8-K

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): September 10, 2007

WASHINGTON MUTUAL, INC.
(Exact name of Registrant as specified in its charter)

Washington	1-14667	91-1653725
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

1301 SECOND AVENUE
SEATTLE, WASHINGTON 98101
(Address of principal executive offices and Zip Code)

Registrant's telephone number, including area code: (206) 461-2000

(Former name or former address, if changed since last report)

 Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

SECTION 7 – REGULATION FD

Item 7.01  Regulation FD Disclosure

Kerry Killinger, the Chairman and Chief Executive Officer of Washington Mutual, Inc. (the “Company”), gave a presentation to investors at the Lehman Brothers Financial Services Conference in New York City on September 10, 2007.  Copies of Mr. Killinger’s script and the electronic slides he presented are furnished by the Company as Exhibits 99.1 and 99.2 to this Current Report on Form 8-K.

When presenting slide 15, Mr. Killinger stated that: 

“Through the end of August, we have reduced our loans held for sale balance to $9 billion from $19 billion at the end of June, primarily through the transfer of nonperforming loans to our held for investment portfolio.” 

The reduction in the Company’s loans held for sale balance to $9 billion at the end of August from $19 billion at the end of June was actually primarily through the transfer of nonconforming loans to the Company's held for investment portfolio.  Of the transferred nonconforming loans, less than 1% were nonperforming loans.

The information in the preceding paragraphs, as well as Exhibits 99.1 and 99.2, is considered to be “furnished” under the Securities Exchange Act of 1934.

SECTION 9 - FINANCIAL STATEMENTS AND EXHIBITS

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

99.1    Script for Kerry Killinger’s presentation at the Lehman Brothers Financial Services Conference on September 10, 2007 (furnished by the Company).

        99.2    Slides presented by Kerry Killinger at the Lehman Brothers Financial Services Conference on September 10, 2007 (furnished by the Company).

SIGNATURE

        Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date:  September 12, 2007		WASHINGTON MUTUAL, INC.
	By:	/s/ Fay L. Chapman Fay L. Chapman Senior Executive Vice President

EXHIBIT INDEX

Exhibit No.	Description
99.1	Script for Kerry Killinger’s presentation at the Lehman Brothers Financial Services Conference on September 10, 2007 (furnished by the Company).
99.2	Slides presented by Kerry Killinger at the Lehman Brothers Financial Services Conference on September 10, 2007 (furnished by the Company).

EX-99.1

Exhibit 99.1

Lehman Brothers

Financial Services Conference 2007

Kerry Killinger

Monday, September 10, 2007

8:30 a.m. ET

Last updated: 9/10/07

[SLIDE 1.Title]

·        Thank you Bruce, I’m pleased to be here this morning to talk about WaMu.

·        Before I get started, I need to point out the Cautionary Statement regarding the forward-looking comments in my talk today. That slide is located at the end of this presentation.

[SLIDE 2.Key Messages]

·        This morning I’ll update you on how we have positioned WaMu to be successful in what is rapidly becoming a challenging business environment.

·        First and foremost, I want you to understand that WaMu is primarily a consumer and small business bank. We are of course involved in mortgage banking, but that is just one of our business lines. Our consumer and small business banking model is dramatically different, and much more resilient, than monoline mortgage companies, many of which have gone out of business over the past two months, because they were not as diversified and lacked the adequate capital and sources of liquidity we have. 

·        Second, over the past 18 months we have taken key strategic actions to further diversify our business, reduce our market risk and reduce our expenses, all of which has put us in a better position to weather this challenging market environment.

·        Third, our top-tier Retail Bank and Card Services businesses deliver the bulk of our revenue, and these businesses continue to thrive and have not been impacted by the mortgage centric problems.

·        Fourth, we anticipated a housing market correction and have been proactive in preparing for it. However, it now appears that the housing and capital market correction will be significantly worse and longer lasting than we expected. We believe this will lead to much higher NPAs, loan losses and loan loss provisioning in the near term. I will go into more detail about this later.

·        And lastly, I will discuss our strong liquidity and capital position which will enable us to continue to grow and be successful for the long run.

[SLIDE 3Vision]

·        Our vision for the company has not changed. We are working very hard to create the leading national franchise in consumer and small business banking.

·        And we’re in a strong position to realize our vision. Our culture is unique and supports our vision. We are well positioned in some of the highest growth markets in the country. We are very good at serving the diverse mass-market consumers and small businesses that make up our target customer base.

·        With our success in offering consumers innovative products and services, our customer base has grown from just 250,000 in the mid-80s to nearly 20 million households today.  And in the second quarter alone, we added a record 406,000 net new checking accounts and 928,000 new credit card accounts.

·        And we continue to build our company for the long-term, adjusting to changing market conditions, looking for profitable growth opportunities and remaining focused on the needs of our customers.

[SLIDE 4.Strategic Actions since end of 2005]

·        We have undertaken numerous strategic actions that have contributed significantly to our strong position today.

·        First, we acquired Providian Financial, in October 2005, to form our Card Services Group which has quickly leveraged our retail banking customer base and diversified our business.

·        Then in October of 2006, we acquired Commercial Capital Bancorp, the #3 multi-family lender in the Los Angeles market, enhancing our commercial business in California and further diversifying our assets and earnings.

·        From the end of 2005 through the second quarter of this year, we opportunistically reduced our balance sheet by $31 billion and repurchased 142 million shares, or 14 percent of our shares outstanding.

·        At the same time, we significantly improved our availability of funding from the Federal Home Loan Bank by replacing advances with deposits and other types of borrowings. 

·        Since the end of 2005, we decreased our advances by $47 billion, or nearly 70 percent. This opens up significant borrowing capacity for us as we have over $50 billion of assets that can be utilized to secure advances or other collateralized borrowings.

·        We also greatly improved our market-risk profile by selling $2.5 billion of our mortgage servicing rights (MSR) portfolio. We did this to better balance our servicing portfolio with our origination franchise. And it reduced mortgage servicing rights as a percentage of our capital, augmenting our efforts to diversify the company.

·        And at the end of 2006, we sold WM Advisors, our non-core retail asset management business. The proceeds from that sale helped offset the cost of various actions taken to improve our productivity.

·        These productivity initiatives included the following: 

·        We continued to consolidate our back-office footprint, relocate positions to lower-cost markets and optimize our retail store network.

·        We eliminated positions to match market capacity, particularly in Home Loans. Overall in 2006, we reduced staffing by more than 10,000, or 18 percent.

·        The result is reflected in the reduction of our annual expense run rate by approximately $560 million, or 6 percent, to $8.5 billion based on the second quarter of this year, compared with a $9.1 billion annual run rate for the fourth quarter of 2005.

·        This puts us in a much better position to deal with the challenges and opportunities of the current environment.

[SLIDE 5Leading Player in all Business Lines]

·        So let’s look at how we are positioned as a top player in each of our business lines.

·        From the second quarter of last year to the second quarter of this year, we have maintained our competitive position in some of the most important and growing areas of our business.

·        We’re the 6^th largest banking company in terms of assets, total deposits and retail stores.

·        We’re 4^th in the number of debit cards outstanding.

·        We were the 6^th largest bank credit card issuer and the #1 bank multi‑family portfolio lender,

·        As well as a leading prime home equity lender, ranked #1 or #2 in our footprint states and 4^th nationally.

·        On the other hand, we have intentionally reduced our market share in those areas of our business where we have felt caution was warranted.

·        At the end of the second quarter of this year, we were the 6^th largest home lender and the 5^th largest home loan servicer, down from 3^rd for both a year ago.

·        Although we originate subprime loans, we are not currently a significant player in that market. As I will discuss in a moment, we became concerned with housing market conditions and we dramatically reduced our position from being the 6^th largest subprime originator two years ago to our current position of originating less than $200 million per month.

[SLIDE 6Diversified Business Model]

·        I’m going to spend most of my time this morning talking about how WaMu is performing in this challenging environment, since I’m sure that’s what you’re most interested in.

·        The key to our ability to remain successful when one business sector experiences hard times is our diversified business model.

·        As you know, we have four lines of business and three of the four continue to perform very well.

[SLIDE 7.Diversification of Revenue]

·        During the first half of 2007, our Retail Bank has generated approximately 53% of our revenue, which is about the same as in 2005. Income from fees and the like are a larger percentage of our revenues today, offsetting a decline in revenue from portfolio management, which was the result of our intentional shrinking of the balance sheet.

·        About 28% of our revenue in the first half of this year has come from our Card Services business compared with zero prior to the acquisition of Providian in late 2005.

·        And our Commercial Group contributed a solid 6%, down slightly as a percentage from 2005.

·        Finally, our Home Loans Group contributed only 13% to revenue in the first half of this year compared with 33% for all of 2005.

