier 148
4
0
2 222 6 4
1
7
Regulatory Assessments
1
9
2 1 (
0
)
4
0
6
2
Office Supplies
1
9
1
1
1 4 2 38
Travel &Training 79
4
2
7 7 32 1
6
7
Other Taxes &Licenses 17
1
2
2
2
1
11 63
Other Operating Losses, Net 36
2
1
0
1
5
1
3
8
2
1
0
Loan Expenses
1
2
4
8
6 6 0
7
3
Credit Card Loan Expenses 0 - - 108 - 1
0
8
Other- Real Estate- Net 0 - 1 - (
0
)
1
Security Services 18 0 0 0 13 32
Contributions 2 0 - 0 39 41
Outside Printing
4
8
1
6
0 0 3 67
1
Other Outside Services 62
6
0
3 1 30 1
5
6
Other Operating Expense & Oth
4
2
4
9
2 5 7 1
0
5
Foreclosed Assets Expense, Net 60 245 3 - 1 3
0
9
Amort
O
f
Other Intangibles 56 - 3
9
2
- 1
5
2
Other Noninterest Expense 6
1
9
542
3
2
480 3
2
3
1,997
Total $ 3 596 $ 1 924 $ 226 $ 1 139 $ 1 938 $ 8 822
129
Note: Home loans expenses exclude $1.78
b
n
goodwill writedown.
3,596 1,924 1,139 1,938 8,822
CONFIDENTIAL
Return
Headcount Overview
(12-31-2007)
Retail Store Distribution 23,525 Home Loans Support 877 Multifamily 282
WaMu Investments 1,129 MB Capital Markets 353 Commercial Real Estate 102
C D
i
t P i i 385 R t ilCh l 4 604 C ilMt L
d
i
125
Retail Bank Home Loans Commercial Group
Consumer Deposit Pricing 3
8
5
Retail Channel 4,604 Commercial Mortgage Lendin
Small Business 5
1
2
Wholesale Channel 1,384 WaMu 1031 Exchange
3
3
Retail Marketing 45 Consumer Direct 7
2
1
Commercial Deposits
9
5
ECC 2,725 Insurance Services 34 Other Comm'l Group
2
1
Enabler groups 462 Servicing 2,585 Support Operations 748
Overhead/ Support 1 Fas
9
1
181
Home Equity 584
Total 28,784 Total 11,323 Total 1,406
Card Services Corporate / Support / Other WM Consolidated
Communications 16 Technology 2,308 Retail Bank 28,784
Credit 1
1
2
Finance & Treasury 492 Home Loans 11,323
Executive 5 Enterprise Operations 383 Commercial Group 1,406
Finance 79 Legal 281 Card Services 2,860
Human Resources 53 Marketing / Ecommerce 239 CSO/ Other 5,032
Marketing 3
9
4
Enterp Risk Mgmt 700
Technology 1
9
3
Human Resources 4
1
7
Total Operations 2,008 CEAD 138
Corp Communications 43
Executive 31
T l 2 860 T l 5 032 T l
4
9
405
130
Total ,860 Total 5,032 Total 49,405
CONFIDENTIAL
Return
Impact
o
f
Home Prices
o
n
Portfolio
Appendix B
131
CONFIDENTIAL
Return
Housing Values - MSA Level
FARES SFR Home Price Index (February
40%
50%
90%
100%
2008)
%
of
M
S
A
20%
30%
70%
80%
h
a
n
g
e
As
W
i
t
h
Y
e
a
r
O
v
e
r
0%
10%
50%
60%
v
e
r
-
Y
e
a
r
)
H
P
I
%
Ch
Y
e
a
r
D
e
c
l
i
n
e
s
(
Ho
20%
-10%
30%
40%
A
n
n
u
a
l
(
Y
e
a
r
-
ov
u
s
i
n
g
U
n
i
t
s
C
o
u
n
t
The image cannot be displayed. Your computer may not haveenough memory to opentheimage, or the image mayhave beencorrupted. Restart your computer, and thenopen the file again. If theredx still appears, you mayhave todelete the image and then insert it again.
Average + 1 Standard Deviation
Max (Avg
o
f
5 MSAs)
Average %YoY Change
HP
-30%
-
10%
20%
t
W
e
i
g
h
t
e
d
)
Average - 1 Standard Deviation
Min (Avg
o
f
5 MSAs)
PI
%
o
f
MSAs With YoY Declines
132
-40%
7
7
7
8
7
9
8
0
8
1
8
2
8
3
8
4
8
5
8
6
8
7
8
8
8
9
9
0
9
1
9
2
9
3
9
4
9
5
9
6
9
7
9
8
9
9
0
0
0
1
0
2
0
3
0
4
0
5
0
6
0
7
0
8
0%
Year
Source: First American Real Estate Solutions.
A
l
l
statistics are weighted
b
y
MSA- level housing unit count
CONFIDENTIAL
Return
Cumulative Home Price Appreciation
WaMu Top
1
0
MSAs
1800%
1400%
1600%
me
P
r
i
c
e
C
h
a
n
g
e
1000%
1200%
C
u
m
u
l
a
t
i
v
e
H
o
m
600%
800%
200%
400%
133
0%
7
6
7
7
7
8
7
9
8
0
8
1
8
2
8
3
8
4
8
5
8
6
8
7
8
8
8
9
9
0
9
1
9
2
9
3
9
4
9
5
9
6
9
7
9
8
9
9
0
0
0
1
0
2
0
3
0
4
0
5
0
6
0
7
0
8
Note: Cumulative appreciation
i
s based
o
n
FARES HPI. The top
o
f
t
h
e
shaded range corresponds
t
o San Francisco- San Mateo- Redwood City, CA MSAD and the bottom
corresponds
t
o Midland,
T
X
MSA
CONFIDENTIAL
Cumulative Home Price Appreciation
WaMu Top 10 MSAs
11.
c

=
o

u
'0
..

IS
"

