[R]1:30PM New York – Wachovia reported second quarter loss on higher write downs in financial assets, plans to eliminate 6,400 jobs and reduce dividend by 75%.[/R]

Wachovia Corporation, the fourth largest U.S. bank, said Tuesday it will stop originating wholesale mortgage origination business after posting a wider-than expected $9 billion loss in the three months to June 30.

The bank said it will exit wholesale mortgages origination business before July 25, and that the second quarter dividend will be cut to 5 cents from 37.5 cents per share, as part of measures to conserve cash from mounting losses from ill-times acquisitions by former chief executive Thompson.

Wachovia hopes to save as much as $5 billion in these and other measures, with about $700 million per quarter from lower dividend payouts

The second quarter loss of $4.20 per share, which include results from A.G Edwards Inc purchased last October compared to net income of $2.34 billion or $1.22 per share reported in the year ago quarter.

Excluding goodwill impairment of $6.1 billion and net merger-related and restructuring expense of $128 million, Wachovia reported a loss of $2.67 billion, or $1.27 per share in the quarter.

Wachovia is the latest bank to stop wholesale mortgage business after Bank of America and National City exited from the business a year ago.The companies have been hard hit by the slowdown in the US housing market and lack of risk controls by the banks.

Wachovia said it ""recognized some opportunities to re-position our business"" in current market conditions.

Wachovia will also shift its focus to refinancing existing pick-a-pay mortgages into conventional mortgage products. It said more than 1,000 mortgage staffers will be re-deployed ""to assist customers in avoiding foreclosures and meaningfully reduce the company's risks in the mortgage area.""

Wachovia hired Robert Steel as its new chief executive on July 9 after the ousting of predecessor Ken Thompson who is credited with ill timed purchase of subprime lender. Wachovia bought mortgage lender Golden West Financial in 2006 for about $25 billion at the height of the housing boom.

But Golden West sold pick-a-pay mortgage to risky borrower that left the group with $120 billion worth of deteriorating loans, as it let borrowers skip some payments.

Wachovia said it was streamlining expenses and capital expenditures, cut the number of credit-only commercial borrowers and dispose of non-core assets, as part of strategies to maintaining a healthy balance sheet.

Golden West Haunts

For the three months to June 30, Wachovia reported revenue decline of 13.8% to $7.5 billion from $8.7 billion a year earlier, sustained by higher banking fees.

Analysts surveyed by Thomson Financial expected second quarter loss of 78 cents per share on revenue of $8.37 billion.

Net interest margin was at 2.58% while net interest income declined to $4.3 billion compared with $4.5 billion same period in 2007. Fee and other income fell 23.8% to $3.12 billion. In the quarter, return on equity plunged to a negative 49.1% from a positive 13.54% a year earlier.

Total assets under management were $245.9 billion at June 30, 2008 driven by net outflows of $17.6 billion as well as $11.2 billion in lower market valuations. Wachovia ended the quarter $50 billion in regulatory capital and Tier 1 ratio of 8%, which was up from 7.5% at the end of 2007.

The bank added $5.6 billion to its loan loss reserve to cover net charge-offs and increase the reserve by $4.2 billion.

The provision largely reflected current and anticipated severe deterioration in the residential housing market, particularly in specific markets in California and Florida.