[SLIDE 8.Strong and Diversified Funding Sources]

·        In addition to diversifying our revenue sources, we have also been very proactive in diversifying our borrowings and increasing sources of lower cost equity capital. Through the end of the second quarter of this year:

·        We have issued $8 billion of covered bonds by tapping into the global liquidity market;

·        Reduced FHLB advances by $47 billion from the end of 2005 to the end of the second quarter of this year;

·        Issued $3.5 billion of hybrid equity;

·        And we have considerable available funding sources remaining:

o       Our strong retail bank franchise provides reliable retail deposit funding, and over $50 billion existing assets are available for pledging to the FHLB.

o       Substantially all of our operations are funded at the Bank level; therefore, all our businesses have full access to retail deposits and FHLB borrowings.

o       Our current conforming originations can be sold to Fannie Mae and Freddie and substantially all of our nonconforming prime mortgage production is eligible as collateral for FHLB advances.

o       And we do not rely on commercial paper as a funding source and have non outstanding.

·        What this all means is that our strong liquidity position and capital are enabling us to not only weather more challenging conditions, but to prudently take advantage of the growth opportunities presented.

[SLIDE 9.GDP and Housing Price Indices]

·        Now, let’s take a look at home price appreciation trends over the last 20 years or so.

·        This slide demonstrates the dramatic increase in home price appreciation as measured by two well-known benchmarks for home price appreciation – Case-Shiller and the OFHEO House Price Index – overlaying the movement in Gross Domestic Product or GDP.

·        From 1987 through the end of 2004, home price appreciation per the OFHEO Index has averaged 4.91 percent, or nearly 2 percent above GDP. So that’s the long term average rate of housing appreciation.

·        And while several years of above average housing appreciation is not unusual, it’s typically followed by a period of much lower appreciation or flat or declining housing prices.

·        Looking at this data, it appeared to us that some type of housing correction was inevitable.

·        In fact, over two years ago during our second quarter 2005 earnings call, I first commented about the risks of a housing market correction.

·        We pointed out the potential overextension of the housing market in some regions of the country and that there were clear signs of speculation in some markets. Investors were becoming a growing percentage of home purchasers.

·        We also noted that housing prices in most markets were rising faster than incomes, reducing housing affordability.

·        In short, at a time when money was still flooding in from Wall Street, we rang the warning bell and became very proactive in managing our housing exposure risk, while remaining active as a market participant.

[SLIDE 10.We Have Been Preparing for a Housing Downturn]

·        As I said, we saw the housing bubble developing over two years ago, and began preparing for its eventual impact on our Home Loans business.

·        First, we downsized our home loans business. Since the fourth quarter of 2005, we have reduced staffing by 28%. We also exited the low margin correspondent channel. The result was moving from the #3 mortgage originator in 2006 to #6 in 2007.

·         I have commented several times over the past two years that many mortgage players appeared to be blindly adding staffing and capacity, even while mortgage demand was falling. This overcapacity had to be taken out of the system before satisfactory returns could return to the business. 

·        Second, during 2005 we took advantage of the strong demand for mortgage-backed securities and sold virtually all of our 2004 and 2005 subprime residuals.

·        Third, we made a series of major underwriting changes in our Home Loans lending guidelines.

·        Fourth, we sold the majority of our Option ARM production during 2005, 2006 and 2007.

·        Finally, we sold mortgage related and other assets as we reduced our balance sheet from $351 billion at June 30, 2006 to $312 billion at the end of this year’s second quarter.

[SLIDE 11:WaMu Exposure to Markets]

·        We strive to be as transparent as possible regarding our risk profile and the following are areas where we have no exposure:

o       We have no leveraged buyout obligations;

o       No obligations to third party asset backed commercial paper conduits;

o       No asset backed commercial paper, structured investment vehicles or similar arbitrage vehicles;

o       No ABS collateralized debt obligations;

o       Minimal exposure today to warehouse mortgage lending with only $2.7 billion outstanding.

o       And as of the end of June, we had only about $107 million in total exposure to subprime mortgage and Alt-A residuals. And I should add that we have no home equity residuals.

[SLIDE 12.Credit Quality: Estimated Loan-to-Value]

·        Now, let’s take a look at the quality of the loans we hold in our investment portfolio.

·        The loans with the highest risk of loss are those to borrowers with the lowest credit ratings combined with high loan-to-value ratios.

·        As of June 2007, based upon estimated current loan-to-value ratios, only 3 percent of our $106 billion home loans portfolio had LTVs above 80 percent and FICO scores less than 660.

·        The average FICO score of the home loans portfolio was 693 and the average estimated current LTV was 58 percent.

·        We feel that our proactive steps have been important in positioning us for the dramatic slowing of the housing market.

·        Our Home Equity portfolio was primarily generated through our Retail Banking and Retail Home Loans channels.

·        This portfolio has an average current FICO of 722 and an estimated combined LTV of 63 percent.

·        By their nature home equity loans are highly sensitive to changes in home values. At the end of June, about 25 percent of this portfolio is first lien and only 8 percent had a current estimated LTV above 80 percent and a FICO score of less than 660.

·        Before moving on, let me comment on our two other significant portfolios which are not represented on this chart:

o       First, our multi-family portfolio. We continue to prudently grow this portfolio and it continues to perform very well with no charge-offs in the first half of 2007.

o       The other is our credit card portfolio. We are very pleased with its ongoing stable credit performance, which reflects the overall strength of the economy and particularly the low unemployment rates in most parts of the country. But we are also being very cautious in our underwriting and portfolio management activities as the risks of a slowing economy appear to be increasing.

·        So overall, we believe our portfolio has been strengthened by the various actions we have taken, and we believe we are well positioned to weather the current storm. 

[SLIDE 13.GDP and Housing Price Indices]

·        This is the same GDP and housing price index slide I just showed you, but now we have rolled it forward through the end of June.

·        You can see that home price appreciation remained very high, in fact above 10%, through the middle of 2006 but began dropping quickly thereafter.

·        These indexes come out on about a two month lag, so we only have data through mid-year 2007. However, there is significant anecdotal evidence that the decline has become even more pronounced in the third quarter of 2007.

·        The combination of rising delinquencies, higher foreclosures, more housing inventory, increasing interest rates on mortgages and greatly reduced availability of mortgages due to limited liquidity is creating a near perfect storm for housing.

·        While the housing weakness will likely be muted if today’s stable employment continues, we would not be surprised to see declines in housing prices in many regions of the country and perhaps for the average of the entire country over the next few quarters. You can see from the chart that based on history, this situation would be highly unusual and will probably put stress not only on housing, but on consumer spending, the economy and employment.

·        In any event, most housing markets are currently weakening.

[SLIDE 14.Rising LIBOR and Nonconforming Loan Rates]

·        Uncertainty in the housing markets, challenges in the LBO financing markets and spreading investor uncertainty are also causing interest rates to rise.

·        Although the Fed Funds rate has remained stable at 5.25 percent, we have seen 3-month LIBOR edge up about 30 basis points to 5.7 percent in the past month, as liquidity and confidence in the financial markets continue to be stressed.

·        What is highly unusual is the current disconnect between Treasury rates, which have been declining, and LIBOR and mortgage rates, which are rising. Think about 3-month rates where Treasuries are at about 4 percent, Fed Funds at 5.25% and LIBOR at 5.7%. These rates are normally in a tight range.

·        There is significant speculation regarding the Fed’s next move. I trust the Fed will fully appreciate how quickly economic conditions are changing and act accordingly.

·        However, even if the Fed does reduce the Fed Funds rate, we will be most interested in what happens to LIBOR as the majority of our short-term funding is tied to 3‑month LIBOR and not Fed Funds.

·        Not only have mortgage interest rates increased in relation to Treasuries, but a significant divergence has developed between conforming and nonconforming mortgage interest rates. This reflects general lack of liquidity for nonconforming products, as there are relatively few players with the capital and liquidity to hold these assets.

·        This has resulted in an opportunity for those, like WaMu, that have the ability to hold loans on their balance sheet.

[SLIDE 15.Strong Liquidity Position Enables B/S Growth]

·        As a result of our strong liquidity and capital position, we are able to take advantage of the displacement in the mortgage markets at this time.

·        Through the end of August, we have reduced our loans held for sale balance to $9 billion from $19 billion at the end of June, primarily through the transfer of nonconforming loans to our held for investment portfolio.

·        Of the $9 billion still in the held for sale portfolio, $6 billion are home loans of which 71 percent are conforming and the remaining $3 billion are credit card and commercial loans.  

·        We are comfortable with the credit quality of these loans, but the disruption in the mortgage market will result in a mark-to-market loss for the third quarter.

·        Since the secondary market disruption for all but conforming agency guaranteed securities, we have seen a dramatic improvement in the pricing and quality of new loan originations. As a result, we are carefully adding loans to our portfolio.

·        We are picking and choosing carefully and will take our time to grow our portfolio.

·        But we expect our loan portfolio to increase by approximately $20 billion during the third quarter, primarily due to the following estimated balance changes:

o       $11 billion in prime hybrid and prime fixed rate loans;

o       $5 billion in prime short-term ARMs;

o       $3 billion in prime home equity;

o       We also expect to increase our cash and cash equivalents to support our strong liquidity position, but we do not expect to add to our sub prime portfolio at this time.

