Industry News

Wachovia reports additional $1.1 billion in subprime losses

AIG also reports write-down related to mortgages

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Wachovia Corp., which announced in third-quarter earnings last month that it had boosted provisions for loan losses to $408 million in response to "modest deterioration in credit quality," today announced a $1.11 billion pre-tax loss in October on its subprime mortgage portfolio. "Following the October 2007 announcement of third-quarter 2007 results ... certain financial markets experienced further deterioration, particularly the markets for subprime residential mortgage-backed securities and for collateralized debt obligations collateralized by (those securities)," the company reported in a U.S. Securities and Exchange Commission filing. CDOs are used to securitize financial instruments such as bonds, loans and asset-backed securities, and divide them into various risk categories, called tranches. Wachovia is among a series of financial services companies to announce large write-downs related to subprime mortgage-related assets. Morgan Stanley this week reported that it lo...