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Sovereign Falls in Wall St. Plunge

Amid the huge selloff on Wall Street Monday, shares of Sovereign Bank fell more than 70 percent.

WBUR's Curt Nickisch reports.

Sovereign's stock nose-dived after the company said it had taken a several hundred million dollar loss by selling risky mortgage debt. At the same time, big investor hedge funds, hurt by the Washington Mutual and Wachovia bank buyouts, were pulling their money out of Sovereign.

That selloff was amplified by the larger crash on Wall Street, according to Gerard Cassidy, an analyst with RBC Capital Markets. With Sovereign, he thinks investors are overreacting. He says the Boston-run bank will still have to sell more bad investments, but that it has enough capital reserves to get through.

Other local financial institutions lost big on Wall Street, too, including First Marblehead, State Street and Boston Private Holdings.

This program aired on September 30, 2008. The audio for this program is not available.

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