 [SLIDE 16.Higher Quality Loans at Higher Returns]

·        This slide reflects the opportunity we see for higher returns on current mortgage originations.

·        Looking back to the beginning of July, we saw an effective rate on Jumbo Option ARMs of 8.00 percent and that rate increased to 8.60.

·        Similarly, 5/1 Jumbo Hybrids increased 90 basis points to 7.40 percent.

·        The returns on both of these products now easilyexceed our targeted hurdle of a high-teens ROE for assets we target for our balance sheet.

·        I should add that these projected returns assume current LIBOR funding costs and our updated credit cost assumptions for the more challenging housing market. A reduction in current LIBOR borrowing costs could make these returns even more attractive.

·        I also want to assure you that the credit quality of these loans good. Loan originations in these two products for the month of August had an average FICO of approximately 725 and loan-to-value ratio of 70%.

·        In summary, the returns and quality of the portfolio product we are currently adding to the balance sheet appears to be excellent.  

[SLIDE 17.Implications of the Current Environment]

·        So what does this all mean to our shorter term outlook?

·        As a policy, we don’t provide interim updates to our earnings drivers between our quarterly earnings calls. However, the near-perfect storm in the housing and capital markets I spoke about will impact our second half performance and I want to give you my insights into what that may look like. Of course, we will be updating our earnings drivers during our third quarter earnings call next month.

·        Given a weakening housing market, we do expect to see:

o       A continuation of the increase in nonperforming loans which could lead to a higher level of charge-offs in the coming quarters.

o       As a result of this, and in support of our loan portfolio growth, we expect that our loan loss provisioning for the year could be approximately $500 million greater than the full-year guidance we gave in July of $1.5 to $1.7 billion.

·        Next, the lack of secondary market liquidity and rising interest rates for nonconforming loans will have two major impacts: one unfavorable and the other favorable.

o       First, as I mentioned earlier, we moved nonconforming loans from our held for sale portfolio to our held for investment portfolio. We did this during the months of July and August and the mark-to-market loss on these loans is expected to be about $200 million.

o       Going forward, gain on sale income will be lower as the volume of loans sold will be reduced in favor of retaining loans in portfolio.

o       On the positive side, our balance sheet will grow as we add assets with attractive risk adjusted returns. This should lead to improved net interest income in future quarters.

·        Another major factor is changinginterest rates.

o       Higher interest rates on many mortgage loans have led to much slower prepayments speeds on existing mortgage loans. This will result in increased value of our mortgage servicing rights which will be partially, but not entirely, offset by hedging costs.

o       As I just noted, a recent rise in LIBOR, if prolonged, will have a negative impact on our borrowing costs and thus our net interest margin.

·        Finally, if the Fed Funds rate is reduced, as is currently projected by the forward yield curve this should eventually lead to lower LIBOR rates, which would help reduce our borrowing costs and increase our net interest margin.

·        So there are definitely some near term credit cost and gain on sale head winds. But the benefits of asset growth and NIM expansion could be considerable if short-term interest rates were to decline. 

[SLIDE 18.Key Takeaways]

·                    You can see from this slide the key Takeaways I mentioned at the beginning of this presentation.

·                    Let me close my presentation by offering the perspective of an 18-year CEO and a 35-year financial executive who has been through a lot of cycles.

·                    As I mentioned earlier, current housing conditions are very challenging. I described this as a near-perfect storm earlier.  Some of us saw a storm coming, but few of us expected it to be as severe as it appears to be playing out. My attitude on difficult cycles is that you may not like it, but you must deal with it. And the faster you deal with it, the better.

·                    When difficult conditions hit, as owners of the company, we need to ask three key questions: Is management on top of the situation? Does the company have the financial strength to weather the storm? Does the company have growth prospects once the storm has passed?

·                    On the first point, I believe this management team is strong, deep and is diligently addressing the challenges posed by this environment. I am also encouraged to see us continue to attract top notch talent like John McMurray who is joining us as chief credit officer. In challenging times, you can’t have too many smart people.

·                    Regarding our financial strength, as mentioned earlier, we have appropriate capital and sources of liquidity to weather the storm. We were pleased to see both S&P and Moody’s affirm our ratings.

·                    And regarding future growth prospects,

·                    We have a high growth retail banking powerhouse driving strong customer growth, increasing cross sales and double digit fee income growth. We have great opportunities to further increase our sales of credit cards, mortgage loans, securities and insurance products to our banking customers.

·                    We have vigorously attacked expenses, giving us excellent operating leverage.

·                    For relatively few portfolio lenders like WaMu, there is currently an unusual opportunity to originate loans at very attractive returns. Contrary to the past few years when money flooding in from Wall Street helped drive down underwriting standards and decreased spreads. Today, loan quality has improved, spreads have widened and there are few competitors. This may be one of the best times I have seen to take on new loans in the portfolio. And capacity is now coming out of the mortgage banking industry as weaker competitors close down or finally adjust their capacity to current realities.

·                    And finally, we have excellent margin expansion potential if the interest rate environment were to return to more normal conditions. In past cycles, the Fed has had to respond to declining economic conditions by lowering the Fed Funds rate. And as I indicated earlier, LIBOR typically follows Fed Funds rate. A return to a more normal yield curve and lower LIBOR rates would be quite beneficial to our net interest margin.

So while we are very attentive to the short term challenges, it is just as important to keep our focus on the long term value creation potential for the company. And we believe that value creation potential is excellent.

[SLIDE 19Cautionary Statements]

·        Here’s that Cautionary Statement regarding the forward-looking comments I mentioned at the start of my presentation.

[SLIDE 20Questions]

·        With that, I’d be happy to take a few questions.

EX-99.2

EXHIBIT 99.2

Click here for a printer-friendly version of Exhibit 99.2

Slide 1

Lehman Brothers

Financial Services Conference

Kerry Killinger

Chairman and Chief Executive Officer

September 10, 2007

Slide 2

 Key Messaging

•   WaMu is a leading consumer and small business bank

•   Key strategic actions have diversified the business, reduced market risk and lowered expenses

•   Top-tier Retail Bank and Card Services businesses deliver the bulk of earnings

•   Proactive steps were taken to mitigate an anticipated decline in housing prices; however, current conditions are worsening and will increase near term credit costs

•   We are well positioned with strong liquidity and capital to support long-term growth

Slide 3   Vision

To be the national leader in consumer and small business banking

Slide 4

 Strategic Actions since end of 2005

•      Diversified the business through Providian and CCBI acquisitions

•      Opportunistically reduced our balance sheet by $31 billion through the end of Q2 ’07 and repurchased 142 million shares or 14 percent of shares outstanding as of 12/31/05

•      Reduced FHLB advances by $47 billion, or approximately    70 percent, through Q2 ‘07

•      Sold $2.5 billion of mortgage servicing rights

•      Sold our retail mutual fund group, WM Advisors

•      Implemented productivity initiatives

-  Reduced employee count by over 10,000

-  Reduced annualized expense run rate by approximately $560 million                 (Q4 ’05 vs. Q2 ’07)

 

Slide 5 Leading Player in All Business Lines

National Rankings                                                                Q2 2006           Q2 2007
Retail Banking
Total deposits and retail banking stores                           6th                    6th
Debit cards outstanding                                                       3rd                    4th
Bank credit card issuer1                                                    6th                     6th

Commercial Group
Multi-family portfolio holdings                                          1st                     1st


Home Loans
Home lending originations2                                               3rd                    6th
Home lending servicing2                                                    3rd                    5th
Home equity loans                                                                5th                    4th

1 Nilson Report, 1/07, 2006 ranking
2 Inside Mortgage Finance

Slide 6 Diversified Business Model

Retail Banking
Card Services
Commercial Group
Home Loans

Slide 7

Diversification of Revenue

 2005

Home Loans Commercial Group Card Services Retail Banking Portfolio Management Retail Banking Noninterest Income Retail Banking net interest income without portfolio management
$4,411 $926 $997 $1,033 $2,539 $3,898
 

YTD 6/30/07

Home Loans Commercial Group Card Services Retail Banking Portfolio Management Retail Banking noninterest income Retail Banking net interest income without portfolio management
$1,013 $471 $2,181 $374 $1,567 $2,188
 

Slide 8 Strong and Diversified Funding Sources

$316.3 billion as of 12/31/05

Retail Deposits 44% Retail Broker Deposits 2% Institutional Brokered Deposits 7% Commercial & Escrow Deposits 7% FHLB Advances 22% Liquidity Funds 7% Other Borrowings 8% Other Liabilities 3%
 

$288.0 billion as of 6/30/07

Retail Deposits 51% Retail Broker Deposits 6% Institutional Brokered Deposits 4% Commercial & Escrow Deposits 10% FHLB Advances 7% Liquid Funds(1)  4%Covered Bonds 3%Other Borrowings 11% Other Liabilities 4%
 

(1) Includes Federal Funds purchased, commercial paper and securities sold under agreements to repurchase

