Wachovia Is Said to Raise Billions Amid Credit Losses

NY Times ^ | 14 Apr 2008 | Eric Dash

[BGHater]

The Wachovia Corporation, the country’s fourth largest bank, is raising several billion dollars from outside investors because of mounting housing losses and an ill-timed acquisition of a big California mortgage lender, people briefed on the matter said Sunday night.

It is unclear whether the investment will come from the issuing of new shares of stock to the public or from private investors. Wachovia said Sunday night that it would move up the release of its first-quarter earnings to Monday from Friday, without explanation. That has led to speculation that an announcement of an investment deal could come with its earnings report.

Representatives of the bank did not return calls seeking comment about the investment.

Wachovia is the latest financial institution to seek outside funding. Citigroup, Merrill Lynch and UBS raised tens of billions of dollars from foreign and private equity investors last fall, and last week Washington Mutual secured $7 billion from a group of investors led by the buyout firm TPG.

Meanwhile, other lenders, including small local banks, are actively looking to raise capital. Taken together, the moves show how quickly the banking industry’s health has deteriorated.

[ken21]

there was an interesting piece of propaganda in the nyt today.

it suggested that milton friedman’s contributions to economics

are no longer valid because of the sub-prime meltdown.

they want to end the friedman-reagan years of less government intervention.

[Moonman62]

I believe government intervention helped create the subprime crisis.

[Pearls Before Swine]

they want to end the friedman-reagan years of less government intervention

I'd say those policies ended some time ago. The subprime mess was largely sponsored by government inflation of the monetary supply, fostered by the low interest rates of the Greenspan Fed for years after they were needed. The seeking out of many high-risk borrowers was also in response to government "neighborhood lending" policies as well.

[Jimmy Valentine]

Couldn't happen to a more deserving financial institution. Wachovia in name is actually First Union in fact.

They had lots of fun destroying careers and trashing out banks they bought along the way.

My personal hope is that their payback hurts like sin.

[Jimmy Valentine]

"I believe government intervention helped create the subprime crisis."

You are perfectly correct.

The Clinton Administration in the person of Deval Patrick sued banks left and right to make them give more loans to the deserving poor and underserved.

This is the harvest.

[redgolum]

How long till someone says “We have to bail them out For the good of the country!”

Yet no one cares when anything else fails and a lot more people end up out of work.