Project Restart and the Wamulians

It’s been another tough week for Washington Mutual, the nation’s largest and perhaps most troubled thrift. The company announced a major new restructuring called Project Restart. Some 1,200 employees were let go. Offices have been closed and major personnel changes made at the top, including the promotion of Arlene Hyde to head the home loan operations.

Wamu eliminated two mortgage products—the infamous option ARM loans which lets borrowers forgo interest payments by adding them to their principal and another product that was a combination home equity loan and mortgage. The Seattle-based company also increased its commitment to a fund to help troubled homeowners stay in their homes by $1 billion.

Meanwhile, David Dreman, an influential money manager, called for Wamu chief Kerry Killinger to get fired. This comes as opposition builds for private equity firm TPG’s $7 billion Wamu investment, which shareholders need to approve at a special meeting on June 24. In a note to employees on June 19, obtained by BusinessWeek, Killinger said:

“Quite a while ago, I told you that every day, each of us at WaMu has a choice to make. We can choose to be distracted and disheartened by the challenges we face. Or we can choose to take the actions needed and to fight to turn this company around. For the last year—day after day—I’ve seen WaMulians choose to move forward and fight. Thank you for all you are giving and doing to ensure a WaMu comeback.” -Kerry