Slide 9

 GDP and Housing Price Indices¹

                                    GDP % change Case-Shiller Index        OFHEO Index

1987q1	87Q1	1987	2.63%		8.39%
1987q2	87Q2		4.40%		8.05%
1987q3	87Q3		3.63%		7.75%
1987q4	87Q4		6.99%		6.78%
1988q1	88Q1	1988	1.96%	11.71%	6.34%
1988q2	88Q2		5.09%	10.70%	6.58%
1988q3	88Q3		2.14%	10.87%	6.06%
1988q4	88Q4		5.28%	10.68%	6.18%
1989q1	89Q1	1989	4.06%	10.89%	5.70%
1989q2	89Q2		2.62%	10.94%	4.89%
1989q3	89Q3		2.85%	8.41%	6.15%
1989q4	89Q4		1.02%	6.67%	6.03%
1990q1	90Q1	1990	4.62%	4.67%	5.05%
1990q2	90Q2		1.02%	1.93%	3.63%
1990q3	90Q3		0.03%	-0.26%	1.65%
1990q4	90Q4		-3.02%	-2.80%	0.24%
1991q1	91Q1	1991	-2.04%	-5.34%	0.62%
1991q2	91Q2		2.60%	-5.71%	1.10%
1991q3	91Q3		1.93%	-3.64%	0.73%
1991q4	91Q4		1.88%	-2.22%	2.59%
1992q1	92Q1	1992	4.14%	-0.32%	2.48%
1992q2	92Q2		3.86%	0.31%	1.81%
1992q3	92Q3		3.92%	-1.15%	2.86%
1992q4	92Q4		4.41%	-1.60%	1.89%
1993q1	93Q1	1993	0.48%	-1.64%	1.06%
1993q2	93Q2		2.03%	-1.95%	2.13%
1993q3	93Q3		2.05%	-1.72%	1.71%
1993q4	93Q4		5.38%	-1.41%	2.08%
1994q1	94Q1	1994	4.07%	-0.73%	2.71%
1994q2	94Q2		5.22%	0.52%	2.20%
1994q3	94Q3		2.24%	1.28%	1.86%
1994q4	94Q4		4.69%	1.65%	0.84%
1995q1	95Q1	1995	1.11%	1.22%	0.74%
1995q2	95Q2		0.72%	0.15%	2.16%
1995q3	95Q3		3.26%	-0.19%	3.48%
1995q4	95Q4		2.93%	-0.36%	4.52%
1996q1	96Q1	1996	2.82%	-0.15%	5.42%
1996q2	96Q2		6.56%	0.89%	3.72%
1996q3	96Q3		3.35%	1.15%	2.52%
1996q4	96Q4		4.68%	1.65%	2.61%
1997q1	97Q1	1997	3.09%	2.12%	2.29%
1997q2	97Q2		6.08%	2.79%	3.00%
1997q3	97Q3		4.98%	3.84%	4.12%
1997q4	97Q4		2.95%	4.86%	4.59%
1998q1	98Q1	1998	4.43%	6.55%	5.22%
1998q2	98Q2		2.65%	7.99%	5.20%
1998q3	98Q3		4.61%	9.39%	5.09%
1998q4	98Q4		6.08%	9.45%	4.98%
1999q1	99Q1	1999	3.40%	8.87%	4.44%
1999q2	99Q2		3.31%	9.26%	5.02%
1999q3	99Q3		4.67%	9.32%	5.18%
1999q4	99Q4		7.11%	10.23%	5.10%
2000q1	00Q1	2000	1.01%	11.48%	6.20%
2000q2	00Q2		6.28%	12.97%	6.57%
2000q3	00Q3		-0.46%	13.17%	7.00%
2000q4	00Q4		2.08%	13.80%	7.54%
2001q1	01Q1	2001	-0.49%	14.41%	8.09%
2001q2	01Q2		1.23%	12.30%	8.18%
2001q3	01Q3		-1.41%	10.88%	7.88%
2001q4	01Q4		1.58%	9.76%	7.53%
2002q1	02Q1	2002	2.72%	7.95%	6.51%
2002q2	02Q2		2.18%	9.56%	6.59%
2002q3	02Q3		2.36%	12.25%	7.13%
2002q4	02Q4		0.20%	14.20%	7.40%
2003q1	03Q1	2003	1.20%	15.23%	7.10%
2003q2	03Q2		3.42%	13.63%	6.47%
2003q3	03Q3		7.29%	12.25%	5.99%
2003q4	03Q4		2.63%	12.98%	7.77%
2004q1	04Q1	2004	2.93%	14.92%	8.22%
2004q2	04Q2		3.44%	18.49%	9.79%
2004q3	04Q3		3.55%	20.29%	12.63%
2004q4	04Q4		2.52%	19.15%	11.76%
		2005

Case Shiller (10 metro composite) Quarterly(Seasonally adjusted annual rates)

