WaMu Plunges as Buyer hopes Dim

NEW YORK (CNNMoney.com) -- Washington Mutual's stock plunged Thursday despite reports that the company was actively looking for a buyer.

Shares of WaMu (WM, Fortune 500) were down more than 20% in afternoon trading, suggesting that the endgame for the embattled savings and loan may be rapidly approaching following ratings agency downgrades. At one point, the stock had fallen as much as 30%.

Earlier Thursday, The Wall Street Journal reported that WaMu has approached private equity firms Carlyle Group and Blackstone Group (BX) about a potential takeover of the firm.

Separately, The New York Times reported that federal regulators are also rushing to broker a deal as financial pressures mount on the firm.

The Times said that Citigroup (C, Fortune 500), JPMorgan Chase (JPM, Fortune 500), British bank HSBC (HBC), Spanish bank Banco Santander (STD) and Wells Fargo (WFC, Fortune 500) have shown interest in bidding for all or part of WaMu.

But one fund manager said the fact that WaMu's stock plummeted in the afternoon following a 13% rise in pre-market trading Thursday morning may be a sign that WaMu is having a difficult time convincing anyone to buy it.

"Obviously, it appears that [the bidding process] is not going well," said Christopher Wiles, who helps oversee about $30 billion at Allegiant Asset Management, including finance stocks. His fund does not own shares of WaMu.

The slide in WaMu's stock was also in stark contrast to what most other bank stocks were doing following the news that Congress had come to an agreement on the framework for a bank bailout plan.

Shares of other battered banks, such as Wachovia (WB, Fortune 500), Citigroup and Morgan Stanley (MS, Fortune 500), soared Thursday afternoon.

Spokespersons for WaMu, Carlyle, Blackstone, JPMorgan Chase, HSBC and Citigroup refused to comment about the reports.

A spokeswoman for the FDIC, the government agency that insures bank deposits and is in charge of taking over failed banks, would also not comment about whether it was helping WaMu find a buyer.

WaMu has been hit by a series of credit downgrades in the past month, which has increased the urgency on the company to find a buyer. The credit agency Standard & Poor's downgraded WaMu on Wednesday, lowering the firm from junk status to an even lower junk status.

Rating agency DBRS also downgraded WaMu on Wednesday, lowering the holding company's credit rating to junk bond status but keeping the firm's banking business at investment grade status.

"They do have a very strong retail franchise," said DBRS analyst Steve Picarillo, referring to WaMu's nearly 2300 branches across the nation.

WaMu has been one of the most hard-hit companies during the financial crisis. The company is the nation's largest savings & loan. As a result, much of its assets are tied up in mortgages, many of which have gone sour as housing prices fell.

But Picarillo said that WaMu's survival isn't entirely dependent on its retail business or even on a potential buyer. He said the firm could benefit from the bank bailout, which will involve a massive government investment in toxic mortgage-related holdings.

WaMu's stock has plunged 83% this year and the company has reported three consecutive quarterly losses. Analysts expect WaMu to lose money again in the third quarter and to post losses for the full year as well as for 2009.