'3
E
,
o
""'"
1400% ..
--Los Angeles-Long Beach-Glendale. CA
New York-White Plains-Wayne. NY-NJ
Santa Ana-Anaheim-Irvine, CA
San Diego-Carlsbad-San Marcos. CA
- San Francisco-San Mateo-Redwood City. CA
......
"',.: ....
. '
100""
CA ........................................................................................
... ................................................................ .
- ,
.'
8Q.O% .....................................
/ ... . , ... :/..
:(
"""
............................. __ ........................................................................................ .... ...... ............. - ......... .
76 77 n 81 85 92 00 w
Note: Cumulative appreciatior'lis based 011 FARES HPI . The top oftl1e shaded rBllge oorrespollds 10 Sail FrallciscoSBIl Maleo.-Redwood City. CA MSAO Blld the bottom
corresponds to MidlBnd, TX MSA
133
Return
Cumulative Home Price Depreciation (Peak
t
o
Feb 08)
FARES County-Level HPI Data
Cuyahoga, OH
26%
WaMu Real Estate Loan
Balance Distribution
b
y
Cumulative HPD
Monterey, CA 28%
ContraCosta,
C
A 25%
Yuba, CA 25%
Prince William, WA 26%
Category
17%
3%
16%
8%
Merced, CA 33%
Brevard,
F
L
25%
Santa Barbara, CA 29%
Kern, CA 25%
19%
10%
27%
Charlotte,
F
L
28%
Sacramento, CA 29%
San Joaquin, CA 30%
Stanislaus, CA 31%
Santa Benito,
C
A
28%
e ced, C
Orleans,
L
A
31% Collier,
F
L
30%
Lee,
F
L
25%
Sarasota,
F
L
26%
134
25.1%-32.5% 20.1%-25.0% 15.1%-20.0% 10.1%-15.0% 5.1%-10.0% "d5.0% -
N
/
A
Source: First American Real Estate Solutions
CONFIDENTIAL
Return
WaMu Real Estate Loan Exposure1
b
y
County
HFI Portfolio
King, WA $5.2bn
B
y
Volume Category
18%
35%
5%
3%
3
%
2%
7 counties
8
4
counties
Total = $229.9bn
34%
3
4
counties
San Diego, CA $10.8bn
Orange, CA $12.0bn
Los Angeles, CA $35.8bn
Santa Clara, CA $7.6bn
Alameda, CA $5.3bn
Miami-Dade, FL $5.0bn
135
$5.0B-$36B $1.0B-$4.9B $0.25B-$0.9B $0.1B-$0.24B $50MM-$ 99MM $10MM-$ 49MM
<
$
10MM
1
Includes SFR Prime, SMC, Commercial, &Home Equity loans. Does not include Other Consumer products. Excludes accounting adjustments and loans with invalid
county designations totaling $5.5 billion. Data
a
s
o
f
end
o
f
January 2008.
CONFIDENTIAL
Return
WaMu Card Loan Exposure(
1
)
b
y
County
Managed Portfolio
Cook,
I
L $0.440B
2%
B
y
Volume Category
15%
18%
14%
7%
11%
Maricopa, $0.327bn
1
0
counties
2
4
counties
33%
San Diego, CA $0.443bn
Orange, CA $0.448bn
Los Angeles, CA $1.492bn
Riverside, CA $0.341bn
San Bernardino,
C
A
$0.300bn
A
Z
Miami-Dade,
F
L
$0.413bn
Broward, FL $0.302bn
Harris, TX $0.358bn
Total = $26.6B
171 counties
136
$300MM-$ 1.5B $100MM-$ 299MM $25MM-$ 99MM $10MM-$ 24MM $5MM-$ 9MM $1MM-$ 4MM
<
$
1MM
1
Card Services
o
n
a Managed basis. Excludes accounting adjustments and loans with invalid county designations totaling $0.3 billion. Data
a
s
o
f
end
o
f
January 2008.
CONFIDENTIAL
Return
Balances
b
y
MSA
% %
Real Estate Card Total
o
f
Total cum
1 Los Angeles- Long Beach- Glendale, CA $35,822 $1,492 $37,314 14.6% 14.6%
2 New York-White Plains- Wayne, NY-
N
J
$14,814 $1,246 $16,060 6.3% 20.8%
3 Santa Ana- Anaheim- Irvine,
C
A
$11,968 $448 $12,416 4.8% 25.7%
Rank MSA/ MSAD
Principal Balance
(
$ MM)
, , ,
4 San Diego- Carlsbad- San Marcos, CA $10,812 $443 $11,255 4.4% 30.1%
5 San Francisco- San Mateo- Redwood City, CA $10,316 $228 $10,545 4.1% 34.2%
6 Oakland- Fremont- Hayward,
C
A
$9,233 $336 $9,569 3.7% 37.9%
7 San Jose- Sunnyvale- Santa Clara, CA $7,821 $213 $8,034 3.1% 41.0%
8 Riverside- San Bernardino- Ontario, CA $6,990 $641 $7,631 3.0% 44.0%
9 Seattle- Bellevue- Everett, WA $6,371 $313 $6,684 2.6% 46.6%
1
0
Chicago Naperville Chicago- Naperville- Joliet,
I
L $5,510 $679 $6,189 2.4% 49.0%
1
1
Nassau-Suffolk, NY $5,141 $397 $5,538 2.2% 51.2%
1
2
Miami-Miami Beach- Kendall,
F
L
$5,012 $413 $5,426 2.1% 53.3%
1
3
Sacramento-- Arden- Arcade-- Roseville, CA $4,797 $279 $5,076 2.0% 55.3%
1
4
Phoenix-Mesa- Scottsdale,
A
Z
$3,297 $348 $3,644 1.4% 56.7%
1
5
Washington- Arlington-Alexandria, DC-VA-MD- WV $3,283 $340 $3,623 1.4% 58.1%
1
6
Fort Lauderdale- Pompano Beach- Deerfield Beach,
F
L
$3,306 $302 $3,608 1.4% 59.5%
1
7
Portland-Vancouver- Beaverton, OR- WA $2,985 $255 $3,240 1.3% 60.8%
1
8
Houston- Sugar Land- Baytown,
T
X
$2,674 $525 $3,199 1.2% 62.0%
1
9
Oxnard-Thousand Oaks- Ventura, CA $3,070 $121 $3,191 1.2% 63.3%
2
0
West Palm Beach- Boca Raton- Boynton Beach,
F
L
$2,612 $191 $2,802 1.1% 64.4%
2
1
Atlanta- Sandy Springs- Marietta,
G
A
$2,035 $510 $2,545 1.0% 65.4%
2
2
Dallas- Plano- Irving, TX $2,031 $398 $2,429 0.9% 66.3%
2
3
Denver- Aurora, CO $2,071 $231 $2,302 0.9% 67.2%
2
4
Las Vegas- Paradise,
N
V
$2,002 $263 $2,265 0.9% 68.1%
2
5
Bridgeport- Stamford- Norwalk, CT $2,070 $
7
4
$2,144 0.8% 68.9%
2
6
Orlando-Kissimmee,
F
L
$1,684 $284 $1,968 0.8% 69.7%
2
7
Edison- New Brunswick,
N
J
$1,632 $263 $1,896 0.7% 70.4%
2
8
Santa Barbara- Santa Maria, CA $1,796 $
4
3
$1,839 0.7% 71.2%
2
9
Salinas, CA $1,746 $
4
9
$1,795 0.7% 71.9%
3
0
N kUi NJPA $1 564 $217 $1 782 0 7%
7
2
6%
137
Newark- Union, NJ-PA 1,564 1,782 0.7% 72.6%
Note: Real Estate HFI portfolio includes SFR Prime, SMC, Commercial, &Home Equity loans. Does
n
o
t
include Other Consumer products. Card Services balances
o
n
a
Managed basis. Excludes accounting adjustments. Data
a
s
o
f
end
o
f
January 2008
CONFIDENTIAL
Return
Cumulative Home Price Depreciation
(Peak
t
o
Jan 08)
FARES County-Level HPI Data
California Florida
138
25.1%-30.0% 20.1%-25.0% 15.1%-20.0% 10.1%-15.0% 5.1%-10.0% "d5.0% -
N
/
A
CONFIDENTIAL
Return
Market Analysis -
Appendix C
Illustrative Example
139
CONFIDENTIAL
Return
Los Angeles-Long Beach- Glendale, CA
YoY HPI Change
40% 40%
20%
30%
20%
30%
h
a
n
g
e
10% 10%
Y
e
a
r
H
P
I
%
Ch
0% 0%
FARES
Y
e
a
r
-
o
v
e
r
-
Y
FARES OFHEO S&
P
/
CS
Year-Over-Year HPI Change Statistics Summary
10% 10%
2 Standard Deviation Range
OFHEO
S&
P
/
Case-Shiller
Average (FARES, 1976- 2008)
Last YoY Change -17.8% -3.2% -13.7%
Max YoY Change 29.9% 31.7% 33.3%
Min YoY Change -17.8% -9.6% -13.7%
Time Series 7.8% 8.3% 6.5%
Date
<
=
2003 7.3% 7.1% 5.3%
1990- 2003 2.9% 2.2% 2.6%
Since Jan-
0
0
10.7% 12.3% 10.7%
D t A OfD t F b
0
8
Q4 D
M
e
a
n
Y
o
Y
%
140
20%
7
7
7
8
7
9
8
0
8
1
8
2
8
3
8
4
8
5
8
6
8
7
8
8
8
9
9
0
9
1
9
2
9
3
9
4
9
5
9
6
9
7
9
8
9
9
0
0
0
1
0
2
0
3
0
4
0
5
0
6
0
7
0
8
20%
Data
A
s
O
f
Date Feb- Q4-
0
7
Dec-
0
7
CONFIDENTIAL
Return
Cumulative Appreciation
1600%
Median
1200%
1400%
h
a
n
g
e
FARES NAR
Median Price $ $415,000 $509,700
Data
A
s
O
f
Date Feb-
0
8
Q4-
0
7
Home Price
800%
1000%
H
o
m
e
P
r
i
c
e
Ch
400%
600%
C
u
m
u
l
a
t
i
v
e
H
200% FARES
OFHEO
S
&
P
/
CS
141
0%
7
6
7
7
7
8
7
9
8
0
8
1
8
2
8
3
8
4
8
5
8
6
8
7
8
8
8
9
9
0
9
1
9
2
9
3
9
4
9
5
9
6
9
7
9
8
9
9
0
0
0
1
0
2
0
3
0
4
0
5
0
6
0
7
0
8
CONFIDENTIAL
Return
Economy &HPI Forecast
10%
12%
1.0%
1.5%
Unemployment Population Dynamics Net Migration
6
%
8%
1.2% 1.2%
1.0%
0.9% 0.9% 0.9%
- 0.9% - 0.9%
- 1.0%
- 1.2%
0.5%
0.0%
0.5%
0%
2%
4%
9
0
9
1
9
2
9
3
9
4
9
5
9
6
9
7
9
8
9
9
0
0
0
1
0
2
0
3
0
4
0
5
0
6
0
7
0
8
Unemployment
Average ( 6.9%)
-1.6%
- 1.8%
2.0%
1.5%
1.0%
2001 2002 2003 2004 2005 2006
International Internal
Net Migration Population Growth Rate
0
Dec-
0
7 Dec-
0
6 Change
Unemployment % 5.2% 4.2% 1.0%
E l tYY%
C
h
Y Y
C
h
F t
10%
15%
20%
25%
1%
2
%
3%
Decline Peak Trough %
3 years 06- Q4 09- Q4 - 22%
MECOM OFHEO Forecast
Employment YoY %Change OFHEO HPI YoY Change Forecast
20%
15%
10%
5%
0%
5%
4%
- 3%
- 2%
- 1%
0%
9
0
9
1
9
2
9
3
9
4
9
5
9
6
9
7
9
8
9
9
0
0
0
1
0
2
0
3
0
4
0
5
0
6
0
7
0
8
142
30%
25%
1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4
-
6
%
2006 2007 2008 2009 2010 2011
- 5%
-
CONFIDENTIAL
Return
Portfolio Analysis
1 400
40,000 16.0% 1,600 5.6%
Real Estate HFI Portfolio Card Managed Portfolio
C
o
n
c
e
n
t
r
a
t
i
o
n
800
1,000
1,200
1,400
c
ip
a
l
B
a
la
n
c
e
($
M
M
)
4.8%
5.0%
5.2%
5.4%
tfo
lio
C
o
n
c
e
n
tra
tio
n
1
6
.2
1
%
1
6
.1
2
%
1
6
.0
7
%
1
5
.9
9
%
1
5
.9
0
%
5
.8
6
%
3
% % % %
%
6
% 3
%
1
% 1
5
.4
9
%
1
5
.4
3
%
1
5
.4
0
%
1
5
.3
4
%
6.1%
6.2%
6.2%
6.2% 6.2% 6.3%
6.0% 5.2% 5.3% 5.2% 5.2% 5.3% 5.4% 5.6%
5.0% 5.0% 5.2% 5.2%
25.1% 25.1% 24.9%
28.5%
28.1% 28.1% 27.8%
27.6% 27.5% 27.3% 27.1%
26.9%
26.7%
26.7%
26.5%
26.3%
26.1% 25.9%
20,000
25,000
30,000
35,000
c
ip
a
l
B
a
la
n
c
e
($
M
M
)
14.0%
14.5%
15.0%
15.5%
tfo
lio
C
o
n
c
e
n
tra
tio
n
B
a
l
a
n
c
e
&
C
0
200
400
600
8 9 10
1
1
1
2 1 2 3 4 5 6 7 8 9 10
1
1 12 1
P
rin
c
4.2%
4.4%
4.6%
P
o
rt
Balance Concentration
1
2
.5
2
%
1
2
.4
9
%
1
2
.4
4
%
1
2
.3
2
%
1
2
.2
9
%
1
2
.2
5
%
1
1
.7
4
%
1
1
.5
8
%
1
1
.5
4
%
1
1
.5
6
%
1
1
.5
7
%
1
1
.5
8
%
1
1
.5
1
%
1
1
.5
0
%
1
1
.4
9
%
1
1
.3
7
%
1
1
.3
3
%
1
1
.2
2
%
1
1
5
.8
3
1
5
.7
5
%
1
5
.7
0
%
1
5
.6
6
%
1
5
.6
0
%
1
5
.5
6
1
5
.5
3
1
5
.5
1
0
5,000
10,000
15,000
8 9
1
0
1
1
1
2 1 2 3 4 5 6 7 8 9
1
0
1
1
1
2 1
2006 2007 08
P
rin
c
12.5%
13.0%
13.5%
P
o
rt
SFR Prime Home Equity Subprime Mortgage Channel MFL/ CRE Concentration
n
c
y
2006 2007
0
8
2 5%
3.0%
3.5%
4.0%
o
ta
l
D
e
lin
q
u
e
n
c
y 20%
25%
n
c
y
SFR Prime
Home Equity
MFL/ CRE
Subprime (right axis)
5.0%
6.0%
7.0%
cy
SFR HE SMC MFL/ CRE Total
Concentration 12.5% 16.2% 6.3% 25.9% 15.4%
Total Dlq - Jan-
0
8 3.6% 3.3% 20.3% 0.2% 3.2%
Jan 1 2% 1
3
% 7 8% 0 3% 1
3
%
o
t
a
l
D
e
l
i
n
q
u
e
n
1.0%
1.5%
2.0%
2.5%
P
rim
e
,
H
o
m
e
E
q
u
ity
a
n
d
M
F
L
/
C
R
E
To
5%
10%
15%
S
u
b
p
rim
e
T
o
ta
l
D
e
lin
q
u
e
n
1 0%
2.0%
3.0%
4.0%
C
a
rd
-
T
o
ta
l
D
e
lin
q
u
e
n
c
Concentration 5.5%
Total Dlq - Jan-
0
7
1.2% 1.3% 7.8% 0.3% 1.3%
143
To
0.0%
0.5%
8 9
1
0
1
1
1
2 1 2 3 4 5 6 7 8 9 10 11
1
2 1
2006 2007
0
8
0%
0.0%
1.0%
8 9
1
0
1
1
1
2 1 2 3 4 5 6 7 8 9
1
0
1
1
1
2 1
2006 2007
0
8
Total Dlq - Jan-
0
8 6.2%
Total Dlq - Jan-
0
7 4.1%
CONFIDENTIAL
Return
Recent Credit
Performance
Appendix D
144
CONFIDENTIAL
Return
Credit Performance Results
(
$
i
n millions)
SFR Prime Sep-
0
6
Dec-
0
6
Mar-
0
7
Jun-
0
7
Sep-
0
7
Dec-
0
7
Jan-
0
8
Outstanding Portfolio Balance $123,179 $101,562 $95,522 $90,593 $108,003 $112,614 $112,194
Total Delinquencies $1,449 $1,661 $1,730 $2,164 $3,086 $4,703 $5,310
Total Delinquency Rate 1.18% 1.64% 1.81% 2.39% 2.86% 4.18% 4.73%
Non Performing Loans $603 $667 $731 $1,038 $1,496 $2,358 $2,707
Non Performing Loan Rate 0.49% 0.66% 0.77% 1.15% 1.39% 2.09% 2.41%
Net Charge- offs $
1
5
$
2
0
$
3
5
$
2
1
$
5
2
$100 $
9
7
Annualized Net Charge-
o
f
f
Rate 0.05% 0.07% 0.14% 0.09% 0.20% 0.36% 1.03%
Subprime Mortgage Channel Sep-
0
6
Dec-
0
6
Mar-
0
7
Jun-
0
7
Sep-
0
7
Dec-
0
7
Jan-
0
8
Total Delinquencies $1,883 $2,172 $2,289 $2,680 $3,495 $3,963 $4,047
Non Performing Loans $1,122 $1,282 $1,503 $1,707 $2,356 $2,721 $2,789
Net Charge- offs $
4
7
$
4
8
$
4
0
$
9
2
$145 $273 $132
o
f
f
Rate 0.91% 0.92% 0.77% 1.79% 2.85% 5.73% 8.64%
Home Equity Sep-
0
6
Dec-
0
6
Mar-
0
7
Jun-
0
7
Sep-
0
7
Dec-
0
7
Jan-
0
8
Total Delinquencies $462 $589 $634 $778 $1,154 $1,708 $1,898
Non Performing Loans $161 $231 $297 $378 $533 $835 $978
Net Charge- offs $6 $
1
1
$
2
6
$
5
2
$101 $244 $113
A
l
i d N tCh
f
f R t 0 04% 0 09% 0 20% 0 38% 0 70% 1 62% 2 22%
145
o
f
f
Rate 0.04% 0.09% 0.20% 0.38% 0.70% 1.62% 2.22%
Note: Home Loans SFR Prime includes SFR Prime, Custom and Builder portfolios Subprime Mortgage Channel includes Purchased SMF, Long Beach Mortgage, HEL
Subprime, and HEL Purchased portfolios. Home Equity includes HEL and HELOC portfolios; excludes Other Consumer portfolio
CONFIDENTIAL
Return
Credit Performance Results
(
$
i
n millions)
Card Services Sep-
0
6
Dec-
0
6
Mar-
0
7
Jun-
0
7
Sep-
0
7
Dec-
0
7
Jan-
0
8
O
n
Balance sheet Delinquencies $206 $289 $244 $291 $299 $379 $389
O
n
Balance sheet Rate 2.34% 2.66% 2.57% 2.93% 3.41% 4.29% 4.51%
Managed Delinquencies $1,212 $1,234 $1,216 $1,277 $1,503 $1,762 $1,829
Managed Rate 5.53% 5.25% 5.15% 5.11% 5.73% 6.47% 6.76%
On Balance sheet Net Charge-offs $
2
7
$
1
9
$
3
0
$
3
4
$
3
8
$
3
0
$
4
0
O
n
Balance sheet Net Charge-
o
f
f
Rate 1.19% 0.79% 1.13% 1.35% 1.57% 1.35% 5.46%
Managed Net Charge- offs $311 $331 $367 $392 $413 $464 $197
Managed Annualized Net Charge-
o
f
f
Rate 5.71% 5.81% 6.21% 6.40% 6.38% 6.92% 8.70%
MFL/ CRE Sep-
0
6
Dec-
0
6
Mar-
0
7
Jun-
0
7
Sep-
0
7
Dec-
0
7
Jan-
0
8
Total Delinquencies $123 $169 $131 $190 $280 $233 $291
Non Performing Loans $
5
8
$
7
1
$
8
7
$101 $151 $168 $174
Net Charge-offs $0 $0
-
$ 1 $2 $0 $5 $1
o
f
f
Rate 0.00% 0.00% -0.01% 0.02% 0.00% 0.05% 0.03%
Other Comm./ Retail Small Bus. Sep-
0
6
Dec-
0
6
Mar-
0
7
Jun-
0
7
Sep-
0
7
Dec-
0
7
Jan-
0
8
Total Delinquencies $
6
2
$
7
0
$
8
0
$
8
4
$
7
7
$
9
1
$
9
2
Non Performing Loans $
4
3
$
4
2
$
5
2
$
5
0
$
4
0
$
3
8
$
3
8
Net Charge-offs $5 $7 $6 $
1
2
$
1
6
$
2
8
$
1
2
146
Charge
o
f
f
Rate 1.06% 1.40% 1.26% 2.46% 3.10% 5.61% 6.77%
CONFIDENTIAL
Return
CONFIDEI ALTREATMENTREQ ESTER
I
February 23 2006
Darrel Dodliow
Deputy Regional DirectorWest Region
101 Stewart Street Suite 1010
Washington Mutual
John F Robinson
Corporbte
Risk
Manegeinenl
Re Washington Mutual
BattkDocket
Number 08551Requestfor
confitmatid of capital treatment of two classes ofpreferred stock
DeaaMr Dochow
On behalf of Washingtari Mutual WMIn I amwriting
with reference to the riotice
filed
January 30 2006
by Washington Mutual
tank
WMB
toesstablisha new
subsidiary Washington Mutual Preferred Fpding LC`WMPF for
the
purposeof
issuing two classes of
preferredsecurities to be eligibleforinclesiein in
corecapital of
WMB the `Notice You provided notice of thenonobjectionof the Office of
Thrift
Supervision STS to the establishtnejat of WMPPby your letierdated February 9 2005
Asyou are aware inthe NotieeWMB
requestedthe
OTSoonfirstrthat the We of the
Cayman Co Preferred Securities and the Delaware
Issuer Securities as defined in the
Noticeto
outside investors constitutes thesale oftheLLC Preferred Securities
a
s
defined
in
th6Notice to outside investors and that the LLC Preferred Securities qualify
for
inclusion
i
i
i
core capital
ofWMB
I
n connection with
thatrequest
t
WM herebytndertakes
that
i
f asa result of
aSupervisory
Event
as defined in the Notice WMI exchanges its
Holding Company
Shares
as
defilned
r
u
n
the Notice for Cayman Co Preferred Securities
andthe Delaware Issuer tecurities or
i
f
WMI subsequent to such exchange acquires
the
LLC Preferred Securities W7vnwillcontribute1toWMB the Cayman
Co Preferred
Securities and the Delaware Issuer Securities
or as appropriate the LLC Pitferred
Securities
If
you
have
anyquestions regarding this letterplease call Robert Monheit at
2123266104 or meat 206 4906100
Zl
35hn` FRobinson
ExecWve Vice President
Corporate
Risk
Management
1201 Thi%d Avenue
wMr166
Seattle WA98101
phone 7064905100
Fax 2053775316
CONFIDENTIAL
Return
N
Office of Thrift
Supervision
Department
ofthe
Trc4sw7
wane Regina
lot S wzt 5tecd W
i
s l01Q SeMk WA 981012419 Sedde ArwQfjlr
Telaphce 216 3292600 Fac 205 $29200
February 24 2006
Mr John FRobinson
Execultivc Vice President
Corporate Risk Manageunaat
Washington Mutual W
1201 ThirdAvenun WMT 1601
Seattle WA 981 or
FEB 2 8 2006
LEGAL DEPARTMENT
Dear Mr Robinson
This letter further responds to the notice filed January 3020 advising that Washington Mutual
Bark rWMB plans
to establish
i
t now subsidiary Washington
Mutual Preferred Funding YYC
CVb9nfor the
purpose
of
issuing two classes of Preferred Secxnities to be eligible for
inclusion
i
n
cmcapital
ofWMB
By
letter dated
February 92006 we
took no objection to thr
establishment of the new operating subsidiary and the issuance of secsvities by
WMPF
Please be advised that OTS will not exercise its supervisory authority
and discretion to exclude
the Prefrsod Securities fromcore
capital
under 12 CFR 5675al footnote 4or the
resaYation of authority provision 12 CFR 56711
of the OTS
capital rule
and we hereby
confirm thalthc Proffered Securities will qualify for inclusion in WMB core capital This
decision
i
s based on the representations in theNotice attachment thereto and commitment
detailed in
your
confidential letter dated
February 23 2006
Notwithstanding
the above the OTS reserves the
right i
n its sole dis tion to exchrdc the
Preferred Securities or prospective issuances ofPrefesred
Securities i
f the teems are revised or
i
and a realistic ability
to absorb
losses
or otherwise raises
supevisorp ccncems This
may
include OTS cancers about the capital mix
or asset structure of the
Subsidiary or WMB
If
you
have any questions regarding this letter please contact me at 206 8292601
Sincerely
Darrel W Dochow
Regional Deputy
Director
cc William LLynch Secretary Washington Mutual
CONFIDENTIAL
Return
Washington
Mutual
CONFIDENTIAL TREATMENT REQUESTED
November 14 2006
Darrel Dochow
Deputy Regional Director West
Region
Office of Thrift
Supervision
Re
Washington
Mutual Bank
Docket
Number 08551 Request for
confirmation of
capital
treatment of additional class of
preferred
stock
am
Dear Mr Dochow
On behalf of Washington Mutual Inc
WMI
and Washington Mutual Bank
the
Association I am
writing
with reference to the notice filed
January 30
2006
by
the Association to establish a new subsidiary Washington
Mutual Preferred
Funding LLC
WMPF
for the
purpose
of
issuing
two classes of
preferred
securities
collectively
the LLC Preferred
Securities
to be
eligible
for inclusion
i
n
core capital of WMB
the Notice
You
provided
notice of the
nonobjection
of the
Office of Thrift Supervision OTS
to the establishment of WMPF by your
letter
dated February 9 2006
As
you are aware i
n the Notice the Association
requested
the OTS confirm that the
sale of the
Cayman
Co Preferred Securities and the Delaware Issuer securities
as
defined
i
n the
Notice
to outside investors constitutes the sale of the LLC
as
defined
i
n the
Notice
to outside investors and that the LLC
qualify
for inclusion
i
n
core capital
of the Association You
advised by
letter dated
February 24 2006 that the OTS will not exercise its
supervisory authority
and discretion to exclude the LLC Preferred Securities from
core
capital
under 12 CFR
5675a1footnote 4
or the reservation of
authority
provision 12 CFR
56711
of the OTS
capital
rule and confirmed that the LLC
Preferred Securities will
qualify
for inclusion
i
n the Associations core capital
WMPF
i
s
planning
to issue an additional class of LLC Preferred Securities the
FixedtoFloating Rate
Perpetual
Noncumulative Preferred Securities Series
2006C LLC Preferred Securities
II
The LLC Preferred Securities
I
I will
include terms
substantially
the same as the LLC Variable Rate Preferred
Securities as defined
i
n the
Notice including
the
requirement
for the
prior
approval
of the OTS for
any proposed redemption
Like the LLC Variable Rate
Preferred Securities the LLC Preferred Securities
I
I will have a stated amount to
be determined based
upon
market conditions and will
pay
distributions on a
noncumulative
basis at a fixed rate for a period to be determined and thereafter will
pay
distributions based on a variable rate of interest plus an applicable spread
However the dividend rates dividend
payment
dates and redemption dates and
prices will be different than the LLC Variable Rate Preferred Securities
Corporate Execatlve Offices
1301 Second Avenue
Seattla WA 98101
CONFIDENTIAL
Return
Mr Darrel Dochow
November 14 2006
Page
2
I
I will be issued to the Association
i
n
exchange
for
not more than
approximately
$10 billion
i
n
assets consisting of a pool of option
ARMs
originated by
the Association
Simultaneously
the Association will then sell
the LLC Preferred Securities
1
1
to a new entity Washington
Mutual Preferred
Funding
Trust
I
I
Delaware Issuer III
for not more than
approximately $10 billion
i
n cash Delaware Issuer
1
1
will be a trust formed under the laws of the State of
Delaware and will not be a
subsidiary
of the Association for
purposes
of the
notice
requirement
set forth
i
n 12 CFR

