Wachovia bank has $8.8 billion loss, slashes dividend

Wachovia Corp. announced a whopping second quarter loss of $8.9 billion this morning, and outlined a turnaround plan that includes discontinuing wholesale mortgage origination.

The Charlotte bank also cut its quarterly dividend to 5 cents per share from 37.5 cents.

The bank has been suffering from its 2006, $24 billion acquisition of Golden West Financial, a California mortgage lender known for exotic loans. The so-called Pick-a-payment loans, which Wachovia inherited from Golden West, have proved a headache for the bank and a lightning rod for shareholders, defaulting at higher rates than other mortgages.

Chief executive Bob Steel, who was hired by Wachovia less than two weeks ago, had hinted that the bank would trim its balance sheet, with a focus on the mortgage portfolio

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