Big loss at Wachovia: We're talking about nearly $9 billion, though two-thirds of that is in write-offs from bad loans. Net charge-offs - loans the company doesn't think are collectible - soared to 1.10 percent of total loans from 0.14 percent a year earlier. Wachovia, of course, is the bank that acquired World Savings parent Golden West Financial at exactly the wrong time – and is now paying the price.
From the NYT:
Investors had been bracing for large losses since the bank named Robert K. Steel, a former Treasury under secretary, as chief executive, to help steer it through the housing crisis. At the time, the bank said that it anticipated a loss of $2.6 billion to $2.8 billion on top of an unspecified merger-accounting charge. But Mr. Steel had every incentive to kick off his tenure with a “kitchen sink” quarter as he tries to clean up the bank’s problems.
Wachovia has faced staggering losses from its ill-timed acquisition of Golden West Financial, a large California lender that specialized in so-called pay-option mortgages. Loans made to builders and commercial real estate developers have started to sour. With the credit markets frozen, it has been forced to take steep markdowns on billions of dollars of unsold buyout loans and complex mortgage investments it holds on its books.
Markets down but not out: Stocks are getting bumped a little on this morning's Wachovia's news, but the losses have been modest so far (at last check the Dow was actually up a bit). Meanwhile, oil prices fell below $127 a barrel on news that Tropical Storm Dolly won't do damage to Gulf crude production.
Ford turning small: So much for pick-ups and SUVs. The nation's second-largest automaker will be converting three of its North American assembly plants from trucks to cars, the NYT is reporting. As part of the plan, Ford will realign factories to manufacture more fuel-efficient engines and produce six of its next European car models for the U.S. market. The formal announcement is expected on Thursday when the company reports earnings.
Ford’s chief executive, Alan R. Mulally, has directed an unprecedented overhaul of the company’s future products. Mr. Mulally, who joined the company from aircraft maker Boeing in 2006, is committed to reducing Ford’s dependence on large vehicles, according to people familiar with his plans. “We don’t have a sustainable company if we don’t do this,” Mr. Mulally recently told members of his management team. For at least a decade, about 60 percent of Ford’s United States sales came from trucks and S.U.V.’s, compared to 40 percent from cars and car-based crossover vehicles.
Qatar buys C-17s: It's the first Middle Eastern nation to purchase Boeing's C-17 GlobemasterIII airlifters, which are made in Long Beach (the program employs 4,900 workers). The Qatar order will make 16 international C-17s. Great Britain already has six in use and Canada and Australia each have four. Boeing's next international order likely will be two from NATO. (Press-Telegram)
Candy Spelling's $47-million pad: It will take up the top two floors of the Century, the ultra high-end condo going up next to the Century Plaza. The purchase price comes to $2,848 a square foot, which is a record for a Los Angeles condo (though other luxury units now under construction might top that number). Spelling's new home will be less than a third the size of her a 123-room, 56,500-square-foot mansion in Holmby Hills, but you can't beat the view, which will span from downtown to Catalina. From the LAT:
The lower floor will have a living room with two working fireplaces, a dining room for 25 guests, and staff quarters. The top floor will house the bedrooms including a 4,000-square-foot master suite, a massage room, an exercise room, a conservatory complete with rose garden, and a swimming pool and deck. Builders have yet to start construction of the top of the building, so they were able to make structural adjustments to accommodate the indoor pool that opens onto a balcony, said David Wine, vice chairman of Related Cos.
"Girls Gone Wild" mogul pleads not guilty: Joe Francis denied charges that he deducted more than $20 million in phony business expenses on his corporate returns during 2002 and 2003. In a brief hearing, he said he was a victim in an IRS whistle-blower program. The government alleges that Francis used offshore companies to conceal much of his income. (LAT)
Lacter on radio: This morning's business chat with KPCC's Steve Julian covers the latest jobless numbers and how Hollywood has kept working. Also on kpcc.org and on podcast.