55911 Delaware Issuer
I
I will own all of
1
1 which will be the sole asset of the Delaware Issuer
I
I
Delaware Issuer
I
I
will issue a single class of securities Delaware
Issuer
I
l
Securities which will represent undivided beneficial ownership interests
i
n the LLC
1
1
held
by
Delaware Issuer
I
I
Delaware Issuer
1
1
will
passthrough
any
distributions or payments upon redemption or upon liquidation with
respect
to the LLC Preferred Securities
I
I to be holders of the Delaware Issuer
I
I
Securities Delaware Issuer
1
1
Securities will be sold
solely
to US
persons
who are
qualified institutional buyers within the
meaning
of Rule 144A under the
Securities Act of 1933 as amended
Securities Act
who are also qualified
purchasers within the meaning of the Investment Company act of 1940
Investment Company Act i
n a transaction exempt from the registration
requirements of the Securities Act
pursuant
to Rule 144A thereunder
I
agreed
that the amount of the Associations core
capital
that
may
be
comprised
of the LLC Preferred Securities
plus any
other
future issuances of
subsidiary preferred stock
will not exceed 25
percent
of the
Associations core capital including
the LLC Preferred Securities and
any
future
subsidiary preferred
securities issuances The issuance of LLC Preferred
Securities
1
1
will not cause the Association to exceed this limit On a
pro
forma
basis based upon an October 10 2006
forecast
the amount of LLC Preferred
Securities and LLC Preferred Securities
I
I will constitute no more than
approximately
1402
percent
of the Associations core capital
as of December 31
2006
In connection with the
request I
n the Notice
regarding
the
capital
treatment of the
LLC Preferred Securities WMI by letter to you
dated
February 23 2006 stated
i
I
n addition to the creation of Delaware Issuer
I
I a new asset trust Washington Mutual Option ARM
Trust I Asset Trust l1will be formed Asset Trust
I
t will be a trust formed under the laws of the
State of Delaware
pursuant
to a trust agreement between WMPF as depositor and a trustee
unaffiliated with the Association as Delaware Trustee Asset Trust
I
I will own approximately $30
billion of first lien closedend optionARM home loans the Asset Trust
I
f
Assets acquired
from
the Association WMPF and from university Street Inc REIT any property
that secured a loan
that Asset Trust
I
l
acquires
b
y
foreclosure or deed
i
n lieu of foreclosure as well as other assets
authorized for federal
savings
associations under federal law
CONFIDENTIAL
Return
Mr Darrel Dochow
November 14 2006
Page 3
that
i
t will undertake that
i
f as a result of a Supervisory Event as defined
i
n the
Notice
WMI
exchanges its Holding Company
Shares as defined
i
n the Notice
for
Cayman
Co Preferred Securities and the Delaware Issuer Securities or
i
f WMI
subsequent t
o such
exchange acquires
the LLC Preferred Securities WMI will
contribute to WMB the
Cayman
Co Preferred Securities and the Delaware Issuer
Securities
or as appropriate the LLC Preferred Securities On behalf of WMI I
hereby
extend that
undertaking
to the issuance of LLC Preferred Securities
l
i and
the Delaware Issuer
I
I Securities
Based on the foregoing the Association
respectfully requests
the OTS to confirm
that the OTS will not exercise its
and discretion to exclude the
LLC Preferred Securities
I
I from
corecapital
under 12 CFR
5675a1footnote 4
or the reservation of authority provision 12
CFR
56711
of the OTS
capital
rule
and confirm that the LLC Preferred Securities
1
1
will
qualify
for inclusion
i
n the
Associations core
capital
Request
for Confidential Treatment Consistent with the standards of the Freedom
o
f
Information Act 5 USC
552b
the Association
hereby requests
confidential
treatment of the information contained
i
n this letter
the Submission
The
Submission contains information that
i
s commercial or financial information
obtained from a
person
and
privileged
and confidential that
i
s
exempt
from
disclosure under
paragraph b4 o
f
the Freedom of Information Act 5 USC
552b4
and the
applicable regulations
of the
Department
of the
Treasury
31
CFR 12c1 and
16a
The information
i
s
proprietary compiled
for internal
use only and
i
s made available to
regulatory
authorities
only upon request
The
Association
requests
that the information contained
i
n this document be treated as
confidential
indefinitely
because the basis for confidential treatment will continue to
exist after the issues
presented by
this Submission are resolved The Association
further
requests
that
i
f notwithstanding
the
foregoing
the OTS should determine
preliminarily to make available to the public any
of the information contained
i
n this
Submission
i
t will inform the Association
prior
to
any
such release
I
f
you
have
this letter please
call Robert Monheit at
212
3266104 or me at 206 5004149
ohn F Robinson
Corporate Risk
Management
CONFIDENTIAL
Return
U
M
Office of Thrift
Supervision
Department of the Treasury
1551 Nottb Tssda Avenue Suits 1050 Santa Ana
CA 927058635
TeScpltone 714 7964700 FAX 714 7964710
December 4 2006
Mr John F Robinson
Corporate
Risk Management
Washington mutual
1301 Second Avenue
Seattle WA 98101
bear Mr Robinson
W4VVL
West lzs toh
Santa Ana Area Offim
Prist1t brand tax transmittal memo 7671 Ff popes
r
To ro
Dept phone
TaTi
This responds to your
November 142006 letter advising that
Washington
Mutual Bank hWNB plate to
issue an additional class ofpicferred securities C LLC PreierrrdSecurities 11 Rough Washington
Mutual Professed Funding
LLC
WMPF and requcatin OTS confirmation that such securities are
eligible for inclusion in core capital of WMB The LLC Pre1 red securities
1
1 wil bo issued to WMB in
exchange for not morethan $1 billion is assets consisting of a pool of option ABMs origiuate+l by WMIB
By letter dated February 24 2006 this office con niad that the initial two classes of LLC Preferred
Securities issued by
WMPF could be included inWW
I
s
capital subject to certain representations
and
=krWdngs Similarly please be advised that OTS will not exercise its
atpe
rvisory authority
and
discretion to exclude the LLC Preferred Securities
1
1
timmcore capital under 12 CFR
$675a1 footnote 4
or the reservation of authority provision 12 CFR 56711 of the OTS capital zuie and we hereby
confirm
that the preferred securities will qualify for inclusion i
n WMB core capital
This decision
i
s based on the
r esentations made in your November 141etter
Notwiibatanding the above the OTS reserves the right in its cote discretion to exclude she Pr+efeured
Securities or prospective
issuances of Preferred
Securities
if the terms are revised or i
t otherwise ceases
to provide meaningibl capital support and a realistic ability to absorb losses or otherwise raises
supervisory
concerns This
may
include OTS concerns about the capital mix or asset struttwc ofthe
Subsidiary
or WMB
I
f
you have any questions regarding thisletter please contact we a
t
206 8292603
Sincercly
Darrel W Doehow
cc FDIC
CONFIDENTIAL
Return
August 17
2007
Michael Finn
Regional Director
West
Region
Office of Thrift
Supervision
101 Stewart
Street Suite 1010
John P Rabhnaan
Executive V ce President
Corporate Risk Management
1301 Second Avenue
WMC3Z01
Seattle WA 98101
206 500 4149 phone
206 377 3018 fax
Re Washington Mutual Bank Docket Number 08551 Request
for
confirmation of
capital treatment of additional class of
preferred
stock
Dear Mr Finn
On behalf of
WMI
and Washington Mutual Bank the
Association
I am writing
with reference to the notice filed January 30
2006
by
Mutual Preferred
Funding
LLC
WMPF
for the
purpose
of issuing two classes of
preferred
securities
collectively
the LLC Preferred
Securities
to be eligible for inclusion i
n
core capital
of WMB
the Notice
The Office of Thrift Supervision COTS
provided
notice of Its
nonobjection
to the establishment of WMPF by
letter dated
February 9 2006 All
capitalized
terms used but not otherwise defined herein shall
have the same meaning
ascribed to them
i
n the Notice
As
you are aware i
n the Notice the Association requested
that the OTS confirm
that the sale of the
Cayman
Securities to outside investors constitutes the sale of the LLC Preferred Securities
to outside investors and that the LLC Preferred Securities qualify
for inclusion
i
n
core capital
of the Association The OTS advised by letter dated
February 24
2006 that
i
t will not exercise its
LLC Preferred Securities from core
capital
under 12 CFR 5675a1footnote 4 or
the reservation of
authority provision 12
CFR
56711
of the OTS
capital
rule and
confirmed that the LLC Preferred Securities
qualify
for inclusion
i
n the Associations
core capital
Subsequently
the Association by
letter dated November 14 2006 requested
the
OTS confirm the capital treatment of an issuance of an additional class of LLC
Preferred Securities the Fixed
toFloating
Rate Perpetual Noncumulative
Preferred Securities Series 2006C LLC
Preferred Securities 11 The OTS
advised by
letter dated December 4 2006 that
i
supervisory
authority
and discretion to exclude the LLC Preferred Securities
I
I from core capital
under 12 CFR
5675a1footnote 4 or the reservation of authority provision 12
CFR
56711
of the OTS
capital
Preferred
Securities
I
t
qualify
for inclusion
i
Q
Equal Honing
Lander
CONFIDENTIAL
Return
Mr Michael Finn
August 17 2007
Page
2
Following that issuance the
Association by letter dated February 7 2007
requested the OTS confirm the capital treatment of an issuance of another
additional class of LLC Preferred
Securities the Fixedto
Floating
Rate Perpetual
Noncumulative Preferred
Securities Series 2007A LLC
Ill The OTS indicated
i
t consent
b
y
return of the letter
stamped
No
Objection
as of
February 24 2007
WMPF
i
s now planning to issue an additional class of LLC Preferred Securities
the
LLC Preferred Securities IV The LLC Preferred Securities IV will be fixed rate
and will include terms
substantially
the same as the LLC Fixed Rate Preferred
Securities
as defined
i
n the
Notice including
the
requirement
for the
prior approval
of the OTS for
Like the LLC Fixed Rate Preferred
Securities the LLC Preferred Securities IV will have a stated amount to be
determined based
upon
pay
distributions on a
noncumulative
basis However the dividend rates and redemption dates and
prices
will
be different than the LLC Fixed Rate Preferred Securities Also the LLC Preferred
Securities IV will not be callable during the first five
years following
issuance and
then
may
be called at
any
time thereafter
i
n the discretion of WMPF subject to
prior approval
of the OTS
The LLC Preferred Securities IV will be issued to the Association
i
n
exchange
for
not more than
i
n cash
Simultaneously
the Association
will then sell the LLC Preferred Securities IV to a new
entity Washington
Mutual
Preferred
Funding
Trust IV Delaware Issuer
IV
for not more than
approximately
$10 billion
i
n cash2 Delaware Issuer IV will be a trust formed under the laws of
the State of Delaware and will not be a
subsidiary
purposes
of the notice
requirement
set forth
i
n 12 CFR

