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Wachovia Loses $9 Billion in Second Quarter of 2008

Newspaper current event by Brandon on 22 July 2008, tagged as banking, economics, and housing market

Wachovia, the United State's fourth largest bank, reported nearly a $9 billion loss in the second quarter of 2008, representing a $4.20 loss per share. Excluding a one-time, $6.1 billion charge related to "declining market valuations" (as is commonly done) reduces the loss to $1.27 per share, but this is still behind the $0.78 loss predicted by analysts. The first half of 2008 contained the first back-to-back quarter losses in 20 years for Wachovia, which may make it an attractive purchase for larger companies.

Wachovia's new CEO, former Treasury undersecretary Steel, has outlined two new measures to return to profitability:

  • cut quarterly dividend to 5 cents per share from 37.5 cents
  • leave the wholesale mortgage lending business by the end of the week

The latter of these steps will result in the loss of 6,350 jobs and is accompanied by a $5.6 billion addition to Wachovia's loan loss reserve. The bank expects home prices to fall another 14%.

Wachovia claims it is still adequately capitalized with a tier 1 ratio of 8%. Other large banks such as Bank of America, Citigroup, JPMorgan and Wells Fargo also reported hefty losses or declines in profit, but were able to beat expectations.

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4 Nerd-Its - +
Lost $9 Billion - $5 reward in cash for finder by VnutZ :: NR8

As all these banks continue to lose money ... sometimes I chuckle thinking that some guy is going to say, "Oh wait, here it is. I found it. My bad."

Posted 22 July 2008, Hide, Reply
4 Nerd-Its - +
Thomas Jeffereson on Banking. by ldsudduth :: NR6

I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.

Thomas Jefferson, Letter to the Secretary of the Treasury Albert Gallatin (1802)

Enough Said, I think.

Posted 23 July 2008, Hide, Reply