Guardian UK: US banks slip further into crisis

[marmar]

Fourth-largest US bank resorts to emergency fundraising
Jill Treanor guardian.co.uk, Monday April 14 2008


America's fourth-largest bank, Wachovia, is raising $7bn (£3.52bn) through emergency fundraising as the subprime mortgage crisis in the US continues to reverberate through the banking sector.

Wachovia is raising the funds through public offerings of common and convertible preference stock after incurring a surprise $350m loss in the first quarter of 2008 compared with $2.3bn in profit a year earlier.

The news came today as two of the biggest names in Wall Street - Citigroup and Merrill Lynch - were poised to report huge write-downs because of the continuing credit crisis. Analysts are bracing themselves for total write-downs of $17bn when the two banks report their quarterly results later this week.

At North Carolina-based Wachovia, the loss was caused by a rise in provisions against loans which had turned sour, particularly mortgages hit in the housing downturn. These option adjustable rate mortgages begin with a low interest rate, which is then replaced by a heftier charge.

Wachovia's chief executive, Ken Thompson, blamed the "precipitous decline in housing market conditions and unprecedented changes in consumer behaviour" for the figures. The group bought Golden West Financial Corp, a specialist in these adjustable rate mortgages, just before the home loan market plunged. It has set aside $2.8bn for credit related losses compared with $177m in the same quarter last year before the home loan crisis began.

To conserve $2bn of funds, Wachovia is cutting its quarterly dividend by 41% to 37.5 cents per share. ........(more)

The complete piece is at: http://www.guardian.co.uk/business/2008/apr/14/creditcrunch.useconomy

[DemocratInSoCal]

1. But THIS Is The Bottom

Things will get better.

Grey skies are gonna clear up, put on a happy face.

:-)

:sarcasm: Off

[dixiegrrrrl]

2. So Wachovia is blaming the "consumers" for this problem?

"unprecedented changes in consumer behaviour"


uh....just what behavior changed?
Seems to me the sheep were happily signing off onto unsurmountable
levels of debt..
then they "changed"
and started walking out of the rigged game.

[Nay]

3. Yeah, this pisses me off, too. What? Consumers have run out of

credit to buy shit and it's all our fault? How about YOU GUYS stop depending on an unending fountain of consumer cash, esp since your fellow corporations have been sending jobs overseas, cutting jobs, slashing pay, raising gas prices, etc.?