Tuesday, July 22, 2008

Chronicles Of Depression 2.0: #168

An ad I saw moments ago at my Yahoo homepage:

And now this:

Wachovia has $8.9B loss, cuts 6,350 jobs, dividend
CHARLOTTE, N.C. (AP) -- Wachovia Corp. 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.

Even excluding one-time items, the results substantially missed Wall Street estimates, and shares sank to mid-1991 levels in premarket trading.

"These bottom-line results are disappointing and unacceptable," Chairman Lanty Smith said in a statement. "While to some degree they reflect industry headwinds and weaker macroeconomic conditions, they also reflect performance for which we at Wachovia accept responsibility."

Emphasis added by me.

And yet Smith did not tender his resignation after making that statement! So who is accepting responsibility? I'd say the 6,350 people who are losing their jobs!
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.

Emphasis added by me.

How bad is the bloodletting?
During the quarter, the bank boosted its provision for loan losses to $5.57 billion from $179 million a year ago, and added $4.2 billion to its reserves for bad loans.

Wachovia has been suffering from its 2006 acquisition of Golden West Financial Corp. The bank paid roughly $25 billion for the California mortgage lender known for exotic loans.

The so-called "Pick-a-Payment" loans, which Wachovia inherited from Golden West, have proved a headache for the bank and a lightning rod for shareholders, defaulting at higher rates than other mortgages.

Emphasis added by me.

So was Wachovia greedy to begin with or -- like Golden West's victims -- was Wachovia wooed by a Something For Nothing pitch?

Here's something I mentioned earlier this week:
Late Monday, Wachovia announced plans to leave the wholesale mortgage lending business. And beginning Friday, the company will no longer offer mortgages through brokers, joining other lenders making similar moves to exit the troubled sector.

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.

Emphasis added by me.

So, they all have loan officers after all!

That means there's simply one explanation for this mess: Sheer Naked Greed!

Rot and collapse, you toxic bastards!

Where's your money today?

Educate yourself!

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