GDP in billions of chained 2000 dollars

Jan-87	62.82
Jan-87	62.82				Quarterly GDP in billions	(Seasonally adjusted annual rates) of chained  2000 dollars
Feb-87	63.39				1987q1	6365
Mar-87	63.87	63.4	63.36		1987q2	6435
Apr-87	64.57		65.57		1987q3	6493.4
May-87	65.56		68.22		1987q4	6606.8
Jun-87	66.59	65.6	69.80		1988q1	6639.1
Jul-87	67.54		70.78	11.71%	1988q2	6723.5
Aug-87	68.25		72.59	10.70%	1988q3	6759.4
Sep-87	68.87	68.2	75.64	10.87%	1988q4	6848.6
Oct-87	69.42		77.25	10.68%	1989q1	6918.1
Nov-87	69.76		78.49	10.89%	1989q2	6963.5
Dec-87	70.22	69.8	80.53	10.94%	1989q3	7013.1
Jan-88	70.45		82.00	8.41%	1989q4	7030.9
Feb-88	70.77		82.41	6.67%	1990q1	7112.1
Mar-88	71.12	70.8	82.15	4.67%	1990q2	7130.3
Apr-88	71.65		82.08	1.93%	1990q3	7130.8
May-88	72.48		81.78	-0.26%	1990q4	7076.9
Jun-88	73.63	72.6	80.10	-2.80%	1991q1	7040.8
Jul-88	74.81		77.77	-5.34%	1991q2	7086.5
Aug-88	75.70		77.40	-5.71%	1991q3	7120.7
Sep-88	76.40	75.6	78.81	-3.64%	1991q4	7154.1
Oct-88	76.90		78.33	-2.22%	1992q1	7228.2
Nov-88	77.28		77.52	-0.32%	1992q2	7297.9
Dec-88	77.58	77.3	77.64	0.31%	1992q3	7369.5
Jan-89	77.99		77.90	-1.15%	1992q4	7450.7
Feb-89	78.36		77.07	-1.60%	1993q1	7459.7
Mar-89	79.12	78.5	76.25	-1.64%	1993q2	7497.5
Apr-89	79.83		76.13	-1.95%	1993q3	7536
May-89	80.52		76.56	-1.72%	1993q4	7637.4
Jun-89	81.24	80.5	75.98	-1.41%	1994q1	7715.1
Jul-89	81.66		75.69	-0.73%	1994q2	7815.7
Aug-89	82.08		76.52	0.52%	1994q3	7859.5
Sep-89	82.25	82.0	77.54	1.28%	1994q4	7951.6
Oct-89	82.44		77.24	1.65%	1995q1	7973.7
Nov-89	82.43		76.61	1.22%	1995q2	7988
Dec-89	82.35	82.4	76.63	0.15%	1995q3	8053.1
Jan-90	82.29		77.39	-0.19%	1995q4	8112
Feb-90	82.15		76.96	-0.36%	1996q1	8169.2
Mar-90	82.02	82.2	76.50	-0.15%	1996q2	8303.1
Apr-90	82.05		77.32	0.89%	1996q3	8372.7
May-90	82.01		78.28	1.15%	1996q4	8470.6
Jun-90	82.19	82.1	78.24	1.65%	1997q1	8536.1
Jul-90	82.10		78.12	2.12%	1997q2	8665.8
Aug-90	81.86		79.48	2.79%	1997q3	8773.7
Sep-90	81.39	81.8	81.28	3.84%	1997q4	8838.4
Oct-90	80.84		82.04	4.86%	1998q1	8936.2
Nov-90	80.09		83.23	6.55%	1998q2	8995.3
Dec-90	79.38	80.1	85.83	7.99%	1998q3	9098.9
Jan-91	78.53		88.91	9.39%	1998q4	9237.1
Feb-91	77.77		89.79	9.45%	1999q1	9315.5
Mar-91	77.00	77.8	90.62	8.87%	1999q2	9392.6
Apr-91	76.86		93.78	9.26%	1999q3	9502.2
May-91	77.31		97.19	9.32%	1999q4	9671.1
Jun-91	78.02	77.4	98.98	10.23%	2000q1	9695.6
Jul-91	78.61		101.02	11.48%	2000q2	9847.9
Aug-91	78.93		105.94	12.97%	2000q3	9836.6
Sep-91	78.88	78.8	110.00	13.17%	2000q4	9887.7
Oct-91	78.68		112.64	13.80%	2001q1	9875.6
Nov-91	78.31		115.57	14.41%	2001q2	9905.9
Dec-91	77.99	78.3	118.97	12.30%	2001q3	9871.1
Jan-92	77.74		121.96	10.88%	2001q4	9910
Feb-92	77.51		123.63	9.76%	2002q1	9977.3
Mar-92	77.31	77.5	124.77	7.95%	2002q2	10031.6
Apr-92	77.36		130.35	9.56%	2002q3	10090.7
May-92	77.62		136.90	12.25%	2002q4	10095.8
Jun-92	77.94	77.6	141.19	14.20%	2003q1	10126
Jul-92	77.95		143.76	15.23%	2003q2	10212.7
Aug-92	77.99		148.11	13.63%	2003q3	10398.7
Sep-92	77.76	77.9	153.68	12.25%	2003q4	10467
Oct-92	77.45		159.51	12.98%	2004q1	10543.6
Nov-92	77.09		165.21	14.92%	2004q2	10634.2
Dec-92	76.68	77.1	175.49	18.49%	2004q3	10728.7
Jan-93	76.56		184.85	20.29%	2004q4	10796.4
Feb-93	76.28		190.05	19.15%	2005q1	10878.4
Mar-93	75.91	76.3	196.14	18.72%	2005q2	10954.1
Apr-93	75.83		205.71	17.22%	2005q3	11074.3
May-93	76.04		214.18	15.87%	2005q4	11107.2
Jun-93	76.51	76.1	220.60	16.07%	2006q1	11238.7
Jul-93	76.61		223.20	13.79%	2006q2	11306.7
Aug-93	76.59		225.76	9.75%	2006q3	11336.7
Sep-93	76.47	76.6	225.60	5.33%	2006q4	11395.5
Oct-93	76.22		223.69	1.40%	2007q1	11412.6
Nov-93	76.02		220.48	-1.22%	2007q2	11523.8
Dec-93	75.71	76.0	218.10	-3.39%	1967q3	3491.8
Jan-94	75.71				1967q4	3518.2
Feb-94	75.63				1968q1	3590.7
Mar-94	75.73	75.7			1968q2	3651.6
Apr-94	76.03				1968q3	3676.5
May-94	76.49				1968q4	3692
Jun-94	77.04	76.5			1969q1	3750.2
Jul-94	77.40				1969q2	3760.9
Aug-94	77.64				1969q3	3784.2
Sep-94	77.57	77.5			1969q4	3766.3
Oct-94	77.50				1970q1	3760
Nov-94	77.23				1970q2	3767.1
Dec-94	76.99	77.2			1970q3	3800.5
Jan-95	76.82				1970q4	3759.8
Feb-95	76.64				1971q1	3864.1
Mar-95	76.38	76.6			1971q2	3885.9
Apr-95	76.36				1971q3	3916.7
May-95	76.60				1971q4	3927.9
Jun-95	76.94	76.6			1972q1	3997.7
Jul-95	77.26				1972q2	4092.1
Aug-95	77.47				1972q3	4131.1
Sep-95	77.43	77.4			1972q4	4198.7
Oct-95	77.26				1973q1	4305.3
Nov-95	76.95				1973q2	4355.1
Dec-95	76.68	77.0			1973q3	4331.9
Jan-96	76.56				1973q4	4373.3
Feb-96	76.44				1974q1	4335.4
Mar-96	76.49	76.5			1974q2	4347.9
Apr-96	76.84				1974q3	4305.8
May-96	77.33				1974q4	4288.9
Jun-96	77.78	77.3			1975q1	4237.6
Jul-96	78.10				1975q2	4268.6
Aug-96	78.36				1975q3	4340.9
Sep-96	78.37	78.3			1975q4	4397.8
Oct-96	78.36				1976q1	4496.8
Nov-96	78.23				1976q2	4530.3
Dec-96	78.12	78.2			1976q3	4552
Jan-97	78.08				1976q4	4584.6
Feb-97	77.98				1977q1	4640
Mar-97	78.29	78.1			1977q2	4731.1
Apr-97	78.76				1977q3	4815.8
May-97	79.42				1977q4	4815.3
Jun-97	80.25	79.5			1978q1	4830.8
Jul-97	80.86				1978q2	5021.2
Aug-97	81.41				1978q3	5070.7
Sep-97	81.57	81.3			1978q4	5137.4
Oct-97	81.83				1979q1	5147.4
Nov-97	81.98				1979q2	5152.3
Dec-97	82.31	82.0			1979q3	5189.4
Jan-98	82.70				1979q4	5204.7
Feb-98	83.13				1980q1	5221.3
Mar-98	83.87	83.2			1980q2	5115.9
Apr-98	84.69				1980q3	5107.4
May-98	85.77				1980q4	5202.1
Jun-98	87.03	85.8			1981q1	5307.5
Jul-98	88.14				1981q2	5266.1
Aug-98	89.01				1981q3	5329.8
Sep-98	89.58	88.9			1981q4	5263.4
Oct-98	89.80				1982q1	5177.1
Nov-98	89.76				1982q2	5204.9
Dec-98	89.82	89.8			1982q3	5185.2
Jan-99	90.06				1982q4	5189.8
Feb-99	90.48				1983q1	5253.8
Mar-99	91.31	90.6			1983q2	5372.3
Apr-99	92.55				1983q3	5478.4
May-99	93.69				1983q4	5590.5
Jun-99	95.10	93.8			1984q1	5699.8
Jul-99	96.28				1984q2	5797.9
Aug-99	97.31				1984q3	5854.3
Sep-99	97.99	97.2			1984q4	5902.4
Oct-99	98.48				1985q1	5956.9
Nov-99	98.94				1985q2	6007.8
Dec-99	99.51	99.0			1985q3	6101.7
Jan-00	100.00				1985q4	6148.6
Feb-00	100.81				1986q1	6207.4
Mar-00	102.24	101.0			1986q2	6232
Apr-00	104.01				1986q3	6291.7
May-00	105.98				1986q4	6323.4
Jun-00	107.83	105.9
Jul-00	109.02
Aug-00	110.07
Sep-00	110.90	110.0
Oct-00	111.75
Nov-00	112.60
Dec-00	113.56	112.6
Jan-01	114.58
Feb-01	115.45
Mar-01	116.69	115.6
Apr-01	117.94
May-01	118.94
Jun-01	120.03	119.0
Jul-01	121.01
Aug-01	121.99
Sep-01	122.89	122.0
Oct-01	123.46
Nov-01	123.78
Dec-01	123.64	123.6
Jan-02	123.93
Feb-02	124.45
Mar-02	125.92	124.8
Apr-02	127.95
May-02	130.33
Jun-02	132.76	130.3
Jul-02	135.04
Aug-02	137.04
Sep-02	138.62	136.9
Oct-02	140.12
Nov-02	141.26
Dec-02	142.18	141.2
Jan-03	142.86
Feb-03	143.59
Mar-03	144.84	143.8
Apr-03	146.45
May-03	148.17
Jun-03	149.70	148.1
Jul-03	151.65
Aug-03	153.61
Sep-03	155.77	153.7
Oct-03	157.71
Nov-03	159.55
Dec-03	161.27	159.5
Jan-04	162.90
Feb-04	164.82
Mar-04	167.91	165.2
Apr-04	171.58
May-04	175.43
Jun-04	179.45	175.5
Jul-04	182.69
Aug-04	184.95
Sep-04	186.91	184.9
Oct-04	188.65
Nov-04	190.08
Dec-04	191.42	190.1
Jan-05	193.35
Feb-05	195.87
Mar-05	199.21	196.1
Apr-05	202.51
May-05	205.76
Jun-05	208.86	205.7
Jul-05	211.65
Aug-05	214.13
Sep-05	216.77	214.2
Oct-05	219.07
Nov-05	220.81
Dec-05	221.91	220.6
Jan-06	222.46
Feb-06	223.38
Mar-06	223.75	223.2
Apr-06	224.99
May-06	226.00
Jun-06	226.29	225.8
Jul-06	226.17
Aug-06	225.54
Sep-06	225.09	225.6
Oct-06	224.74
Nov-06	223.94
Dec-06	222.39	223.7
Jan-07	221.32
Feb-07	220.46
Mar-07	219.66	220.5
Apr-07	219.00
May-07	218.23
Jun-07	217.07	218.1

1 Housing price indices represent year-over-year percentage changes
2 GDP % has been annualized
3 S&P/Case-Shiller® Home Price Indices are based on index values
4 OFHEO House Price Index is based on repeat sales index

Slide 10

 We Have Been Preparing for a Housing Downturn

•      Right-sized home loans business

-   Reduced staffing by 28% from Q4 ’05 to Q2 ‘07

-   Exited low margin correspondent channel

•      Sold virtually all 2004 and 2005 subprime residuals

•      Tightened underwriting guidelines across all products

•      Limited asset growth due to below target risk adjusted returns

-   Reduced loan volume through tighter subprime underwriting guidelines and increased pricing

