Bank Shares Slump, Led by Wachovia
David Gaffen
Wall Street Journal
September 26, 2008
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Following the failure of Washington Mutual Inc., investors are taking aim at other major banks, particularly Wachovia Corp. and National City Corp, both of which are sustaining double-digit losses in early Friday action.
Shares of Wachovia have dropped 18% and were the most actively traded on the Big Board, while National City was down 19%. The Philadelphia Stock Exchange/KBW Bank Index was down 2.4% as most components were hit on another stressful day for financial institutions.
The failure of WaMu — not long after substantial investments by private-equity groups — has some investors rethinking investments in a sector that has seen previous bottom-picking attempts get run over by the steaming wreckage that is the credit crisis. Banks have been hurt by the seizing-up in credit markets, as commercial paper markets have been inactive and banks remain reluctant to lend to one another.
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