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Financial Winners & Losers: Wachovia

Stocks in the sector rise late after a report says Paulson is considering creating a government entity to solve the market's credit mess.
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Financial stocks overcame an uncertain start Thursday and bolted higher in the afternoon following a report that Treasury Secretary Henry Paulson is floating the idea of a government entity -- similar to the Resolution Trust Corp. of the late 1980s that solved the savings and loan crisis -- to stem the current market's credit mess.

According to

CNBC

, the government program would take over bad debts from a number of financial institutions. After the report aired, the overall stock market rocketed higher, and the financials were some of the biggest beneficiaries.

The Amex Securities Broker/Dealer index was up 4.9%, the NYSE Financial Sector index was soaring 8.3%, and the KBW Bank index was jumping 4.7%.

Among individual stocks,

Dow

components

JPMorgan Chase

(JPM) - Get JPMorgan Chase & Co. (JPM) Report

,

Citigroup

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and

Bank of America

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were gaining more than 9%.

Wells Fargo

(WFC) - Get Wells Fargo & Company Report

was higher by 10.4%, and

BB&T

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(BBT) - Get BB&T Corporation Report

was up almost 13%.

Morgan Stanley

(MS) - Get Morgan Stanley (MS) Report

, the investment bank that several reports have said is seeking a merger partner or investor, was slumping earlier but lately rose 5%. A day ago, the stock hit its lowest level in years.

Wachovia

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, said to have held talks about a deal with

Morgan

, was sharply higher, surging 54% to $14.

Goldman Sachs

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, which tumbled along with Morgan on Wednesday, remained weak, falling 10% to $102.94. Meanwhile,

Washington Mutual

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, a lender that has been driven lower for months but is now believed to be up for auction, was rising 18%.

The New York Times

reported after the previous close that

Washington Mutual

has hired Goldman to begin the process of selling the company.

This article was written by a staff member of TheStreet.com.