This story reveals the vast incompetence of Wall Street analysts and reporters. The only assets that are making Wachovia any money at all are the loans made by Golden West! If the analysts and reporters took a closer look, they would see this fact. Instead they are allowing Wachovia executives to point the finger of blame away from themselves. Golden West adjustable rate loan products were NOT AT ALL like the ones causing the mortgage industry so much grief. They were (and are) good loans. Why do you think Golden West was one of the country’s most profitable companies in US history for decades - even during economic downturns? It was because Golden West’s strategy was sound. Misdirection by Wachovia should not be taken at face value. Regurgitating statements by others is closer to plagarism than journalism. Get your facts straight!!!!

the entire wachovia board should be sent to jail- what is the diffence between what they and ken thompson did versus bernie ebbers and koslowski at tyco- wb had “off balance sheet investments; large egos; poor due diligence; and irresponsible attitudes towards their “risk management” fiduciary responsibilities- the only differnce in the wb boards’ actions and that of tyco and worldcom is that stock holders donot know of any girl firends involvement- all current directors should make restitution of their pay and resign immediately so that a new more responsible board armed with proper governance can take charge and lead this venerable instituiton back to respectability

Why haven’t we seen a detailed analysis of the Golden West acquisition decision? Who initiated it, who favored and who objected, why is the same board of directors that approved the deal still in place, including the now Chairman who supported the deal?

When is Steel going to fire (with cause) the financial brains behind the Golden West deal - CFO Tom Wurtz? Tom was the genius responsible for pricing the deal. Tom was the genius that depleting Golden West’s capital cushion by giving each GDW shareholder $18 of their own capital. Tom was the genius that did not understand that the inner working of GDW asset/liability would not allow him to increase margins. Tom was the genius behind dismissing the entire financial management team from GDW.

“The entire Wachovia board should be sent to jail….” The list of CEO’s and corporate boards who should be sent to jail these days is a mile long and a mile high. Will they? Don’t hold your breath. If anything, they will probably get bigger pay checks. I’m voting for Obama this time around even though I have voted Republican for 40 years. Truth is, I doubt if he will be any different but there is a chance - just a chance - that he will do something to clean up the corruption in the corporate world and government. Again, don’t hold your breath.

Did the Sandlers who sold Golden West retain their stock and indure the downturn. There has been little said of this.

i was a golden west employee. when i was there, things were pretty good. yes there were unconventional loan methods, but worldsavings/golden west had one of the lowest foreclosure rates in the industry. when the sandlers thought about the aquistion, they thought about a company that had the same values that they did. it would appear as though they didnt pick the right place. wachovia has made it apparent that they’re happy to throw the golden west/world savings name ‘under the bus’.

and another thing…usually ceo’s of a company receive what is known as a golden ballon (kind of like a bonus), i would like everyone to know that the sandler’s did not take this. they set that money aside for those that would be misplaced during the beginning of the merger. tell me how many ceo’s have done that for a company and their employees?

About two years ago or so, G Kennedy Thompson was interviewed in the Charlotte Observer and spoke about how PROUD he was to outsource jobs to India. I’m not kidding! He spoke about how this really helped the people of India. Now he’s shamed and cast out of his job as CEO. Karma hurts, doesn’t it ?

Deal or Deals from Hell? Remember, today’s Wachovia is yesterday’s First Union (with a name change). Ken Thompson was part of a team that did several wealth destroying deals - First Fidelity, Core States, Money Store, etc. Ken was never qualified for the job of CEO, never held a corporate finance job until he was named its head, never held a job with another institution, never held a job outside of a three state region and surrounded himself with UNC cronies. A recipe for disaster.

j rivers/Mike:
Incompetence is not the same as corruption. Many “venerable institutions” have been destroyed by incompetence. While there are a variety of bad things that happen to incompetent people, “jail” will never be among them.

Several sources comment that Wachovia did not write-off any of the $14 billion of goodwill it recorded in its acquisition of Golden West. There’s much more to come from Golden West, billions in losses on loans and write-offs of goodwill.

