Could-Have-Been-Worse News Now Cheers Wall Street

A year into crisis, analysts redefine once-shocking news as not so bad
By Jason Farago,  Newser Staff
Posted Jul 23, 2008 5:56 AM CDT
Could-Have-Been-Worse News Now Cheers Wall Street
In this Oct. 24, 2007 file photo, pedestrians pass a branch office of Bank of America in New York.   (AP Photo/Mark Lennihan, file)

Yesterday's announcements of multibillion-dollar losses at Wachovia and Washington Mutual were only the latest poundings since the credit crisis took hold a year ago. Yet Wall Street, its expectations at rock bottom, cheered the reports because they could have been worse. Shares in WaMu, which posted a $3.3 billion quarterly fall, soared 6.2%. "We are redefining bad," one risk analyst told the New York Times.

This week the CEO of Bank of America insisted that the industry was making a recovery—as proven by his bank's lost of only 41%. But cooler heads warn that the crisis has a long way to go. The problem is no longer just subprime loans and the securities they backed, but a broader economic downturn that could become a recession. "The bad news is going to get dramatically worse," warned a former bank CEO.  (More Wachovia stories.)

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