Q. What led to this?
Wachovia's job cuts and losses represent fallout from problems battering the U.S. economy.
Years of lax mortgage lending spurred a building boom and helped drive up home prices. A lot of people got mortgages they couldn't afford. That resulted in waves of foreclosures, which have spooked the stock market, produced a glut of homes for sale and driven down prices. Lenders tightened standards and raised interest rates. That means a growing number of people, including some with good credit, can't buy homes.
Wachovia has been especially hard hit because of its 2006, $24 billion acquisition of mortgage specialist Golden West Financial. The company's Pick-A-Pay mortgage holders have had higher default rates than Wachovia's traditional borrowers. The bank has largely abandoned Pick-A-Pay mortgages.
Q. How do Wachovia's woes compare to those of other banks?
Most financial firms have been hurt by the mortgage mess, but Wachovia's problems in the second quarter were worse than those of other big banks.
Charlotte rival Bank of America saw earnings fall 41 percent, but it still led its peers in profits, earning $3.41 billion.
Q. If I'm a Wachovia customer, are my checking, savings and other accounts safe?
The average customer shouldn't be affected by the recent changes at Wachovia.
Steel says the bank has $50 billion in capital, substantially above what federal regulators require. Analysts have not suggested that Wachovia is having problems akin to this month's highly publicized failure of California-based IndyMac Bancorp.
Q. Is Wachovia going ahead with its First Street Cultural Campus, which includes a new headquarters and a planned condo tower?
Tom Wurtz, Wachovia's chief financial officer, said to expect “continued progress on all fronts.”
“No change in schedule for the office tower,” he said. As for the planned condo, he said it is “of great interest to us.” However, Wachovia might pursue that project with a partner.
Uptown's condo market has struggled in the downturn, with two towers postponed, one in foreclosure and another stalled by a legal dispute. David Furman, one of Charlotte's early high-profile condo developers, said Wachovia has a year or more to consider its next steps because the condo would sit atop a museum still under construction. “It's not worth worrying about today,” Furman said.
Q. How do these moves compare with other cutbacks?
In 2000, then-First Union's restructuring included a $2.8 billion charge and nearly 5,300 job cuts. The following year, the Charlotte bank merged with Wachovia and kept the Winston-Salem bank's name. Early in 2005, Wachovia announced that by 2007 it would eliminate up to 4,000 jobs.