Volume Increases on Wachovia Bank Failure at Prediction Market
The online prediction market - Intrade.com - still listed Wachovia as having a 10 percent chance of failure by the end of this year. However, the asking price was now 20.00 and the volume was 50 (number of bets), the most of any of the dozen or so banks listed on the exchange. Bank United stood the largest chance of closing before the year was over with 35 percent. It should be cautioned that the amount of action taken on bank closures up to this point has been nominal at Intrade.
Bloomberg News reported Tuesday morning the gloomy news that Wachovia Corp., the U.S. bank that hired Treasury Undersecretary Robert Steel as chief executive officer two weeks ago and the nation's fourth largest bank, reported a record quarterly loss of $8.9 billion, slashed the dividend and announced 6,350 job cuts. The stock slumped as much as 10 percent in New York trading.
The second-quarter loss of $4.20 a share compared with net income of $2.3 billion, or $1.23, a year earlier, the Charlotte, North Carolina-based company said today in a statement. The loss included a $6.1 billion charge tied to declining asset values.
``Steel is clearly trying to get his arms around this,'' said Joseph Gordon, president of Gordon Asset Management in Durham, North Carolina, which owns Wachovia shares and manages more than $200 million. Even so, ``We aren't advising any clients to buy until they fess up and go full transparency on Golden West and their commercial lending problems.''
Wachovia shares have declined 65 percent this year, the second-worst performance on the 24-company KBW Bank Index behind National City Corp., Ohio's largest bank.
National City Bank had a 10 percent chance of closing before the year was done according to Intrade.
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Christopher Costigan, Gambling911.com Publisher CCostigan@CostiganMedia.com
Originally published July 22, 2008 12:38 pm EST