I sold subprime and I can tell you most of these loans go to people that shuold not get them. They pay minumum and then when markets correct they bail, Only now you are on the hook with bankruptcy laws, So watch out! The banking industry has learned a lesson about human nature,we tend to take the easy way out, And it cost Wachovia 25 B to figure that out. WAMU is next, they had a lot of GPM on the books, I guess they are vapor too, Anybody wanna buy a house?
NO? hmmm I guess the go-go days of housing are over.
I just fix them now. For people that mind their own business and pay their bills.
I had enough of the ones that bought a house and acted like millionares. Those are the ones that don’t pay….trust me.

chris:
Sorry, but Golden West was an organization that was doomed to fail. If Wachovia hadn’t purchased them, they would have collapsed much sooner than IndyMac. The fact that an institution as large as Wachovia wasn’t able to cushion the blow of the Golden West meltdown tells you how bad Golden West’s business model was. This is one deal about which the naysayers were EXACTLY correct. While the Sandlers may be nice people, it’s pretty clear that a fairly significant amount of dumb luck helped them build Golden West (a market that accommodated stupid innovations like option ARMS) and sell it very profitably (to a firm that would ignore all of the advisers warnings about the mortgage exposure).

I bgt Wachovia at 54. I had owned it years ago and was successful then. I recently sold it at less than $10. I think it is criminal what the CEO did to WB. They should have to pay for their malfeasance.

The Sandlers only made one stupid move in their lives - and this was it. They still retain a significant amount of Wachovia shares as do many of their employees. All those that trusted Herb and Marion have gotten screwed.

To Mike…. Open your eyes pal, Several of Obama’s associates have already been involved in corruption!!!

It looks as if Mr. steel will have quite a job to restore WB’s reputation. Perhaps the WACHOVIA ads we see on TV bragging about being customer friendly, we should ask the stockholders how friendly THEY feel toward WB.
The Board of Directors should be boiled in oil. I would love to see what their holdings in WB were before the stock started to plunge and what their holdings are now….might be a good reason for a nice court trial(s). My experience has always been that Board members have a fiduciary responsibilty for steering a corporation, and while the previous CEO was obviously besot with his power, if the board has served with the best interests of the shareholders, the board could have held him off from making the Golden West deal….SHAME on them all, I hope they lose alot of sleep, I know I have, having been a WACHOVIA shareholder since its inception. Hang ‘em!!!!!!

It’s sad that the Yahoo Message Board contributors recognized the folly of the GW deal when it was in the works better than WB board did.

How about those big annual bonuses for executives? We shareholders were told that bonuses were necessary to attract and keep talent. We shouldn’t have to hear about bonuses for the remainder of this century.

I am glad too see Wachovia bottom and will be so glad too see this bank loose its name to another bank whom I hope buy them out very soon. I have seen this southern style banking and it sucks, that WB was no better than First Union whom bought a name cause of the market value they loosed in the North East in bad banking. So for me bye bye Wachovia and hello to who ever wants to clean this disaster up.

And the funny thing, Wachovia tried to beat Bank of America, in buying MBNA, but Wachovia said no too the price tag, lol BofA now the big bank on the block, Fleet bank, another before MBNA, Wachovia again cried over price, BofA bought them and again whos the bank that made it—–

Goldman guy at the helm of Wachovia.

Paulson is short squeezing the market so he can get the level 3 assets off Golden Scrote’s books.

Wachovia will join Goldman in the sales. Probably will stuff it in some garbage shell company.

Goldman’s trader’s will be setting up massive short positions during the sale.

This is the same Board that ran First Union into the ground and then HAD to buy Wachovia for the goodwill the Wachovia brand generated. They’ve done it again. Why is anyone surprised?

Not so fast. All this dissing of Golden West passes right over the fact that GW had a sterling reputation and record for decades under the Sandlers’ management. GW did not specialize in subprime loans. Yes, Wachovia did buy GW had a high water mark, but it is inconceivable that GW is nearly worthless, as this article suggests. Wachovia appears to be using GW as a convenient scapegoat for other, more deep-seated problems.

I wonder what will happen to all those 6,000 S.F. McMansions in Charlotte that Wachovia mid-level managers built with their year-end bonuses in the last couple of years. Looks like the chickens may be coming home to roost.

To Djack - It is your sole responsibility as an investor to protect your assets. Even if you’re paying an advisor, you still have the last say. And, just because something has worked in the past does not give it a free pass today. You need to do your research if you are going to invest. There should be no such thing as a passive investor.

To Tony - asking for someone’s life, even if you’re joking, is not very funny. Again, investing is not for the apathetic. You must do your research, recognize when you should leave/buy/hold/etc. and do so promptly. It’s pretty apparent that the financial sector has been hurting for quite some time now. And, yes, the board does have a fuduciary responsibility to its holders, however, it’s still YOUR MONEY. No one held a gun to your head and had you invest in WB. So, who’s fault is it really?

