Hindsight is 20/20

Wachovia's `Great Success' Became $122 Billion Burden


On a May 2007 conference call, Wachovia Corp.'s then-Chief Executive Officer Ken Thompson trumpeted the $24 billion acquisition of Golden West Financial Corp., a California lender that specialized in payment-option adjustable-rate mortgages.

``I think that 12 months or so from now people are going to look at the acquisition of Golden West as one that produced great success for Wachovia,'' Thompson said.

Seventeen months later, Thompson is gone and so is Wachovia. After losing 82 percent of its market value since that conference call due to mounting losses on option ARMs, the bank was sold to Citigroup Inc. today in a deal brokered by the Federal Deposit Insurance Corp.

``Golden West was the beginning of the end'' for Wachovia, said Anat Bird, a former Wells Fargo & Co. executive who now runs SCB Forums Ltd., a Granite Bay, California, company that conducts peer group conferences for bankers. Golden West ``had lousy assets, lousy liabilities and they paid a fortune for it.''

Comment: Wachovia was great bank before Golden West. History of Wachovia is here.

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