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Could-Have-Been-Worse News Now Cheers Wall Street

Posted Jul 23, 08 5:56 AM CDT in Opinion,  Business 

(Newser) – Yesterday's announcements of multibillion-dollar losses at Wachovia and Washington Mutual were only the latest poundings since the credit crisis took hold a year ago. Yet Wall Street, its expectations at rock bottom, cheered the reports because they could have been worse. Shares in WaMu, which posted a $3.3 billion quarterly fall, soared 6.2%. "We are redefining bad," one risk analyst told the New York Times.

This week the CEO of Bank of America insisted that the industry was making a recovery—as proven by his bank's lost of only 41%. But cooler heads warn that the crisis has a long way to go. The problem is no longer just subprime loans and the securities they backed, but a broader economic downturn that could become a recession. "The bad news is going to get dramatically worse," warned a former bank CEO. 

Source New York Times

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In this Oct. 24, 2007 file photo, pedestrians pass a branch office of Bank of America in New York.   (AP Photo/Mark Lennihan, file)
An employee unlocks the door to a Washington Mutual Inc. branch in downtown Seattle Tuesday, July 15, 2008.   (AP Photo/Ted S. Warren)
A sign in the window of a Washington Mutual Inc. branch in downtown Seattle reads "Sit, bank, and relax."   (AP Photo/Ted S. Warren)
In this July 10, 2008 file photo, Wachovia CEO Robert Steel speaks during a news conference in Charlotte, N.C.   (AP Photo/Chuck Burton, file)
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Financial Crisis • credit crisis • recession • subprime mortgages • Wachovia • mortgage backed securities • Washington Mutual • quarterly results


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