Washington Mutual Shares Plummet - TheStreet

Editor's note: Our "On the Brink" series will provide daily insight into the financial firms facing capital shortfalls and the growing pressure from short sellers in the market.Updated from 1:21 p.m. EDT.

Washington Mutual

(WM) - Get Report

shares plunged as much as 30% on Wednesday, as concerns regarding the fate of the troubled bank mounted.

WaMu shares closed down 98 cents, or 29.7%, to $2.32 on trading volume that was higher than average and spreads on its credit default swaps -- insurance on bonds backed by the company -- have reached a record high, suggesting the market is increasingly concerned about a possible default, according to a

Reuters

article on Wednesday.

A

Bloomberg

article Wednesday suggested that accounting rule changes that require banks to value assets "at market prices instead of deriving values from measures including the purchase price" is hindering bank M&A. The article says that at least three suitors have walked away this year from any agreements with WaMu or

National City

(NCC)

, another troubled bank, because of the rule changes.

WaMu, whose stock is down 90% from a year earlier, made headlines on Monday for ousting its longtime CEO Kerry Killinger. It hired

Alan Fishman

, the former COO of

Sovereign Bancorp

(SOV)

to take the reins. WaMu also disclosed at the time that it had entered into a memorandum of understanding with the Office of Thrift Supervision in regards to its risk management and compliance processes.

Market observers had speculated that WaMu hired Fishman because the company

could not find a buyer

. Fishman, then CEO, sold

Independence Community Bank

to Sovereign in 2006 and spent 20 years at

Chemical Bank

, later bought by

JPMorgan Chase

(JPM) - Get Report

.

"Everyone is worried they're going out of business," says Matt Shields, a bank stock trader with FIG Partners in Atlanta, who says he is surprised at the way the stock is trading.

"I thought the change in management would have helped their cause, but not at all," Shields says. "They're going to have to come out again in the next few days to try and defend themselves again."

WaMu did not immediately respond to a request for comment.