Sept. 10 (Bloomberg) -- Washington Mutual Inc., the biggest U.S. savings and loan, fell below $3 for the first time since 1991 and its debt risk rose to a record on concern a new accounting rule will hinder attempts to find a buyer.

WaMu dropped 98 cents, or 30 percent, to $2.32 at 4 p.m. on the New York Stock Exchange, the lowest close since November 1990. Credit-default swaps indicate there's a greater than 90 percent chance the company will default within five years.

Potential acquirers ended talks this year in part because the accounting rule will force acquirers to compute a target's assets at market prices instead of deriving values from measures including the purchase price, two bankers involved with the talks said. Rising unemployment and falling property values, meantime, will boost foreclosures.

``The revised rules will create additional hurdles for WaMu and there are already plenty of hurdles,'' said Jaime Peters, an analyst at Morningstar in Chicago. WaMu is in ``a tough place.''

The Seattle-based lender expects losses of up to $19 billion in the next 2-½ years, mostly from subprime and option adjustable-rate mortgages that borrowers may struggle to repay. Job cuts and declining U.S. home prices threaten to undermine new Chief Executive Officer Alan Fishman's efforts to rebound from $6.3 billion in losses over the past three quarters.

WaMu yesterday had its credit-rating outlook cut by Standard & Poor's, which cited concern losses may exceed the company's forecast. Of WaMu's $309.7 billion in assets, 77 percent are from loans.

``We know they've got the loans and we know what the loans look like,'' said Gary Gordon, an analyst at New York-based Portales Partners LLC, who has a ``neutral'' rating on the shares. ``The next issue is how does the economy and housing play out and what's the influence on those loans.''

The lender may be further restricted after signing a memo of understanding this week with its chief regulator, the Office of Thrift Supervision, that requires additional risk control and compliance. WaMu shares have tumbled 93 percent in the past year, the worst performance in the 24-member KBW Bank Index.

To contact the reporter on this story: Ari Levy in San Francisco at alevy5@bloomberg.net.

Last Updated: September 10, 2008 16:22 EDT