Moody's cuts WaMu

Moody's Investors Service said it downgraded by two notches the long-term ratings of Washington Mutual, Inc. (senior to Baa2 from A3) and its subsidiaries including the lead thrift Washington Mutual Bank (financial strength rating to C- from C+ and long-term deposits to Baa1 from A2).

The agency said that the short-term rating at the thrift was lowered to Prime-2 from Prime-1.

Washington Mutual, Inc.'s short-term rating remains unchanged at Prime-2, Moody's said, adding that it placed a stable outlook on all Washington Mutual entities.

Moody's said it actions follows WaMu's announcement in which it stated that it expects to increase its loan loss provision in the 4Q07 between $1.5 and $1.6 billion, up from previous guidance of $1.3 billion in response to continuing deterioration in its large residential mortgage portfolio.

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