Tuesday, July 22, 2008
The pain spreads
Wachovia, America's fourth largest bank chain, has announced a record quarterly loss of $8.9 billion and slashed its dividend by 87%. Yesterday Wachovia announced its intention to exit the wholesale mortgage business altogether. The company has suffering big losses from its 2006 acquisition of Golden West Financial Corp, which pioneered the "pick a payment" negative amortisation loans, which allowed a borrower to make payments lower than the interest due on the loan. The fallout cost former CEO Kennedy Thompson his job after eight years.. Wachovia shares are down 75% from their peak last year.