WaMu Troubles

WaMu is trading at 18.44, down 1.44 or 7.2%.

WaMu said it will stop lending through its subprime channel, close roughly 190 of its 336 home-loan centers and sales offices, shut down nine home-loan processing and call centers, and cut about 2,600 home loan positions and 550 corporate and support employees.

It will also cut its quarterly dividend to 15 cents a share from 56 cents.

"We believe the fundamental news at Washington Mutual is significantly worse than the company and we had previously expected," Bear Stearns said.

"The company is probably now a candidate for takeover but the number of potential buyers is very limited with J.P. Morgan Chase being the only realistic name at the moment," Punk Ziegel analyst Dick Bove said.