Shares of Washington Mutual surged today on news that the company was due to receive a shot in the arm from either Warren Buffett or Goldman Sachs, according to a Bloomberg report.
The nation’s top savings and loan saw its shares climb $1.64, or 16.33%, to $11.68 in afternoon trading on Wall Street.
The news lifted shares off near-record lows, but still leaves them far below their 52-week high of $44.66.
In recent months, Washington Mutual has been battered by the ongoing mortgage crisis as a big chunk of its home loan lending activity was in troubled areas such as California, where prices continue to plummet.
Last December, the Seattle-based thrift announced 3,000 job cuts, slashed its dividend by 73 percent, and said it would raise capital through a $2.5 billion preferred stock sale.
The company discontinued all lending through it subprime mortgage channel and closed roughly 190 of 336 home loan centers and sales offices, along with nine loan processing and call centers.
And in late January, posted its first quarterly loss since 1997, recording a $1.87 billion fourth-quarter hit tied to a rise in bad mortgage loans and larger loan loss provisions.
At that time, the mortgage lender’s percentage of non-performing assets rose to 2.17 percent from just 0.80 percent a year ago.
That in turn led to speculation that the company could be a takeover target, with some rumors stirring that Chase planned to buy Washington Mutual at a discount.
Last week, Merrill Lynch said it expected WaMu to realize $11.2 billion in losses through next year as home loan defaults continue to rise.