Wachovia to raise $7 billion of capital, slash payout Wachovia Corp said on Monday that it would raise $7 billion of capital and slash its dividend as it posted a $350 million first-quarter net loss and a higher loan-loss provision. The surprise announcement sent Wachovia shares tumbling 10% in pre-open trading. "Overall, (it was) a disappointing quarter as expected," Fox-Pitt analyst Andrews Marquardt said in a Monday research report. "While we are pleased by management's actions to build reserves...we are surprised by the size of potential capital raise." Wachovia's need for capital comes only two months after the Charlotte, N.C., bank raised $3.5 billion through a preferred-stock sale.
Deutsche Bank seeking to sell $20 billion in debt European banks are facing another round of losses from the credit crisis, with Deutsche Bank looking to sell as much as $20 billion of leveraged-buyout debt and Credit Suisse expected to write down as much as $5 billion in the first quarter, according to media reports. The price private-equity firms would pay for the debt is unclear, but the prevailing market price is around 90 cents on the dollar. Deutsche Bank is talking to some of the same private-equity firms as Citigroup, though the German bank is looking to sell off the debt in smaller parcels, the Journal said. Deutsche Bank could also be trying to cut its 35 billion euro ($55 billion) loan balance before it updates its investors on April 29.
US banks Citigroup and Merrill Lynch reveal fresh $15bn loss CITIGROUP and Merrill Lynch will heap further pain on Wall Street this week as they reveal additional sub-prime write-downs totalling $15 billion (£7.6 billion) or more. In another sign of the intense pressure on leading banks, Deutsche Bank is attempting to offload some of its €35 billion (£28 billion) of toxic debt to a consortium of private-equity firms. Huge exposure to American mortgages is expected to result in Citi taking a $10 billion hit to its accounts, dragging the bank to a first-quarter loss of almost $3 billion. Some analysts believe Citi’s write-downs could stretch to as much as $12 billion. Merrill will suffer $5 billion of write-downs, analysts say, which would push the bank $2.7 billion into the red.
Wall Street braces for grim bank results Wall Street is gearing up for another round of grim financial news, this time in the form of first-quarter financial results that many banks are scheduled to report next week. Several of the country's largest banks are on deck to issue their quarterly numbers, including J.P. Morgan Chase & Co. and Wells Fargo & Co. on Wednesday, followed by Merrill Lynch & Co. on Thursday and Citigroup on Friday. Some of the banks recently making headlines, as possible acquisition targets or for receiving enormous cash infusions, will be reporting as well, including Washington Mutual on Tuesday and Wachovia Corp.
M3 Money Supply and Inflation: Got Gold? People are running around trying to figure out why in the heck the price of everything from gas to food to electricity is going nuts. Many, including some not so well educated financial analysts call this inflation. The truth is, inflation is not the price of things increasing. When prices rise, this is merely the symptom of what true inflation is: adding more currency to the money supply. This is not rocket science. When you have more of something, it is worth less. Therefore, if you add more dollars to the available supply of dollars, obviously each dollar is worth less. Preposterous you say? Well let me put it another way, if dollars were as common as rocks lying on the ground, how valuable would they be?
The incredible shrinking city Youngstown, Ohio, has seen its population shrink by more than half over the past 40 years, leaving behind huge swaths of empty homes, streets and neighborhoods. Now, in a radical move, the city - which has suffered since the steel industry left town and jobs dried up - is bulldozing abandoned buildings, tearing up blighted streets and converting entire blocks into open green spaces. More than 1,000 structures have been demolished so far. Under the initiative, dubbed Plan 2010, city officials are also monitoring thinly-populated blocks. When only one or two occupied homes remain, the city offers incentives - up to $50,000 in grants - for those home owners to move, so that the entire area can be razed. The city will save by cutting back on services like garbage pick-ups and street lighting in deserted areas.
Fannie warns homeowners who walk away The country's two largest sources of mortgage money have a blunt warning for anyone thinking about joining the growing "walkaway" trend, where homeowners stop making payments and months later send the house keys back to their lender: You will feel the pain. On March 31, Fannie Mae sent out new guidelines to lenders intended for walkaways and other foreclosure situations. Fannie will now prohibit foreclosed borrowers from getting another mortgage through the giant investor for five years, unless there are "documented extenuating circumstances." In those cases, the mortgage prohibition is for three years. Even after five years, borrowers with foreclosures in their files will be required to make at least a 10 percent down payment, and will need minimum FICO credit scores of 680.
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