Sneak up behind them and say “Mortgage portfolio!”
Seriously, aside from this Charlotte Business Journal story last week, there has been precious little local media attention paid to the troubled mortgage and credit market in what is supposed to be one of America’s banking capitals. (No, I don’t count the Uptown paper of record’s months of complaints about Beazer homes as being focused on credit markets.)
And you do not even have to jump to the conclusion that BofA or Wachovia have some sort of direct exposure to the over-leveraged aspects of the market. Merely as participants in the broader credit and lending sector there has to be some sort of impact on the two giants as a result of a general tightening of credit after years of easy money.
Having said that, Wachovia execs seem far too glib about the status of their Golden West Financial arm. You do not want to be holding a bunch of California no-money-down mortgages during the bust cycle of the state’s infamously fickle real estate market. Plus they do not seem to grasp that California’s high-tax, high-regulation model has been steadily chasing off jobs and economic activity for a solid decade now.
And if Wachovia’s outlook seems too sunny, Jim Cramer more than makes up for that with a sky-is-falling tirade directed at the Fed which must be seen to be believed. Bottomline, Cramer and all the market sharpies talked themselves into believing that the Fed would start cutting interest rates tomorrow, and now they are having doubts that will actually happen.
No one to blame but yourselves, guys.
