WaMu COO: We're Not Done Hemorrhaging

Washington Mutual(WM Quote) did not adequately prepare for the sharp, swift downturn in the housing and credit markets and faces "a very challenging year for earnings," Chief Operating Officer Steve Rotella said Wednesday.

The Seattle-based bank, which has posted billions in losses from its investments in the housing market, expects an additional $8 billion to $15 billion worth of related charge-offs over the next three to four years. Rotella also said that WaMu expects its provisions for loan losses to run "substantially higher" than the level of actual charge-offs in 2008. Credit costs and delinquencies have risen "dramatically," he added, noting that credit losses will continue until the housing market begins to stabilize.

Home prices have dropped nearly across the country, particularly in markets like California where WaMu's mortgage portfolio is heavily weighted. The bank expects an excess housing supply to "persist for some time," putting further pressure on prices, Rotella said. ...