Wachovia: Customers unmoved by rumors

On Wall Street yesterday, speculation continued to swirl whether Wachovia Corp. would merge with investment bank Morgan Stanley.

But on Market Street in Philadelphia, Wachovia customers went about their business calmly and even oblivious to the financial-market turmoil that has shoved their bank into this mating dance.

For some customers, the Wall Street meltdown is so unpredictable and widespread that it seems pointless to worry about any one institution. After falling as low as $7.80 in mid-July, Wachovia's shares traded as high as $24 yesterday before closing at $18.75, up 29 percent for the day.

"I just think everything is so unstable right now." clinical researcher Lorraine Quarles said after making a loan payment at the Wachovia office in the 1700 block of Market Street. "I wouldn't run and move my money. I'm not that type. I just don't see what the advantage is."

She's right. Wachovia still has plenty of capital, although it is likely to have to take more losses on its home-loan portfolio. The federal government also provides insurance on up to $100,000 per bank account.

The Morgan Stanley rumors that emerged at mid-week also died down a bit by the end of week, though analysts said a deal still could occur. Morgan Stanley's shares rallied, closing at $27.21, up 21 percent from a day earlier, on news of a new federal plan to stabilize the country's financial sector.

Neither company is commenting on the merger possibility.

Both Morgan Stanley and Wachovia have weaknesses. The merger rationale would be to link Wachovia's deposits with Morgan Stanley's investment-banking business to create a stronger institution with more diversified revenues, CreditSights, a credit-research company, said in a report Thursday.

The ups and downs got the attention of Wachovia customers Jeff Marcus and his mother. Marcus rattled off the movements in the Dow Jones and in Wachovia's stock price as easily as if they were the letters of the alphabet. He said he had gotten out of the stock market five years ago because of its volatility and so had less reason to worry than many people.

Alex Feldenstein fell back on what he learned in his previous career as a financial adviser to explain why he thinks Wachovia depositors should not worry.

"There may be issues with credit and liquidity, but I don't think it's going to affect customers," Feldenstein said. The federal government deposit-insurance program only boosts his confidence further.

Michele Bellamy, who was making a deposit for her mother, said she had not heard about Wachovia's woes. Her mother, she said, "is a news-watcher and a worrier, as far as her Social Security, her income and the economy, and she hasn't mentioned anything to me."