Look, I understand that you held a position with the bank for whatever reasons you have. The bottom line is the stock market is a game, just like any other game. By that I mean that there is risk involved. You MUST evaluate that risk, mitigate it whenever possible and make the right moves. It is inevitable that you WILL make mistakes. Even Warren Buffett has made mistakes (very, very big ones, in fact). However, he does not ask for the lives of those on the board of a company. That’s because he has diversified and mitigated (or hedged) his risk. So, when he takes that hit, it doesn’t hurt as bad. I am not trying to sound condescending. I understand some of you may have lost a lot. I’m just trying to tell you to live and learn. If anything, let this be a lesson and move on. Is it a tragedy that WB is on the skids? Yes. Should you dwell on it or, worse yet, demand someone’s life (even if in jest)? Of course not. It is what it is. And I’ll leave you with this: You must plan for the future and evaluate ALL POSSIBLE RISK, because those who fail to plan, plan to fail.

A name that will forever live in the financial Hall of Shame: Ken Thompson

If Wachovia is going to have a chance then the board and CFO and other execs need to be replaced. Steele has a huge job ahead of him. I used to work in Wachovia CIB and the Company is totally incompetent. I bet Goldman buys them for the asset base and gets rid of the so called investment bankers

Greg. My eyes are open. Sadly, when electing politicians these days, the criteria is not, “Will they be good for the country,” it is - “Mmmm, is this one less corruptable than that one.” In other words, one shouldn’t vote for a (today’s) politicians because they will do good. One votes for who you think will be less crooked than someone else. We have a BIG problem at the moment. In fact, the problems we have are the seeds to the decay and decline of a country. Those problems are that the citizens no longer have faith in their government and - possibly worse - they are losing faith (if they haven’t lost it already) in the financial system and those (like Paulson and Bernanke and the Financial Gangsters of Wall Street) who control it. We are in a very dangerous period where the currency could take a big hit and thus degrade the standard of living for most of the country.

Actually, I missed out something. We know that the Clinton’s were not (I’ll put this as nice as I can) squeaky clean and let’s not get into Cheney and Halibuton or Kellog, Brown and Root but the times dictate that we must try something new and get rid of the cancer in the government and business world. I have no illusions about Obama and the “cult” which has grown up around him does concern me and I sure as h–l do not want to see Jesse Jackson and Al Sharpton standing shoulder to shoulder with Obama in the Oval Office BUT something has to change and I figure it’s worth the risk to take a leap of (possibly mis-guided) faith and try something new. It might just work. Frankly, if I search my soul, I doubt it but it’s no good sitting around doing nothing.

Spare me the notion that the empty suit, Obama, has anything to contribute to resolving the rather complicated stresses now felt by the global financial markets. My concern would be that certain liberals will continue to regard most of those who are losing their homes as “victims” to be rescued by the Nanny State. Yes, some may have been duped and some loan brokers pushed bad paper, but the vast majority of those who took out very aggressive mortgages were gambling - and they lost! Oh, I lost a hand of blackjack in Las Vegas - bail me out! My powerball ticket didn’t come up a winner - bail me out! Sounds ridiculous because it is. Realize that they are adults who signed off on all of the Truth in Lending disclosures - not childlike victims. Take the bitter medicine, and gag on it.

How can anyone legitimately argue that Golden West would still be a sound company if it hadn’t been acquired by Wachovia? Have you failed to noticed that WB no longer offers GDW’s hallmark offering, the “Pick-a-Payment” mortgage? The Sandlers saw unprecedented success due to shrewd business tactics, risk taking, and a skyrocketing real estate market in Cal. Now the bottom has dropped out, and so has the business model. Furthermore, WB is not Wachovia, its First Union masquerading under the name a once venerable NC bank. I could write a book called “Deals from Hell: Any acquisition involving the inept management of First Union”

Interesting fact: Bob Steel was Chairman of the Board at Duke during the lax scandal. Let’s hope he does a better job at WB.

I agree with you about people taking out mortgages they could not afford who were, basically, gambling. Most figured they could buy, watch the values go up and retire in a few years. Most, however, were not sophisticated investors.

On the other hand, those corporations and banks which doled out money as if there were no tomorrow as the Fed ran the printing presses 24/7, should (and proably did) know better but there was too much money pouring into the coffers. Greed has a way of blinding both rich and poor.