-   Sold majority of Option ARM originations in 2005, 2006 and 2007

-   Total assets of $312 billion at 6/30/07 down from $351 billion at 6/30/06

Slide 11

WaMu Exposure to Markets

•      No leveraged buyout obligations

•      No liquidity extended to third party asset backed commercial paper conduits

•      No investment in asset backed commercial paper, structured investment vehicles (SIVs), or similar arbitrage vehicles

•      No ABS collateralized debt obligations (CDOs)

•      Minimal exposure to subprime mortgage, home equity and Alt-A residuals

•      Minimal exposure to warehouse mortgage lending

Slide 12

 Credit Quality: Estimated Loan-to-Value

 

TOTAL PORTFOLIO
	June 30, 2007	Current FICO
		>=660	620-659	580-619	<580	Total
	Home Loans
	<=80%	66%	10%	6%	10%	92%
	>80-90%	4%	1%	1%	1%	7%
	>90%	1%	0%	0%	0%	1%
	Total	71%	11%	7%	11%	100%
	Home Equity Loans
	<=80%	65%	5%	2%	2%	74%
	>80-90%	14%	3%	1%	1%	19%
	>90%	4%	1%	1%	1%	7%
	Total	83%	9%	4%	4%	100%

NONACCRUAL LOANS
			Current FICO
			>=660	620-659	580-619	<580	Total
	Estimated Current          Loan-to-Value	Home Loans
		<=80%	4%	4%	9%	68%	85%
		>80-90%	0%	0%	1%	11%	12%
		>90%	0%	0%	1%	2%	3%
		Total	4%	4%	11%	81%	100%
	Estimated Current Combined         Loan-to-Value
		Home Equity Loans
		<=80%	2%	3%	6%	46%	57%
		>80-90%	0%	1%	2%	21%	24%
		>90%	1%	0%	2%	16%	19%
		Total	3%	4%	10%	83%	100%

1 Includes home loans in the subprime mortgage channel
2 Estimated loan-to-value calculations based on OFHEO March 2007 data
3 Includes the HELOC and HEL portfolios and home equity loans in the subprime mortgage channel
4 Estimated combined loan-to-value calculations based on OFHEO March 2007 data
 

Slide 13

 GDP and Housing Price Indices¹

			GDP % change	Case-Shiller Index	OFHEO Index
1987q1	87Q1	1987	2.63%		8.39%
1987q2	87Q2		4.40%		8.05%
1987q3	87Q3		3.63%		7.75%
1987q4	87Q4		6.99%		6.78%
1988q1	88Q1	1988	1.96%	11.71%	6.34%
1988q2	88Q2		5.09%	10.70%	6.58%
1988q3	88Q3		2.14%	10.87%	6.06%
1988q4	88Q4		5.28%	10.68%	6.18%
1989q1	89Q1	1989	4.06%	10.89%	5.70%
1989q2	89Q2		2.62%	10.94%	4.89%
1989q3	89Q3		2.85%	8.41%	6.15%
1989q4	89Q4		1.02%	6.67%	6.03%
1990q1	90Q1	1990	4.62%	4.67%	5.05%
1990q2	90Q2		1.02%	1.93%	3.63%
1990q3	90Q3		0.03%	-0.26%	1.65%
1990q4	90Q4		-3.02%	-2.80%	0.24%
1991q1	91Q1	1991	-2.04%	-5.34%	0.62%
1991q2	91Q2		2.60%	-5.71%	1.10%
1991q3	91Q3		1.93%	-3.64%	0.73%
1991q4	91Q4		1.88%	-2.22%	2.59%
1992q1	92Q1	1992	4.14%	-0.32%	2.48%
1992q2	92Q2		3.86%	0.31%	1.81%
1992q3	92Q3		3.92%	-1.15%	2.86%
1992q4	92Q4		4.41%	-1.60%	1.89%
1993q1	93Q1	1993	0.48%	-1.64%	1.06%
1993q2	93Q2		2.03%	-1.95%	2.13%
1993q3	93Q3		2.05%	-1.72%	1.71%
1993q4	93Q4		5.38%	-1.41%	2.08%
1994q1	94Q1	1994	4.07%	-0.73%	2.71%
1994q2	94Q2		5.22%	0.52%	2.20%
1994q3	94Q3		2.24%	1.28%	1.86%
1994q4	94Q4		4.69%	1.65%	0.84%
1995q1	95Q1	1995	1.11%	1.22%	0.74%
1995q2	95Q2		0.72%	0.15%	2.16%
1995q3	95Q3		3.26%	-0.19%	3.48%
1995q4	95Q4		2.93%	-0.36%	4.52%
1996q1	96Q1	1996	2.82%	-0.15%	5.42%
1996q2	96Q2		6.56%	0.89%	3.72%
1996q3	96Q3		3.35%	1.15%	2.52%
1996q4	96Q4		4.68%	1.65%	2.61%
1997q1	97Q1	1997	3.09%	2.12%	2.29%
1997q2	97Q2		6.08%	2.79%	3.00%
1997q3	97Q3		4.98%	3.84%	4.12%
1997q4	97Q4		2.95%	4.86%	4.59%
1998q1	98Q1	1998	4.43%	6.55%	5.22%
1998q2	98Q2		2.65%	7.99%	5.20%
1998q3	98Q3		4.61%	9.39%	5.09%
1998q4	98Q4		6.08%	9.45%	4.98%
1999q1	99Q1	1999	3.40%	8.87%	4.44%
1999q2	99Q2		3.31%	9.26%	5.02%
1999q3	99Q3		4.67%	9.32%	5.18%
1999q4	99Q4		7.11%	10.23%	5.10%
2000q1	00Q1	2000	1.01%	11.48%	6.20%
2000q2	00Q2		6.28%	12.97%	6.57%
2000q3	00Q3		-0.46%	13.17%	7.00%
2000q4	00Q4		2.08%	13.80%	7.54%
2001q1	01Q1	2001	-0.49%	14.41%	8.09%
2001q2	01Q2		1.23%	12.30%	8.18%
2001q3	01Q3		-1.41%	10.88%	7.88%
2001q4	01Q4		1.58%	9.76%	7.53%
2002q1	02Q1	2002	2.72%	7.95%	6.51%
2002q2	02Q2		2.18%	9.56%	6.59%
2002q3	02Q3		2.36%	12.25%	7.13%
2002q4	02Q4		0.20%	14.20%	7.40%
2003q1	03Q1	2003	1.20%	15.23%	7.10%
2003q2	03Q2		3.42%	13.63%	6.47%
2003q3	03Q3		7.29%	12.25%	5.99%
2003q4	03Q4		2.63%	12.98%	7.77%
2004q1	04Q1	2004	2.93%	14.92%	8.22%
2004q2	04Q2		3.44%	18.49%	9.79%
2004q3	04Q3		3.55%	20.29%	12.63%
2004q4	04Q4		2.52%	19.15%	11.76%
2005q1	05Q1	2005	3.04%	18.72%	12.78%
2005q2	05Q2		2.78%	17.22%	13.64%
2005q3	05Q3		4.39%	15.87%	12.51%
2005q4	05Q4		1.19%	16.07%	12.96%
2006q1	06Q1	2006	4.74%	13.79%	12.38%
2006q2	06Q2		2.42%	9.75%	9.98%
2006q3	06Q3		1.06%	5.33%	7.70%
2006q4	06Q4		2.07%	1.40%	6.10%
2007q1	07Q1	2007	0.60%	-1.22%	4.45%
2007q2	07Q2		3.90%	-3.39%	3.19%

