Wachovia Loses $8.86 Billion, (BECAUSE OF ILLEGALS)Slashes Jobs

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http://www.inglewoodtoday.com/index.php?option=com_content&task=view&id=1442&Itemid=3
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Thursday, 24 July 2008

For the second time in a week, a major U.S. bank has announced sweeping financial troubles. Wachovia Corp. has reported a record quarterly loss of $8.9 billion and 6,350 job cuts. Dividends have been slashed as stock in the U.S. bank plummeted as much as 10 percent. Stock had fallen $1.18 or 9 percent, to $12 by Tuesday morning, bringing the total decline to 65 percent this year.

Two weeks ago, the bank hired Treasury Undersecretary Robert Steele as chief executive director. He replaced former CEO Kennedy Thompson, who held the position for 8 years, before he was fired.

Adding to its woes, the bank is still recovering from its $24 billion purchase of Golden West Financial Corp. two years ago just as home prices were peaking. Golden West is a specialist in option adjustable-rate mortgages-many of which have been blamed for the record number of loan defaults.

Wachovia is setting aside $10.96 billion for credit losses, up from $6.77 billion in the first quarter and $3.55 billion a year earlier. Net charge-offs increased more than eight-fold from a year earlier to $1.31 billion.

Job cuts will affect more than 5 percent of approximately 120,000 employees, including about 2,000 retail mortgage jobs. Wachovia said it will also eliminate at least 4,400 open positions and contractors in the next year.

Steel said he is trying to unload troubled assets and slash costs to help clean up the mess. Wachovia plans to cut 2009 expense growth by $1.5 billion.

This news comes on the heels of Indymac Bank's failure last week, which sent thousands of depositors running to retrieve their money. The bank is being investigated by the FBI for fraud.

Critics blame Wachovia's woes on the large number of subprime loans made to illegal immigrants. According to the Center for Responsible Lending, just over one-half of African Americans and 4 in 10 Hispanics got subprime loans in 2006.
Coincidentally, 7 of the 10 highest foreclosure areas have high concentrations of Hispanics, including Merced, Salinas-Monterey and Riverside, CA.

Wachovia Corp. is the fourth-largest U.S. bank