Wachovia, WaMu lose billions on mortgage problems

News staff and wire reports

Published July 22, 2008 at 9:05 p.m.

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Two banks with extensive Colorado branch networks posted multibillion-dollar quarterly losses.

* Charlotte, N.C.-based Wachovia, the fourth-biggest U.S. bank, slashed its dividend and said it would eliminate 6,350 jobs as it reported a second-quarter loss of $8.9 billion, more than the company has ever earned in an entire year.

Wachovia entered Colorado in 2006 with the purchase of Oakland, Calif.-based World Savings Bank. According to federal data, it had 34 offices and $5.5 billion of deposits as of June 30, 2007, good for fourth place in the state in deposit market share.

* Seattle-based Washington Mutual, the biggest U.S. savings and loan, reported a $3.3 billion second-quarter loss on uncollectible loans as a record number of borrowers were unable to keep up with mortgage payments. The loss of $6.58 a share compared with net income of $830 million, or 92 cents a share, a year earlier.

WaMu, as it's known, had 47 offices and $498 million in Colorado deposits as of June 30, 2007, according to federal data.

Wachovia led a rally in financial stocks, climbing 27 percent to $16.79, as some investors believed the worst is over.

WaMu's results came after the markets closed.

Wachovia CEO Robert Steel said Tuesday he planned to cut

$2 billion of expenses and sell parts of the bank. The company's shares rose 27 percent on optimism that Steel, the U.S. Treasury official hired two weeks ago, can stem damage from the worst housing market since the Great Depression.

"We're serious about getting on top of these issues quickly," Steel, 56, said. He described the bank's attitude as "prudently paranoid."

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