National City (NCC), Wachovia (WB) Clobbered on WaMu Failure

Following the FDIC's seizure of Washington Mutual (NYSE: WM) last night, traders are pouncing on shares of National City (NYSE: NCC) and Wachovia (NYSE: WB). National City is currently down 46% to $2.72 and Wachovia most recently traded at $9.57, down 30% from yesterday's close.

Coming to the rescue, JPMorgan (NYSE: JPM) announced that it would acquire WaMu's assets, immediately writing-down about $31 billion in estimated further losses on what it believes could be the remainder of WaMu's impaired loans. With shares of National City and Wachovia down so much today, investors seem to be betting that either bank could be the next to see further writedowns, effectively creating the need to raise more capital.

Considering that neither of these banks can be shorted, it is concerning, to say the least, to see such one-day declines.

Despite credit markets which are nearly at a stand-still today, National City has just issued a statement saying it is "strong, stable and well-capitalized". Nat City said that is "different from WaMu as it has a diversified commercial bank model." The bank also said that deposits remain strong.

National City Corporation, a financial holding company, provides commercial and retail banking, mortgage financing and servicing, consumer finance, and asset management services in the United States.

Wachovia Corporation, a financial holding company, provides commercial and retail banking services, and other financial services in the United States and internationally.

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