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July 22, 2008

Economy: Wachovia Loses $8.98B; Cuts 6,350 Jobs And Dividends

Wachovia Corporation lost $8.86 billion in the second quarter, and said Tuesday it was slashing its dividend and cutting 6,350 jobs after losses tied to mortgages soared. Its stock fell as much as 12 percent in early New York trading.

The nation’s fourth-largest bank by assets says it lost the equivalent of $4.20 per share in the April-June period. In the same timeframe last year, the bank earned $2.34 billion, or $1.22 per share. The loss included a $6.1 billion charge tied to declining asset values.

Wachovia has dropped more than 75 percent in New York Stock Exchange composite trading since it spent $24 billion two years ago to buy Golden West Financial Corporation just as home prices were peaking.  Golden West is a California mortgage lender known for exotic loans.

Big banks, such as Bank of America Corp. and National City Corp., have stopped making loans through brokers entirely, relying instead on their loan officers. National City said it was forced to do so by a continuing downturn in loan demand, while Bank of America said it saw better “long-term opportunity” in working through its own loan officers.

The Charlotte-based bank cut its quarterly dividend to 5 cents per share from 37.5 cents, which will conserve approximately $700 million of capital per quarter. In April, Wachovia slashed its dividend 41 percent. The company is moving to “sell selected non-core assets” and reduce the number of business customers who only use the bank for loans rather than other services. Wachovia expects to cut expenses during the second half of this year by $490 million and then reduce 2009 spending by $1.5 billion.

Wachovia shares have declined 65 percent this year, the second-worst performance on the 24-company KBW Bank Index behind National City Corp., Ohio’s largest bank. The stock fell to $12.36 at 9 a.m. in New York. Fitch Ratings cut Wachovia one level to A+ from AA-, citing its mortgage business.

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6 Comments »

  1. All these banks and lending firms with their mortgage-lending problems. They need to share the responsibility for what’s happened to homeowners. And now of course, their just adding to the recession at hand. The news just keeps getting better and better.

    Comment by Bruce — July 22, 2008 @ 1:24 pm | Reply

  2. Bruce – there has to be some accountability — this is some seriously deep shyt we’re in and I fear that this is just the beginning!

    Comment by Paulette — July 22, 2008 @ 2:10 pm | Reply

  3. A Wachovia branch in NC drained my account with fees while I was a volunteer in the El Salvador Earth quakes.

    It seems a branch manager is well able to legally steal money with the help of group stalking perps in short order.

    As is so often is the case, no blessing came of it for those who did it.

    Comment by batguano101 — July 22, 2008 @ 3:47 pm | Reply

  4. A Wachovia branch in NC drained my account with fees while I was a volunteer in the El Salvador Earth quakes.

    It seems a branch manager is well able to legally steal money with the help of group stalking perps in short order.

    As so often is the case, no blessing came of it for those who did it.

    Comment by batguano101 — July 22, 2008 @ 3:48 pm | Reply

  5. the gov.helps banks and loan companies but it seems to me that they should come on down the chain and help the people,after all the bottom layer of anything holds everyting else UP

    Comment by pat hilburn — July 23, 2008 @ 11:27 am | Reply

  6. I agree Pat AND there MUST be some changes in the laws that protects the consumers and protect these financial institutions from their own greed.

    Comment by Paulette — July 23, 2008 @ 11:42 am | Reply


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