55911 Delaware Issuer IV will
own all of the LLC Preferred Securities IV which will be the sole asset of the
Delaware Issuer IV
Delaware Issuer IV will issue a single class of securities
Delaware
Issuer IV
Securities
which will
represent undivided beneficial
ownership
interests
i
n the LLC
Preferred Securities IV held
by Delaware Issuer IV Delaware Issuer IV will
pass
through any
distributions or
payments upon redemption or
upon liquidation with
respect to the LLC Preferred Securities 1V to the holders of the Delaware Issuer IV
Securities Delaware Issuer IV Securities will be sold
solely to US
persons
who
are qualified institutional buyers within
the
meaning
Securities Act
who are also
qualified
1
At the time the letter was submitted WMPF had not determined whether the LLC Preferred
Securities
I
I
I
would be
fixedtofloating rate or fixed rate
2
Alternatively WMPF
may
sell the LLC Preferred Securities
I
I
I
directly
to Delaware Issuer IV for
$10 billion
i
n cash The Association undertakes to advise the OTS
I
f this alternative
i
s selected
prior to the launch date of the issuance
CONFIDENTIAL
Return
Mr Michael Finn
August 17 2007
Page 3
purchasers within
the
meaning
of the Investment
Company act of 1940
n
a transaction
exempt
from the
registration
requirements
of the Securities Act
pursuant to Rule 144A thereunder
I
n the
Notice the Association
agreed that the amount of the Associations core
capital that
may
be
comprised
plus any
other
future issuances of
will not exceed 25
percent
of the
any
future
subsidiary preferred securities issuances The issuance of LLC Preferred
Securities IV will not cause the Association to exceed this limit On a pro
forma
basis based upon a forecast dated
August 9 2007
Securities LLC Preferred Securities
I
I LLC Preferred Securities
I
I
I
and LLC
Preferred Securities IV will constitute no more than
approximately
1821
percent
of
the Associations core capital at
September 30 2007
I
n connection with the request i
n the Notice regarding the capital treatment of the
LLC Preferred Securities WMI by
letter to the OTS dated
February 23 2006
stated that
i
i
f as a result of a Supervisory Event
WMI
exchanges
its
Holding Company Shares for
Cayman
Co Preferred Securities and
the Delaware Issuer Securities or
i
f WMI
subsequent to such exchange acquires
the LLC Preferred
Securities WMI will contribute to WMB the Cayman Co
Preferred Securities and the Delaware Issuer Securities or as appropriate the LLC
Preferred Securities On behalf of
WMI
I
hereby extend that undertaking to the
issuance of LLC Preferred Securities IV and the Delaware Issuer IV Securities
Based on the
foregoing
the Association
the OTS to confirm
LLC Preferred Securities IV from core capital under 12 CFR
5675a1footnote 4
CFR
56711
of the OTS capital rule
and confirm that the LLC Preferred Securities IV will
qualify for inclusion
i
n the
Associations core
capital
Request
for
Confidential Treatment Consistent with the standards of the Freedom
of Information Act 5 USC
552b the Association
hereby requests
confidential
i
n this letter the Submission The
i
obtained from a
person
and
privileged
i
s
exempt from
disclosure under
paragraph b4
of the Freedom of Information Act 5 USC
552b4
and the
of the
Department of the
Treasury
31
CFR
12c1 and 16a The information
i
s
proprietary compiled for internal
use only
and
i
s
made available to
regulatory
authorities
only upon request The
Association
requests that the information contained
i
confidential
indefinitely because the basis for confidential treatment will continue to
presented by
CONFIDENTIAL
Return
Mr Michael Finn
August 17 2007
Page
4
further
requests
that
i
f notwithstanding
the
foregoing
preliminarily
to make available to the
public any
i
n this
Submission
i
t will Inform the Association
prior
to
any
such release
I
f
you
have
this letter please
212 3266104 or me at
206
5004149
hn F Robinson
Corporate
Risk
Management
CONFIDENTIAL
Return
Office of Thrift
Supervision
SEP
d
2007
West Region
101 Stewart Street Suite 1010 Seattle WA 981012419 Seattle Area Once
Telephone 206 8292600 Fax 206 8292620
September 20 2007
Mr John F Robinson Executive Vice President
Washington Mutual
Seattle WA 98101
Dew Mr Robinson
This
responds to your August 17 2007 letter
advising
that
Washington
Mutual Bank WMB plans to issue
an additional class of
preferred
securities
LLC
Preferred Securities IVthrough Washington Mutual
Preferred
Funding
LLC
WMPF
and
requesting
OTS confirmation that such securities are eligible
for
inclusion in core capital
of WMB The LLC Preferred Securities IV will be issued to WMB
i
n
exchange
for
not more than
$
1 billion in cash
On February 24 2006 December 4 2006 and February 24 2007 this office confirmed that the three prior
classes of LLC Preferred Securities issued by WMPF could be included
i
n WMBs capital subject to certain
representations and undertakings Similarly please be advised that OTS will not exercise its
supervisory
authority and discretion to exclude the LLC Preferred Securities IV fromcore capital
under 12 CFR
5675a1 footnote 4 or the reservation of authority provision 12 CFR 56711 of the OTS capital rule
and we hereby
confirm that the
preferred
securities will
qualify
for inclusion in WMB core capital
This
decision
i
s based on the
representations
made in
your August
17 letter
Notwithstanding
the above the OTS reserves the right in its sole discretion to exclude the Preferred
i
t otherwise ceases to
provide meaningful capital support
and a realistic ability to absorb losses or otherwise raises supervisory
concerns This
may
include OTS concerns about the
capital
mix or asset structure of the WMPF or WMB
If
you
have
any questions regarding this letter please contact me at 206
8292603
cc FDIC
CONFIDENTIAL
Return
I
February 23 2006
Darrel Dodliow
Washington Mutual
John F Robinson
Corporbte
Risk
Manegeinenl
BattkDocket
DeaaMr Dochow
filed
January 30 2006
tank
WMB
toesstablisha new
the
purposeof
corecapital of
Thrift
requestedthe
Noticeto
a
s
defined
in
for
inclusion
i
i
i
core capital
ofWMB
I
n connection with
thatrequest
t
WM herebytndertakes
that
i
f asa result of
aSupervisory
Event
Holding Company
Shares
as
defilned
r
u
n
i
f
the
Co Preferred
Securities
If
you
have
2123266104 or meat 206 4906100
Zl
35hn` FRobinson
Corporate
Risk
Management
1201 Thi%d Avenue
wMr166
Seattle WA98101
phone 7064905100
Fax 2053775316
CONFIDENTIAL
Return
N
Office of Thrift
Supervision
Department
ofthe
Trc4sw7
wane Regina
lot S wzt 5tecd W
i
Telaphce 216 3292600 Fac 205 $29200
February 24 2006
Mr John FRobinson
Washington Mutual W
Seattle WA 981 or
FEB 2 8 2006
LEGAL DEPARTMENT
Dear Mr Robinson
Bark rWMB plans
to establish
i
CVb9nfor the
purpose
of
inclusion
i
n
cmcapital
ofWMB
By
letter dated
February 92006 we
WMPF
capital
of the OTS
capital rule
and we hereby
decision
i
detailed in
your
February 23 2006
Notwithstanding
right i
Securities i
i
to absorb
losses
or otherwise raises
may
Subsidiary or WMB
If
you
Sincerely
Darrel W Dochow
Regional Deputy
Director
CONFIDENTIAL
Return
Washington
Mutual
November 14 2006
Darrel Dochow
Region
Office of Thrift
Supervision
Re
Washington
Mutual Bank
Docket
confirmation of
capital
preferred
stock
am
Dear Mr Dochow
WMI
the
Association I am
writing
January 30
2006
by
Mutual Preferred
Funding LLC
WMPF
for the
purpose
of
issuing
two classes of
preferred
securities
collectively
the LLC Preferred
Securities
to be
eligible
for inclusion
i
n
core capital of WMB
the Notice
You
provided
notice of the
nonobjection
of the
letter
As
you are aware i
requested
sale of the
Cayman
as
defined
i
n the
Notice
as
defined
i
n the
Notice
qualify
for inclusion
i
n
core capital
advised by
letter dated
core
capital
under 12 CFR
5675a1footnote 4
authority
provision 12 CFR
56711
of the OTS
capital
qualify
for inclusion
i
WMPF
i
s
planning
Perpetual
II
I
I will
include terms
substantially
i
n the
Notice including
the
requirement
for the
prior
approval
of the OTS for
I
be determined based
upon
pay
distributions on a
noncumulative
pay
payment
1301 Second Avenue
Seattla WA 98101
CONFIDENTIAL
Return
Mr Darrel Dochow
November 14 2006
Page
2
I
i
n
exchange
for
not more than
approximately
$10 billion
i
n
ARMs
originated by
the Association
Simultaneously
1
1
Mutual Preferred
Funding
Trust
I
I
Delaware Issuer III
for not more than
i
1
1
subsidiary
purposes
of the
notice
requirement
set forth
i
n 12 CFR

