Real Estate Investing News - Wachovia Having Major Problems

Wachovia Corporation, according to Bloomberg.com, announced Tuesday, July 22, that it was posting a record $8.9 billion quarterly loss, slashing dividends to five cents per share, and cutting 6,350 jobs.

Coming on the heels of the recent Indybank collapse in California, Wachovia's news was not welcome on Wall Street, and the value of the dollar has suffered as a result as well. Almost a billion dollars of the loss came from paying a charge from a tax court ruling that involved Wachovia's leasing transactions.

Part of the loss was a $6.1billion decline in asset values, which is due in part to the current mortgage crisis and Wachovia's recent acquisition of Golden West Financial.

Declining property values in California and Florida, which comprises around 70% of Golden West's mortgages, has staggered Wachovia. This latest setback, accompanied by the scandal reported by the New York Times last year that telemarketing companies had bilked the elderly of hundreds of millions of dollars and that, according to documents obtained in the subsequent lawsuit, Wachovia bank executives had actually solicited business from companies that had been accused, has dropped Wachovia's stock to trading barely above $10 per share ($13.18 at Monday's close).

Wachovia, through acquisitions and mergers, has grown to become one of the nation's leading financial institutions, and, with the absorption of A. G. Edwards in May, 2007, is the second-largest retail broker (behind Merrill Lynch) in the United States.Should these losses, dividends and job cuts have people in a panic?

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Just what do you think of the mortgage crisis? Panic or Pressure? Feel free to comment below...I want to hear from you.

From Miami

Matt Gerchow
www.real-estate-investing.com