NEW YORK--Wachovia Corp. (WB)shares plunged Friday, one day after JPMorgan Chase & Co. (JPM)agreed to acquire the deposits of failed thrift Washington Mutual Inc. in an emergency sale.
Shares plummeted $3.96, or 28.9 percent, to $9.74 in afternoon trading. Shares are down 64 percent this year.
The move comes after WaMu collapsed on Thursday and the Federal Deposit Insurance Corp. seized and sold its banking assets to JPMorgan Chase & Co. for $1.9 billion.
Seattle-based WaMu failed under the weight of mounting losses tied to bad mortgage bets. Investors have now shifted their focus to other banks, like Charlotte, N.C.-based Wachovia, that also suffer from toxic assets, concerned about their ultimate fate.
"Wachovia is obviously trading down in sympathy," said Kevin Fitzsimmons, an analyst at Sandler O'Neill & Partners, in a telephone interview. "Investors are looking for who else out there has a large exposure to mortgage assets that potentially could be written down to a significant degree."
Wachovia's current problems stem largely from its acquisition of mortgage lender Golden West Financial Corp. in 2006 for roughly $25 billion at the height of the nation's housing boom. With that purchase, Wachovia inherited a deteriorating $122 billion portfolio of Pick-A-Payment loans, Golden West's specialty, which let borrowers skip some payments.
Banks Scramble to Realign
