NEW YORK - Another day, more writedowns on Wall Street.
Wachovia Corp. on Friday became the latest major financial institution to warn of mounting losses in the credit markets, saying the value of securities it owns that are backed by loans sank by about $1.1 billion in October.
The nation's fourth largest banking company also said it plans to boost its allowance for loan losses in the fourth quarter due to expected credit deterioration in the housing market in certain regions. The provision is pegged at $500 million to $600 million in excess of charge-offs in the quarter.
Wachovia shares dropped 45 cents to $39.85 in afternoon trading Friday after sinking earlier in the day to a 52-week low of $38.05.
The news heightened fears that the fallout from the subprime turmoil is spreading deeper into credit markets. It also raised questions about the bank's 2006 acquisition of adjustable-rate mortgage lender Golden West Financial Corp. of Oakland, Calif.
Wachovia is now the latest bank to get hit with the subprime mortgage crash. And since Wachovia bought out Golden West Financial, you have to wonder how much of Wachovia's loses are due to it acquisition of Golden West. Or has Golden West even disclosed their own investment position in the subprime mortgage market? How much has Golden West lost in the mortgage market?
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