If there were any thoughts that the the government guarantee of Freddie Mac and Fannie Mae was a spoonful of sugar that made the medicine go down, the illusion was shattered this morning with the announcement of decidedly bitter quarterly results from Wachovia.
Bloomberg reported Wachovia's staggering $8.9 billion second quarter loss today. Dividends have been slashed, 6,350 employees will be terminated The bulk of the loss, $6.1 billion, was a write down of declining asset value.
Wachovia stock was down 9% in early trading today and has lost a cumulative 65% in 2008.
Phoenix Partners Group stated that the cost of protecting Wachovia's debt rose 10 basis points to 315. Fitch Ratings lowered Wachovia debt to A+ from AA-, while Moody's downgraded it to A1 from Aa3.
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