I
I will own all of
1
I
I
Delaware Issuer
I
I
Issuer
I
l
i
n the LLC
1
1
held
by
Delaware Issuer
I
I
Delaware Issuer
1
1
will
passthrough
any
respect
I
I
I
1
1
solely
to US
persons
who are
meaning
Securities Act
pursuant
I
agreed
capital
that
may
be
comprised
plus any
other
future issuances of
will not exceed 25
percent
of the
any
future
Securities
1
1
pro
forma
forecast
I
approximately
1402
percent
as of December 31
2006
request I
n the Notice
regarding
the
capital
treatment of the
dated
i
I
I
I
State of Delaware
pursuant
I
I
f
Assets acquired
from
that secured a loan
that Asset Trust
I
l
acquires
b
y
foreclosure or deed
i
savings
CONFIDENTIAL
Return
Mr Darrel Dochow
November 14 2006
Page 3
that
i
i
i
n the
Notice
WMI
Shares as defined
i
n the Notice
for
Cayman
i
f WMI
subsequent t
o such
exchange acquires
Cayman
Securities
hereby
extend that
undertaking
l
i and
the Delaware Issuer
I
I Securities
the OTS to confirm
I
I from
corecapital
under 12 CFR
5675a1footnote 4
CFR
56711
of the OTS
capital
rule
1
1
will
qualify
for inclusion
i
n the
Associations core
capital
Request
o
f
552b
the Association
hereby requests
confidential
i
n this letter
the Submission
The
i
obtained from a
person
and
privileged
i
s
exempt
from
disclosure under
paragraph b4 o
f
552b4
and the
of the
Department
of the
Treasury
31
CFR 12c1 and
16a
The information
i
s
for internal
use only and
i
s made available to
regulatory
authorities
only upon request
The
Association
requests
i
confidential
indefinitely
presented by
further
requests
that
i
f notwithstanding
the
foregoing
i
n this
Submission
i
prior
to
any
such release
I
f
you
have
this letter please
212
3266104 or me at 206 5004149
ohn F Robinson
Corporate Risk
Management
CONFIDENTIAL
Return
U
M
Office of Thrift
Supervision
CA 927058635
TeScpltone 714 7964700 FAX 714 7964710
December 4 2006
Mr John F Robinson
Corporate
Risk Management
Washington mutual
1301 Second Avenue
Seattle WA 98101
bear Mr Robinson
W4VVL
West lzs toh
r
To ro
Dept phone
TaTi
Washington
LLC
1
I
s
and
atpe
rvisory authority
and
1
1
$675a1 footnote 4
confirm
n WMB core capital
This decision
i
s based on the
Securities
t otherwise ceases
supervisory
concerns This
may
Subsidiary
or WMB
I
f
t
206 8292603
Sincercly
Darrel W Doehow
cc FDIC
CONFIDENTIAL
Return
August 17
2007
Michael Finn
Regional Director
West
Region
Office of Thrift
Supervision
101 Stewart
Street Suite 1010
John P Rabhnaan
1301 Second Avenue
WMC3Z01
Seattle WA 98101
206 500 4149 phone
206 377 3018 fax
for
confirmation of
preferred
stock
Dear Mr Finn
On behalf of
WMI
Association
I am writing
2006
by
Mutual Preferred
Funding
LLC
WMPF
for the
purpose
preferred
securities
collectively
the LLC Preferred
Securities
n
core capital
of WMB
the Notice
provided
notice of Its
nonobjection
letter dated
February 9 2006 All
capitalized
ascribed to them
i
n the Notice
As
you are aware i
Cayman
for inclusion
i
n
core capital
February 24
2006 that
i
capital
the reservation of
CFR
56711
of the OTS
capital
rule and
qualify
for inclusion
i
n the Associations
core capital
Subsequently
the Association by
the
toFloating
advised by
i
supervisory
authority
I
I from core capital
under 12 CFR
CFR
56711
of the OTS
capital
Preferred
Securities
I
t
qualify
for inclusion
i
Q
Equal Honing
Lander
CONFIDENTIAL
Return
Mr Michael Finn
August 17 2007
Page
2
Floating
Rate Perpetual
i
t consent
b
y
stamped
No
Objection
as of
February 24 2007
WMPF
i
the
substantially
Securities
as defined
i
n the
Notice including
the
requirement
for the
prior approval
of the OTS for
determined based
upon
pay
distributions on a
noncumulative
prices
will
years following
issuance and
then
may
be called at
any
time thereafter
i
prior approval
of the OTS
i
n
exchange
for
not more than
i
n cash
Simultaneously
the Association
entity Washington
Mutual
Preferred
Funding
IV
for not more than
approximately
$10 billion
i
subsidiary
purposes
of the notice
requirement
set forth
i
n 12 CFR