Case Shiller (10 metro composite)					Quarterly	(Seasonally adjusted annual rates)	OFHEO - National
Jan-87	62.82				GDP in billions of chained 2000 dollars		USA	1975	1	61.63
Feb-87	63.39				1987q1	6365	USA	1975	2	62.69
Mar-87	63.87	63.4	63.36		1987q2	6435	USA	1975	3	62.26
Apr-87	64.57		65.57		1987q3	6493.4	USA	1975	4	63.26
May-87	65.56		68.22		1987q4	6606.8	USA	1976	1	64.3
Jun-87	66.59	65.6	69.80		1988q1	6639.1	USA	1976	2	66.17
Jul-87	67.54		70.78	11.71%	1988q2	6723.5	USA	1976	3	66.91
Aug-87	68.25		72.59	10.70%	1988q3	6759.4	USA	1976	4	68
Sep-87	68.87	68.2	75.64	10.87%	1988q4	6848.6	USA	1977	1	70.13
Oct-87	69.42		77.25	10.68%	1989q1	6918.1	USA	1977	2	72.69
Nov-87	69.76		78.49	10.89%	1989q2	6963.5	USA	1977	3	74.65
Dec-87	70.22	69.8	80.53	10.94%	1989q3	7013.1	USA	1977	4	76.92
Jan-88	70.45		82.00	8.41%	1989q4	7030.9	USA	1978	1	79.45
Feb-88	70.77		82.41	6.67%	1990q1	7112.1	USA	1978	2	82.34
Mar-88	71.12	70.8	82.15	4.67%	1990q2	7130.3	USA	1978	3	84.8
Apr-88	71.65		82.08	1.93%	1990q3	7130.8	USA	1978	4	87.37
May-88	72.48		81.78	-0.26%	1990q4	7076.9	USA	1979	1	91.43
Jun-88	73.63	72.6	80.10	-2.80%	1991q1	7040.8	USA	1979	2	94.04
Jul-88	74.81		77.77	-5.34%	1991q2	7086.5	USA	1979	3	96.09
Aug-88	75.70		77.40	-5.71%	1991q3	7120.7	USA	1979	4	98.01
Sep-88	76.40	75.6	78.81	-3.64%	1991q4	7154.1	USA	1980	1	100
Oct-88	76.90		78.33	-2.22%	1992q1	7228.2	USA	1980	2	100.93
Nov-88	77.28		77.52	-0.32%	1992q2	7297.9	USA	1980	3	104.33
Dec-88	77.58	77.3	77.64	0.31%	1992q3	7369.5	USA	1980	4	104.69
Jan-89	77.99		77.90	-1.15%	1992q4	7450.7	USA	1981	1	105.8
Feb-89	78.36		77.07	-1.60%	1993q1	7459.7	USA	1981	2	107.93
Mar-89	79.12	78.5	76.25	-1.64%	1993q2	7497.5	USA	1981	3	109.25
Apr-89	79.83		76.13	-1.95%	1993q3	7536	USA	1981	4	109.67
May-89	80.52		76.56	-1.72%	1993q4	7637.4	USA	1982	1	111.12
Jun-89	81.24	80.5	75.98	-1.41%	1994q1	7715.1	USA	1982	2	111.67
Jul-89	81.66		75.69	-0.73%	1994q2	7815.7	USA	1982	3	111.18
Aug-89	82.08		76.52	0.52%	1994q3	7859.5	USA	1982	4	112.12
Sep-89	82.25	82.0	77.54	1.28%	1994q4	7951.6	USA	1983	1	114.04
Oct-89	82.44		77.24	1.65%	1995q1	7973.7	USA	1983	2	115.31
Nov-89	82.43		76.61	1.22%	1995q2	7988	USA	1983	3	116.08
Dec-89	82.35	82.4	76.63	0.15%	1995q3	8053.1	USA	1983	4	116.49
Jan-90	82.29		77.39	-0.19%	1995q4	8112	USA	1984	1	118.22
Feb-90	82.15		76.96	-0.36%	1996q1	8169.2	USA	1984	2	120.3
Mar-90	82.02	82.2	76.50	-0.15%	1996q2	8303.1	USA	1984	3	121.47
Apr-90	82.05		77.32	0.89%	1996q3	8372.7	USA	1984	4	122.75
May-90	82.01		78.28	1.15%	1996q4	8470.6	USA	1985	1	124.56
Jun-90	82.19	82.1	78.24	1.65%	1997q1	8536.1	USA	1985	2	126.65
Jul-90	82.10		78.12	2.12%	1997q2	8665.8	USA	1985	3	128.98
Aug-90	81.86		79.48	2.79%	1997q3	8773.7	USA	1985	4	130.75
Sep-90	81.39	81.8	81.28	3.84%	1997q4	8838.4	USA	1986	1	133.34
Oct-90	80.84		82.04	4.86%	1998q1	8936.2	USA	1986	2	136.3
Nov-90	80.09		83.23	6.55%	1998q2	8995.3	USA	1986	3	138.85
Dec-90	79.38	80.1	85.83	7.99%	1998q3	9098.9	USA	1986	4	141.41
Jan-91	78.53		88.91	9.39%	1998q4	9237.1	USA	1987	1	144.53	8.39%
Feb-91	77.77		89.79	9.45%	1999q1	9315.5	USA	1987	2	147.27	8.05%
Mar-91	77.00	77.8	90.62	8.87%	1999q2	9392.6	USA	1987	3	149.61	7.75%
Apr-91	76.86		93.78	9.26%	1999q3	9502.2	USA	1987	4	151	6.78%
May-91	77.31		97.19	9.32%	1999q4	9671.1	USA	1988	1	153.7	6.34%
Jun-91	78.02	77.4	98.98	10.23%	2000q1	9695.6	USA	1988	2	156.96	6.58%
Jul-91	78.61		101.02	11.48%	2000q2	9847.9	USA	1988	3	158.67	6.06%
Aug-91	78.93		105.94	12.97%	2000q3	9836.6	USA	1988	4	160.33	6.18%
Sep-91	78.88	78.8	110.00	13.17%	2000q4	9887.7	USA	1989	1	162.46	5.70%
Oct-91	78.68		112.64	13.80%	2001q1	9875.6	USA	1989	2	164.63	4.89%
Nov-91	78.31		115.57	14.41%	2001q2	9905.9	USA	1989	3	168.43	6.15%
Dec-91	77.99	78.3	118.97	12.30%	2001q3	9871.1	USA	1989	4	170	6.03%
Jan-92	77.74		121.96	10.88%	2001q4	9910	USA	1990	1	170.66	5.05%
Feb-92	77.51		123.63	9.76%	2002q1	9977.3	USA	1990	2	170.61	3.63%
Mar-92	77.31	77.5	124.77	7.95%	2002q2	10031.6	USA	1990	3	171.21	1.65%
Apr-92	77.36		130.35	9.56%	2002q3	10090.7	USA	1990	4	170.41	0.24%
May-92	77.62		136.90	12.25%	2002q4	10095.8	USA	1991	1	171.72	0.62%
Jun-92	77.94	77.6	141.19	14.20%	2003q1	10126	USA	1991	2	172.48	1.10%
Jul-92	77.95		143.76	15.23%	2003q2	10212.7	USA	1991	3	172.46	0.73%
Aug-92	77.99		148.11	13.63%	2003q3	10398.7	USA	1991	4	174.82	2.59%
Sep-92	77.76	77.9	153.68	12.25%	2003q4	10467	USA	1992	1	175.98	2.48%
Oct-92	77.45		159.51	12.98%	2004q1	10543.6	USA	1992	2	175.6	1.81%
Nov-92	77.09		165.21	14.92%	2004q2	10634.2	USA	1992	3	177.39	2.86%
Dec-92	76.68	77.1	175.49	18.49%	2004q3	10728.7	USA	1992	4	178.13	1.89%
Jan-93	76.56		184.85	20.29%	2004q4	10796.4	USA	1993	1	177.85	1.06%
Feb-93	76.28		190.05	19.15%	2005q1	10878.4	USA	1993	2	179.34	2.13%
Mar-93	75.91	76.3	196.14	18.72%	2005q2	10954.1	USA	1993	3	180.42	1.71%
Apr-93	75.83		205.71	17.22%	2005q3	11074.3	USA	1993	4	181.83	2.08%
May-93	76.04		214.18	15.87%	2005q4	11107.2	USA	1994	1	182.67	2.71%
Jun-93	76.51	76.1	220.60	16.07%	2006q1	11238.7	USA	1994	2	183.28	2.20%
Jul-93	76.61		223.20	13.79%	2006q2	11306.7	USA	1994	3	183.77	1.86%
Aug-93	76.59		225.76	9.75%	2006q3	11336.7	USA	1994	4	183.35	0.84%
Sep-93	76.47	76.6	225.60	5.33%	2006q4	11395.5	USA	1995	1	184.02	0.74%
Oct-93	76.22		223.69	1.40%	2007q1	11412.6	USA	1995	2	187.24	2.16%
Nov-93	76.02		220.48	-1.22%	2007q2	11523.8	USA	1995	3	190.16	3.48%
Dec-93	75.71	76.0	218.10	-3.39%	1967q3	3491.8	USA	1995	4	191.63	4.52%
Jan-94	75.71				1967q4	3518.2	USA	1996	1	193.99	5.42%
Feb-94	75.63				1968q1	3590.7	USA	1996	2	194.2	3.72%
Mar-94	75.73	75.7			1968q2	3651.6	USA	1996	3	194.96	2.52%
Apr-94	76.03				1968q3	3676.5	USA	1996	4	196.63	2.61%
May-94	76.49				1968q4	3692	USA	1997	1	198.43	2.29%
Jun-94	77.04	76.5			1969q1	3750.2	USA	1997	2	200.03	3.00%
Jul-94	77.40				1969q2	3760.9	USA	1997	3	203	4.12%
Aug-94	77.64				1969q3	3784.2	USA	1997	4	205.65	4.59%
Sep-94	77.57	77.5			1969q4	3766.3	USA	1998	1	208.79	5.22%
Oct-94	77.50				1970q1	3760	USA	1998	2	210.43	5.20%
Nov-94	77.23				1970q2	3767.1	USA	1998	3	213.33	5.09%
Dec-94	76.99	77.2			1970q3	3800.5	USA	1998	4	215.89	4.98%
Jan-95	76.82				1970q4	3759.8	USA	1999	1	218.06	4.44%
Feb-95	76.64				1971q1	3864.1	USA	1999	2	220.99	5.02%
Mar-95	76.38	76.6			1971q2	3885.9	USA	1999	3	224.38	5.18%
Apr-95	76.36				1971q3	3916.7	USA	1999	4	226.9	5.10%
May-95	76.60				1971q4	3927.9	USA	2000	1	231.59	6.20%
Jun-95	76.94	76.6			1972q1	3997.7	USA	2000	2	235.51	6.57%
Jul-95	77.26				1972q2	4092.1	USA	2000	3	240.08	7.00%
Aug-95	77.47				1972q3	4131.1	USA	2000	4	244.01	7.54%
Sep-95	77.43	77.4			1972q4	4198.7	USA	2001	1	250.33	8.09%
Oct-95	77.26				1973q1	4305.3	USA	2001	2	254.77	8.18%
Nov-95	76.95				1973q2	4355.1	USA	2001	3	258.99	7.88%
Dec-95	76.68	77.0			1973q3	4331.9	USA	2001	4	262.39	7.53%
Jan-96	76.56				1973q4	4373.3	USA	2002	1	266.62	6.51%
Feb-96	76.44				1974q1	4335.4	USA	2002	2	271.57	6.59%
Mar-96	76.49	76.5			1974q2	4347.9	USA	2002	3	277.46	7.13%
Apr-96	76.84				1974q3	4305.8	USA	2002	4	281.81	7.40%
May-96	77.33				1974q4	4288.9	USA	2003	1	285.55	7.10%
Jun-96	77.78	77.3			1975q1	4237.6	USA	2003	2	289.14	6.47%
Jul-96	78.10				1975q2	4268.6	USA	2003	3	294.08	5.99%
Aug-96	78.36				1975q3	4340.9	USA	2003	4	303.7	7.77%
Sep-96	78.37	78.3			1975q4	4397.8	USA	2004	1	309.03	8.22%
Oct-96	78.36				1976q1	4496.8	USA	2004	2	317.46	9.79%
Nov-96	78.23				1976q2	4530.3	USA	2004	3	331.22	12.63%
Dec-96	78.12	78.2			1976q3	4552	USA	2004	4	339.43	11.76%
Jan-97	78.08				1976q4	4584.6	USA	2005	1	348.52	12.78%
Feb-97	77.98				1977q1	4640	USA	2005	2	360.76	13.64%
Mar-97	78.29	78.1			1977q2	4731.1	USA	2005	3	372.65	12.51%
Apr-97	78.76				1977q3	4815.8	USA	2005	4	383.41	12.96%
May-97	79.42				1977q4	4815.3	USA	2006	1	391.65	12.38%
Jun-97	80.25	79.5			1978q1	4830.8	USA	2006	2	396.75	9.98%
Jul-97	80.86				1978q2	5021.2	USA	2006	3	401.36	7.70%
Aug-97	81.41				1978q3	5070.7	USA	2006	4	406.81	6.10%
Sep-97	81.57	81.3			1978q4	5137.4	USA	2007	1	409.07	4.45%
Oct-97	81.83				1979q1	5147.4	USA	2007	2	409.4	3.19%
Nov-97	81.98				1979q2	5152.3
Dec-97	82.31	82.0			1979q3	5189.4
Jan-98	82.70				1979q4	5204.7
Feb-98	83.13				1980q1	5221.3
Mar-98	83.87	83.2			1980q2	5115.9
Apr-98	84.69				1980q3	5107.4
May-98	85.77				1980q4	5202.1
Jun-98	87.03	85.8			1981q1	5307.5
Jul-98	88.14				1981q2	5266.1
Aug-98	89.01				1981q3	5329.8
Sep-98	89.58	88.9			1981q4	5263.4
Oct-98	89.80				1982q1	5177.1
Nov-98	89.76				1982q2	5204.9
Dec-98	89.82	89.8			1982q3	5185.2
Jan-99	90.06				1982q4	5189.8
Feb-99	90.48				1983q1	5253.8
Mar-99	91.31	90.6			1983q2	5372.3
Apr-99	92.55				1983q3	5478.4
May-99	93.69				1983q4	5590.5
Jun-99	95.10	93.8			1984q1	5699.8
Jul-99	96.28				1984q2	5797.9
Aug-99	97.31				1984q3	5854.3
Sep-99	97.99	97.2			1984q4	5902.4
Oct-99	98.48				1985q1	5956.9
Nov-99	98.94				1985q2	6007.8
Dec-99	99.51	99.0			1985q3	6101.7
Jan-00	100.00				1985q4	6148.6
Feb-00	100.81				1986q1	6207.4
Mar-00	102.24	101.0			1986q2	6232
Apr-00	104.01				1986q3	6291.7
May-00	105.98				1986q4	6323.4
Jun-00	107.83	105.9
Jul-00	109.02
Aug-00	110.07

