Wachovia "what ifs"

Wachovia shareholders OK Wells deal


Wachovia Corp.’s shareholders approved the company’s merger with Wells Fargo & Co. at a relatively sedate shareholder meeting Tuesday morning, clearing the way for the deal to close next week.

The proposal passed overwhelmingly, with 76 percent of the votes cast in favor of the deal. That included preferred stock that Wachovia issued to Wells as part of the deal, giving the San Francisco company 39.9 percent of Wachovia’s voting power.

Security was tight at the meeting, held in a packed ballroom at the Hilton hotel next door to Wachovia’s Charlotte headquarters. Most of the company’s board of directors was absent, however, and Chief Executive Bob Steel told the audience that the day was one of a “variety of emotions,” including disappointment that Wachovia (NYSE:WB) won’t survive as an independent company. He expressed some excitement about the combination, along with some relief that employees could move forward and focus on their jobs “without the overhanging pressure of balance-sheet challenges.”

What ifs: Could sale have been avoided?


Golden West Financial: Wachovia bought this nontraditional California lender in 2006 at the top of the housing boom. The deal exposed the bank to the faltering housing market and caused investors to worry about mounting losses. Wells now estimates losses of $36 billion, or 29 percent, on Golden West's $122 billion option adjustable rate mortgage portfolio.

Comment: The biggest misstep was Golden West Financial.


While Wachovia Chairman and CEO G. Kennedy "Ken" Thompson had described Golden West as a "crown jewel", investors did not react positively to the deal at the time. Analysts have since said that Wachovia purchased Golden West at the peak of the US housing boom, and its mortage-related problems would in turn bring down Wachovia

No comments:

Post a Comment

Any anonymous comments with links will be rejected. Please do not comment off-topic