Wachovia's last earnings announcement was a doozy. It reported a massive $24 billion loss. That's $2.23 a share loss versus expectations of a 2 cents a share loss. Ouch! Portfolio wonders if Vikram Pandit was sitting back chuckling. His counterpart at Wells Fargo, John Stumpf, put the right spin on it: "We're more encouraged than ever by what we've seen in their franchise, and we're pleased that Wachovia's team continues to focus on serving customers." But clearly the carnage inflicted by the credit crisis was severe. "While average deposits were up 4 percent during the period, actual deposits at the end of it were down 2 percent over last year, which suggests a bit of a run on the bank during the final weeks of the quarter," Portfolio writes. And here's the shocker: Wachovia said it expects losses of various option ARM-type mortgages to hit $26 billion by the end of next year. Recall that it paid $27 billion for Golden West last year. Wells seems to know what it is getting into. We'll see.

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