In the past week, two more major US banks have been forced to raise new capital, cut dividends and curtail lending to stay alive.

Last week it was Washington Mutual, America’s biggest savings and loan, which raised $US7 billion in new equity from the private buyout group TPG, as well as cutting 3,000 jobs, closing 186 offices, slashing its dividend and dropping some mortgage business. It lost well over $US1 billion in the first quarter.

Yesterday it was America’s fourth biggest commercial bank, Wachovia, which lost $US350 million in the first quarter (it earned $US2.3 billion in the first quarter of 2007), raised $US7 billion in fresh capital by selling cheap share to investors, sacked 500 investment bankers and cut its dividend to save $US2 billion.

That means America’s major financial institutions have now raised well over $US140 billion in fresh capital since the credit crunch and subprime crisis bit deeply into capital structures late last year.

Wachovia’s problems stemmed from the $US24.6 billion purchase of Golden West, a home lender in California, when the subprime selling boom was in full cry in 2006.

That purchase has backfired as Golden West’s flawed adjustable rate mortgages have gone bad — California is one of the housing slump’s worst affected areas — forcing it to write set up provisions of over $2 billion for dud housing loans, as well as personal loans which are starting to turn sour. Analysts said billions more may have to be set aside to cover a mortgage portfolio which is imploding as more and more customers default.

It wasn’t good news for investors ahead of new losses of $US15 billion or more from Citigroup and Merrill Lynch later this week. And buried in the Wachovia reports were some comments that will chill US investors and other banks. During a conference call with investors, Wachovia’s chief risk officer, Don Truslow, said US home prices should fall through all of 2008 before finally hitting bottom in the middle of 2009.

Investment bank Lehman Bros has also written off this year. On Friday, its chief financial officer, Erin Callan, told Bloomberg the global credit crisis worsened last month and recovery for the securities industry may take until next year.

“March was a very, very tough month,” Callan said.”I don’t see what the real catalyst for change would be over the next several months. We’ve got to look out to 2009 for where we’re going to change.”

It’s comments like those that support the IMF’s contention that the US is in for two very slow years with economic growth of 0.5% this year and 0.6% for 2009. And, that’s with the proviso that the credit crunch doesn’t worsen.