David Chang_

Next Victim, Please!

Wachovia is the next to fall. It has $120 billion in option ARMs. JPM marked these loans down 17%. This would result in a $20 billion writedown. WB has another $130 billion in residential real estate assets (Alt-A, home equity and subprime).

If WB were to mark assets down to the JPM/Wamu levels, WB would have to writedown an astounding $30 billion. Could WB raise $10-15 billion without severely diluting shareholders?