Delaware Issuer IV
Delaware
Issuer IV
Securities
which will
ownership
interests
i
n the LLC
pass
through any
distributions or
solely to US
persons
who
the
meaning
Securities Act
who are also
qualified
1
Securities
I
I
I
would be
2
Alternatively WMPF
may
I
I
I
directly
$10 billion
i
I
f this alternative
i
s selected
CONFIDENTIAL
Return
Mr Michael Finn
August 17 2007
Page 3
purchasers within
the
meaning
of the Investment
Company act of 1940
n
a transaction
exempt
from the
registration
requirements
I
n the
capital that
may
be
comprised
plus any
other
future issuances of
will not exceed 25
percent
of the
any
future
forma
August 9 2007
I
I
I
I
and LLC
approximately
1821
percent
of
September 30 2007
I
February 23 2006
stated that
i
i
WMI
exchanges
its
Cayman
i
f WMI
the LLC Preferred
WMI
I
Based on the
foregoing
the Association
the OTS to confirm
5675a1footnote 4
CFR
56711
i
n the
Associations core
capital
Request
for
hereby requests
confidential
i
i
obtained from a
person
and
privileged
i
s
exempt from
disclosure under
paragraph b4
552b4
and the
of the
Department of the
Treasury
31
CFR
i
s
use only
and
i
s
made available to
regulatory
authorities
Association
i
confidential
presented by
CONFIDENTIAL
Return
Mr Michael Finn
August 17 2007
Page
4
further
requests
that
i
f notwithstanding
the
foregoing
preliminarily
to make available to the
public any
i
n this
Submission
i
t will Inform the Association
prior
to
any
such release
I
f
you
have
this letter please
212 3266104 or me at
206
5004149
hn F Robinson
Corporate
Risk
Management
CONFIDENTIAL
Return
Office of Thrift
Supervision
SEP
d
2007
West Region
101 Stewart Street Suite 1010 Seattle WA 981012419 Seattle Area Once
Telephone 206 8292600 Fax 206 8292620
September 20 2007
Mr John F Robinson Executive Vice President
Washington Mutual
Seattle WA 98101
Dew Mr Robinson
This
responds to your August 17 2007 letter
advising
that
Washington
Mutual Bank WMB plans to issue
an additional class of
preferred
securities
LLC
Preferred Securities IVthrough Washington Mutual
Preferred
Funding
LLC
WMPF
and
requesting
OTS confirmation that such securities are eligible
for
inclusion in core capital
of WMB The LLC Preferred Securities IV will be issued to WMB
i
n
exchange
for
not more than
$
1 billion in cash
On February 24 2006 December 4 2006 and February 24 2007 this office confirmed that the three prior
classes of LLC Preferred Securities issued by WMPF could be included
i
n WMBs capital subject to certain
representations and undertakings Similarly please be advised that OTS will not exercise its
supervisory
authority and discretion to exclude the LLC Preferred Securities IV fromcore capital
under 12 CFR
5675a1 footnote 4 or the reservation of authority provision 12 CFR 56711 of the OTS capital rule
and we hereby
confirm that the
preferred
securities will
qualify
for inclusion in WMB core capital
This
decision
i
s based on the
representations
made in
your August
17 letter
Notwithstanding
the above the OTS reserves the right in its sole discretion to exclude the Preferred
i
t otherwise ceases to
provide meaningful capital support
and a realistic ability to absorb losses or otherwise raises supervisory
concerns This
may
include OTS concerns about the
capital
mix or asset structure of the WMPF or WMB
If
you
have
any questions regarding this letter please contact me at 206
8292603
cc FDIC
CONFIDENTIAL
Return
I
February 23 2006
Darrel Dodliow
Washington Mutual
John F Robinson
Corporbte
Risk
Manegeinenl
BattkDocket
DeaaMr Dochow
filed
January 30 2006
tank
WMB
toesstablisha new
the
purposeof
corecapital of
Thrift
requestedthe
Noticeto
a
s
defined
in
for
inclusion
i
i
i
core capital
ofWMB
I
n connection with
thatrequest
t
WM herebytndertakes
that
i
f asa result of
aSupervisory
Event
Holding Company
Shares
as
defilned
r
u
n
i
f
the
Co Preferred
Securities
If
you
have
2123266104 or meat 206 4906100
Zl
35hn` FRobinson
Corporate
Risk
Management
1201 Thi%d Avenue
wMr166
Seattle WA98101
phone 7064905100
Fax 2053775316
CONFIDENTIAL
Return
N
Office of Thrift
Supervision
Department
ofthe
Trc4sw7
wane Regina
lot S wzt 5tecd W
i
Telaphce 216 3292600 Fac 205 $29200
February 24 2006
Mr John FRobinson
Washington Mutual W
Seattle WA 981 or
FEB 2 8 2006
LEGAL DEPARTMENT
Dear Mr Robinson
Bark rWMB plans
to establish
i
CVb9nfor the
purpose
of
inclusion
i
n
cmcapital
ofWMB
By
letter dated
February 92006 we
WMPF
capital
of the OTS
capital rule
and we hereby
decision
i
detailed in
your
February 23 2006
Notwithstanding
right i
Securities i
i
to absorb
losses
or otherwise raises
may
Subsidiary or WMB
If
you
Sincerely
Darrel W Dochow
Regional Deputy
Director
CONFIDENTIAL
Return
Washington
Mutual
November 14 2006
Darrel Dochow
Region
Office of Thrift
Supervision
Re
Washington
Mutual Bank
Docket
confirmation of
capital
preferred
stock
am
Dear Mr Dochow
WMI
the
Association I am
writing
January 30
2006
by
Mutual Preferred
Funding LLC
WMPF
for the
purpose
of
issuing
two classes of
preferred
securities
collectively
the LLC Preferred
Securities
to be
eligible
for inclusion
i
n
core capital of WMB
the Notice
You
provided
notice of the
nonobjection
of the
letter
As
you are aware i
requested
sale of the
Cayman
as
defined
i
n the
Notice
as
defined
i
n the
Notice
qualify
for inclusion
i
n
core capital
advised by
letter dated
core
capital
under 12 CFR
5675a1footnote 4
authority
provision 12 CFR
56711
of the OTS
capital
qualify
for inclusion
i
WMPF
i
s
planning
Perpetual
II
I
I will
include terms
substantially
i
n the
Notice including
the
requirement
for the
prior
approval
of the OTS for
I
be determined based
upon
pay
distributions on a
noncumulative
pay
payment
1301 Second Avenue
Seattla WA 98101
CONFIDENTIAL
Return
Mr Darrel Dochow
November 14 2006
Page
2
I
i
n
exchange
for
not more than
approximately
$10 billion
i
n
ARMs
originated by
the Association
Simultaneously
1
1
Mutual Preferred
Funding
Trust
I
I
Delaware Issuer III
for not more than
i
1
1
subsidiary
purposes
of the
notice
requirement
set forth
i
n 12 CFR