Of course, the politicians are now using every chance of a photo-op or televised hearing to sternly question those responsible. I suppose we must assume they (the politicians) were all away on a tour of Mars when this Greenspan inspired “free money” period was taking place and are now, “Shocked, shocked!” to discover what was going on. Give me a break.

However, we have now reached the stage where the “liberals” are not in charge of the madhouse (yet). What we now have is a climate where the financial institutions are on socialist style welfare. FNM, FRE, Bear Sterns, etc, and the incompetent CEO’s walk off with millions. Meanwhile, Bernanke, Paulson, etc, are now in the throes of bailing these institutions out via the tax payer while telling us it’s all under control. It isn’t. Remember, these same clowns told us the sub-prime was contained. Let’s not kid ourselves. I wouldn’t trust Bernanke or Paulson’s word(s)that the tax payer will not lose a dime.

It appears we now have corporate welfare for the rich - and the capitalist system for the middle class. We have been in (for several years) an era of CEO’s stating, “I take full responsibility.” They might take full responsibility but it appears there are no or few consequences for their actions. Must be nice to be able to walk off into the distant horizon with $50 million or more in a tax sheltered account, look over your shoulder at the carnage and say, “I take full responsibility.” I am also concerned that Obama is a “empty suit”. He’s waaaay too glib for my liking but there doesn’t seem to be(outside of not voting) any alternative. Maybe I’ll take that route in November.

Several commenters here have already said it: First Union has taken over yet another fine North Carolina bank … and ruined it.

Wachovia deserves what they got. Stupid, dumb, greed. They wanted a West Coast/California presence. They took the Big Plunge, and made a Big Splash in the financial markets. Not only did they get a West Coast presence, they got worldwide fame! LOL. My manager at World laid me off to save his own bacon. He stayed on with the acquisition. He was one of the liabilities they inherited. I hope he loses his job this time in the 6,300 laid off. Finally, the greedy self-serving top mortgage exec people are getting their pay day… Too bad the good honest little pee-ons that do all the hard work lose their jobs. Throw all the top greedy guys in prison with the top guy at Countrywide. Give their money to the poor and homeless.

we are now seeing what happens after everyone gets greedy and makes a lot of money. everyone pays for it afterwards. now, the new booming industry is “loan modification.” all the old mortgage sales guys are now making big money working on the bad loans they made, and referring them to lawyers. let’s see what happens with this new industry in the coming months, years…

Wachovia has terrible customer service too. They NEVER pass up an opportunity to disappoint.

I have been working at WB for 3 years. This company has a very strict micromanagement style .it does not encourage independent thinking, everything there takes the orders and pass it on without question. It has many weaknesses in its processes that employees can exploit at the expense of the bank and customers. Bob steel is the only guy I listened to at WB who actually sound he understand business and finance. I wish him luck bug he needs to change the culture first. Wachovia is only good at one thing: how to be aggressive

Golden West loan portfolio is performing far better than competitor portfolios. http://online.wsj.com/article/SB121278799055153055.html

HS - Clearly you haven’t looked at WB’s financials and seen the drag from ARMs. A MS Analyst estimates WB will take a 15% on ARMs. Herb Sandler is just playing CYA, and trying to protect his (now tarnished) legacy. Performing better than competitors’portfolios? Like IndyMac and WaMu? That’s not saying too much. WB has many problems, which Mr Sandler so astutely highlighted, but GDW is problem numero uno.

I propose a 16 month timeline for Wacky Bank to pull out of Golden West. I never would have voted for them to invade (except for a not-so-slight head-fake just in case things went well).

What were the qualifications of the people who received all of these so-called nonperforming loans from World Savings? When I asked them for a home loan in 2004, they laughed in my face, even though I had 80-90% of the purchase price sitting in their bank in CASH and mutual funds. If they turned down a borrower with qualifications like that, it is hard for me to imagine that the loans they actually did make are not performing.

Would like to assure all and sundry
that there is no truth to the rumor
that FTU/Wachovia management skills
might light of words like “Brewery”
“Incompetent” or “Micket Mouse”

Ken Thompson was never upto the task, nor was Crutchfield, I await
a big hitter to take them out.

As Sir John Bond, late of HSBC said
“there are no secrets in banking,
merely execution.”

The Board should resign “en masse”
and “incompetence knows no bounds”

Plain and Simple - It’s called “Due Diligence” which wachovia management doesn’t know anything about.

The Board should be fired now!!!!!!!!