WASHINGTON -- 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."

However, those soothing words had to confront the reality of another massive loss by a big bank. Wachovia Corp., the nation's fourth largest, reported that it had lost $8.86 billion in the second quarter due to soaring bad mortgage debt. It said it would slash its dividend and eliminate 10,750 positions out of a work force of roughly 120,000 employees.

Paulson, speaking to business executives in New York City, acknowledged that the overall economy and the financial system were going through a "period of stress" which he said could last for a number of more months.