1 Housing price indices represent year-over-year percentage changes
2 GDP % has been annualized
3 S&P/Case-Shiller® Home Price Indices are based on index values
4 OFHEO House Price Index is based on repeat sales index
 

Slide 14

  Rising LIBOR and Nonconforming Loan Rates

08/31/2006 09/30/2006 10/31/06 11/30/06 12/31/06 01/31/2007 02/28/2007 03/31/2007 04/30/2007 05/31/2007 06/30/2007 07/31/2007 08/31/2007
5/1 Hybrid Jumbo 6.52% 6.46% 6.57% 6.48% 6.39% 6.55% 6.53% 6.41% 6.57% 0.0671 0.07101 0.07095 0.07483
5/1 Hybrid Conforming 6.50% 6.40% 6.46% 6.29% 6.26% 6.44% 6.28% 6.17% 6.30% 0.06426 0.06714 0.06595 0.0675
3M LIBOR 5.40% 5.37% 5.37% 5.37% 5.36% 5.36% 5.35% 5.35% 5.36% 0.0536 0.0536 0.05359 0.05621
Fed Funds 0.0525 0.0525 0.0525 0.0525 0.0525 0.0525 0.0525 0.0525 0.0525 0.0525 0.0525 0.0525 0.0525
 

Slide 15

Strong Liquidity Position Enables
Balance Sheet Growth in Q3 ’07

•    Conforming loans generally designated as held for sale

•    Nonconforming loans now designated as held for investment

•    New originations are high quality at attractive yields

-   Option ARMs

-   Hybrids

-   Home Equity

•    Subprime mortgage portfolio flat, originations down

•    Cash and cash equivalents up 

Slide 16

 High Quality Loans at Higher Returns¹

^{Jumbo Option ARMs}

^{'07/06/07 Aug 31 '07
8.00% 8.60%}
 

^{5/1 Jumbo Hybrids}

^{07/06/2007 Aug 31 '07
   6.50%      7.40%}
 

^{Increase of 0.90%}

^{1 Weighted average coupon, ROA and ROE based on current loss estimates
2 Based on loan rate locks during 8/29-31/07}

 

^{Slide 17}

 Implications of the Current Environment

What’s Changed
Housing prices flat or declining in most markets
Lack of secondary market liquidity for nonconforming loans

Interest rates and spreads

Impact
Higher nonperforming loans
Higher level of charge-offs
Increased provision
Nonconforming loans moved from held for sale to held for investment
Opportunistic portfolio growth leading to increased provision
Higher interest rates leading to much slower loan prepayments and higher MSR valuation
Higher cost of funds will negatively impact net interest margin
Reduction in Fed Funds rate would be favorable, but LIBOR must fall also

Slide 18

 Key Takeaways

•   WaMu is a leading consumer and small business bank

•   Key strategic actions have diversified the business, reduced market risk and lowered expenses

•   Top-tier Retail Bank and Card Services deliver the bulk of earnings

•   Proactive steps were taken to mitigate an anticipated decline in housing prices; however, current conditions are worsening and will increase near term credit costs

•   We are well positioned with strong liquidity and capital to support long-term growth

Slide 19

 Cautionary Statements

This presentation contains forward-looking statements, which are not historical facts and pertain to future operating results. These forward-looking statements are within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, statements about our plans, objectives, expectations and intentions and other statements contained in this document that are not historical facts. When used in this presentation, the words “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” or words of similar meaning, or future or conditional verbs, such as “will,” “would,” “should,” “could,” or “may” are generally intended to identify forward-looking statements. These forward-looking statements are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. Actual results may differ materially from the results discussed in these forward-looking statements for the reasons, among others, discussed under the heading “Factors That May Affect Future Results” in Washington Mutual’s 2006 Annual Report on Form 10-K and “Cautionary Statements” in our Forms 10-Q for the quarters ended March 31, 2007 and June 30, 2007 which include:

 -   Volatile interest rates and their impact on the mortgage banking business;

-   Credit risk;

-   Operational risk;

-   Risks related to credit card operations;

-   Changes in the regulation of financial services companies, housing government-sponsored enterprises and credit card lenders;

-   Competition from banking and nonbanking companies;

-    General business, economic and market conditions;

-   Reputational risk; and

-     Liquidity risk.

There are other factors not described in our 2006 Form 10-K and Forms 10-Q for the quarters ended March 31, 2007 and June 30, 2007 which are beyond the Company’s ability to anticipate or control that could cause results to differ.

Slide 20 Questions?