I
I will own all of
1
I
I
Delaware Issuer
I
I
Issuer
I
l
i
n the LLC
1
1
held
by
Delaware Issuer
I
I
Delaware Issuer
1
1
will
passthrough
any
respect
I
I
I
1
1
solely
to US
persons
who are
meaning
Securities Act
pursuant
I
agreed
capital
that
may
be
comprised
plus any
other
future issuances of
will not exceed 25
percent
of the
any
future
Securities
1
1
pro
forma
forecast
I
approximately
1402
percent
as of December 31
2006
request I
n the Notice
regarding
the
capital
treatment of the
dated
i
I
I
I
State of Delaware
pursuant
I
I
f
Assets acquired
from
that secured a loan
that Asset Trust
I
l
acquires
b
y
foreclosure or deed
i
savings
CONFIDENTIAL
Return
Mr Darrel Dochow
November 14 2006
Page 3
that
i
i
i
n the
Notice
WMI
Shares as defined
i
n the Notice
for
Cayman
i
f WMI
subsequent t
o such
exchange acquires
Cayman
Securities
hereby
extend that
undertaking
l
i and
the Delaware Issuer
I
I Securities
the OTS to confirm
I
I from
corecapital
under 12 CFR
5675a1footnote 4
CFR
56711
of the OTS
capital
rule
1
1
will
qualify
for inclusion
i
n the
Associations core
capital
Request
o
f
552b
the Association
hereby requests
confidential
i
n this letter
the Submission
The
i
obtained from a
person
and
privileged
i
s
exempt
from
disclosure under
paragraph b4 o
f
552b4
and the
of the
Department
of the
Treasury
31
CFR 12c1 and
16a
The information
i
s
for internal
use only and
i
s made available to
regulatory
authorities
only upon request
The
Association
requests
i
confidential
indefinitely
presented by
further
requests
that
i
f notwithstanding
the
foregoing
i
n this
Submission
i
prior
to
any
such release
I
f
you
have
this letter please
212
3266104 or me at 206 5004149
ohn F Robinson
Corporate Risk
Management
CONFIDENTIAL
Return
U
M
Office of Thrift
Supervision
CA 927058635
TeScpltone 714 7964700 FAX 714 7964710
December 4 2006
Mr John F Robinson
Corporate
Risk Management
Washington mutual
1301 Second Avenue
Seattle WA 98101
bear Mr Robinson
W4VVL
West lzs toh
r
To ro
Dept phone
TaTi
Washington
LLC
1
I
s
and
atpe
rvisory authority
and
1
1
$675a1 footnote 4
confirm
n WMB core capital
This decision
i
s based on the
Securities
t otherwise ceases
supervisory
concerns This
may
Subsidiary
or WMB
I
f
t
206 8292603
Sincercly
Darrel W Doehow
cc FDIC
CONFIDENTIAL
Return
August 17
2007
Michael Finn
Regional Director
West
Region
Office of Thrift
Supervision
101 Stewart
Street Suite 1010
John P Rabhnaan
1301 Second Avenue
WMC3Z01
Seattle WA 98101
206 500 4149 phone
206 377 3018 fax
for
confirmation of
preferred
stock
Dear Mr Finn
On behalf of
WMI
Association
I am writing
2006
by
Mutual Preferred
Funding
LLC
WMPF
for the
purpose
preferred
securities
collectively
the LLC Preferred
Securities
n
core capital
of WMB
the Notice
provided
notice of Its
nonobjection
letter dated
February 9 2006 All
capitalized
ascribed to them
i
n the Notice
As
you are aware i
Cayman
for inclusion
i
n
core capital
February 24
2006 that
i
capital
the reservation of
CFR
56711
of the OTS
capital
rule and
qualify
for inclusion
i
n the Associations
core capital
Subsequently
the Association by
the
toFloating
advised by
i
supervisory
authority
I
I from core capital
under 12 CFR
CFR
56711
of the OTS
capital
Preferred
Securities
I
t
qualify
for inclusion
i
Q
Equal Honing
Lander
CONFIDENTIAL
Return
Mr Michael Finn
August 17 2007
Page
2
Floating
Rate Perpetual
i
t consent
b
y
stamped
No
Objection
as of
February 24 2007
WMPF
i
the
substantially
Securities
as defined
i
n the
Notice including
the
requirement
for the
prior approval
of the OTS for
determined based
upon
pay
distributions on a
noncumulative
prices
will
years following
issuance and
then
may
be called at
any
time thereafter
i
prior approval
of the OTS
i
n
exchange
for
not more than
i
n cash
Simultaneously
the Association
entity Washington
Mutual
Preferred
Funding
IV
for not more than
approximately
$10 billion
i
subsidiary
purposes
of the notice
requirement
set forth
i
n 12 CFR

