Wachovia's Loss a Grim Sign for Banks

Selling Stocks Short; April 15, 2008

Saw this in the paper - makes for some interesting reading. We're not out of the woods yet which means there is life on the short side.

RAC
The Intelligent Trader

Wachovia's Loss a Grim Sign for Banks

NEW YORK (AP) - The shocking first-quarter loss at Wachovia Corp., a company long viewed as a relatively conservative player during the mortgage boom, suggests that 2008 will be at best a rebuilding year even for the nation's better-positioned banks.

Results this week from large banks such as JPMorgan Chase & Co., Citigroup Inc., Washington Mutual Inc. and Wells Fargo & Co. should shed more light on how much fixing-up the industry has to do. So far, it's not looking pretty—and that means fewer loans for consumers, skimpier dividends for shareholders and more job cuts.

Wachovia's $393 million quarterly loss was accompanied by a 41 percent dividend cut, plans to eliminate 500 jobs in its corporate and investment bank, and a move to sell $7 billion worth of stock. Many banks have already tried to raise cash through stake sales—Wachovia itself raised $8.3 billion earlier this year, Citi has raised about $20 billion, and WaMu has raised $5 billion, just to name a few.

Read the rest