Both Morgan Stanley and Goldman Sachs lobbied the Federal Reserve to become bank holding companies over the weekend. Their bid was approved by the Fed, ending the era of the independent investment bank.

We need to give Wachovia a bit of credit for warning investors that its earnings were going to be dismal. When you are a week away from posting a nearly $9 billion loss, and the boneheaded analyst community is still anticipating a profit, it's wise to issue a press release.

Analyst Merideth Whitney, who has gained some infamy lately with here bearish (and accurate) calls about the fallout from the housing debacle, called Wachovia's (NYSE: WB) prospects ‘bleak’ and downgraded the company to underperform due to the continued deterioration of the housing and mortgage markets.

Wachovia is eliminating all mortgage products, such as the “Pick-A-Payment” mortgage, that include payment options that can result in negative amortization. Additionally, Wachovia Corp. has decided to eliminate pre-payment penalties on its controversial “Pick-A-Payment” mortgage to help its customers deal with the recent landscape changes within the mortgage and financial markets in the US.

The Wachovia board ousted CEO Kennedy Thompson, blaming him for write-downs that have cost the company half its market value over the last year. Thompson was the lead architect on the purchase of World Savings (a/k/a Golden West) which was a leading Option ARM lender in California right at the peak of the housing bubble. When that deal went down any sane person had to wonder what was he thinking. From Bloomberg on Thompson’s removal:

Wachovia Corp on Thursday said two employees in its main banking unit are targets of a U.S. Department of Justice probe into competitive bidding in the municipal derivative markets.

Wachovia's Treasury Services division today announced it has reached the $1 billion mark in Remote Deposit Capture (RDC) volumes processed in one day.

EPS up 4% to $1.22 in 2nd quarter 2007

Wachovia Corp. and A.G. Edwards Inc. announced today an agreement under which Wachovia will acquire A.G. Edwards, which will be combined with Wachovia Securities, LLC, to create an industry-leading retail brokerage firm with $1.1 trillion in client assets and nearly 15,000 financial advisors. The combined firm will have an enhanced share of the U.S. brokerage market with significantly increased penetration in 48 of the 50 largest metropolitan statistical areas.