Delaware Issuer IV
Delaware
Issuer IV
Securities
which will
ownership
interests
i
n the LLC
pass
through any
distributions or
solely to US
persons
who
the
meaning
Securities Act
who are also
qualified
1
Securities
I
I
I
would be
2
Alternatively WMPF
may
I
I
I
directly
$10 billion
i
I
f this alternative
i
s selected
CONFIDENTIAL
Return
Mr Michael Finn
August 17 2007
Page 3
purchasers within
the
meaning
of the Investment
Company act of 1940
n
a transaction
exempt
from the
registration
requirements
I
n the
capital that
may
be
comprised
plus any
other
future issuances of
will not exceed 25
percent
of the
any
future
forma
August 9 2007
I
I
I
I
and LLC
approximately
1821
percent
of
September 30 2007
I
February 23 2006
stated that
i
i
WMI
exchanges
its
Cayman
i
f WMI
the LLC Preferred
WMI
I
Based on the
foregoing
the Association
the OTS to confirm
5675a1footnote 4
CFR
56711
i
n the
Associations core
capital
Request
for
hereby requests
confidential
i
i
obtained from a
person
and
privileged
i
s
exempt from
disclosure under
paragraph b4
552b4
and the
of the
Department of the
Treasury
31
CFR
i
s
use only
and
i
s
made available to
regulatory
authorities
Association
i
confidential
presented by
CONFIDENTIAL
Return

Washington Mutual (WMI) - Attachments/Exhibits To The Final Report of The Examiner (Part 7/10)

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Washington Mutual (WMI) - Attachments/Exhibits To The Final Report of The Examiner (Part 7/10)

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DO 85 12 08 00

Statement No. 107). Accordingly,

OAS) valuation approach

Includes checking deposits savings deposits and money market deposits

large accelerated filer,

accelerated filer and

Statement No. 107):

Available- for- Sale Securities.

MSR) The market for MSRs

OAS) valuation approach

Mortgage Banking Activities.

Derivative Financial Instruments for further information.

Customers may be offered lease extensions

Rates tied to sales volume

Provides dealer with working

Typical real estate loans are fixed

Financing for Dealer Rent- A-

Currently integrated with DC Truck

Fleet companies manage all customer

Dealer: Floorplan, Capital

Dealer: Floorplan, Capital

Small Business: Fleet

Carco) provides subvention programs exclusively

Full FP&A income model

DSC), with 680 minimum FICO

property age, quality and cash flow

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