Treasury Secretary Henry Paulson spent another day stumping for the U.S. banking system, declaring Tuesday that his top priority was ensuring "stability and confidence in our markets and financial institutions."

Stocks surged in the final hour of trading as a sharp drop in oil prices and an analyst note prompted a late rally in financials. The Nasdaq eked out a gain but investors still punished select techs, including Apple and Texas instruments after the firms dispatched disappointing results.

MORTGAGE MESS: Wachovia Corp. lost $8.86 billion in the second quarter, and announced plans to leave the wholesale mortgage lending business. The Charlotte, N.C.-based bank is slashing its dividend 87 percent and eliminating 10,750 positions after losses tied to mortgages soared.

The five largest quarterly losses for U.S. retail banks, who suffered the losses, how big they were and when they occurred, according to Standard & Poor's Compustat:

The head of a major mortgage industry trade group is stepping down after more than seven years at the organization and is being replaced by the former president of a California mortgage company that shut down last year.

Wachovia Corp. reported a surprisingly large second-quarter loss Tuesday, deflating Wall Street's hopes that the nation's big banks are weathering the credit crisis well. The bank said it lost $8.86 billion, is slashing its dividend and eliminating 10,750 positions after losses tied to mortgages soared.

Wachovia Corp <WB.N>, the fourth-largest U.S. bank, on Tuesday posted an $8.86 billion second-quarter loss, slashed its dividend and announced the elimination of more than 10,700 jobs after losses tied to mortgages soared.

By Jonathan Stempel

Wachovia posted an $8.86 billion loss and slashed its dividend for a second time this year.

The dollar rallied sharply on Tuesday, boosted by a steep drop in oil prices and comments from a Federal Reserve official suggesting that U.S. interest rates may have to rise even before financial markets recover.

Wachovia Corporation, the nation's fourth largest-bank, said Monday that it is leaving the wholesale mortgage lending business.

Bank of America Corp. has become the latest in a string of big banks whose second-quarter earnings, while hurting from the impact of the credit crisis, still managed to beat Wall Street expectations.

Wachovia Corp <WB.N>, the fourth-largest U.S. bank, on Monday said its main mortgage unit will stop offering home loans through brokers this week, joining a growing number of lenders to curb wholesale lending.

NEW YORK (Reuters) - Wachovia Corp <WB.N>, the fourth-largest U.S. bank, on Monday said its main mortgage unit will stop offering home loans through brokers this week, joining a growing number of lenders to curb wholesale lending.

Senior Goldman Sachs Group Inc <GS.N> investment banker Kendrick Wilson will take a leave of absence to advise U.S. Treasury Secretary Henry Paulson on the nation's banking crisis, people familiar with the matter said on Monday.