Friday, July 25, 2008
Inaugurating Wachovia Death Watch
"Hired as Wachovia Corp.'s chief executive late Wednesday, Treasury Undersecretary Robert K. Steel [RS] said he hopes to 'bring some new seasoning' to solving the challenges at the banking giant. ... In leading the search for a successor to ousted CEO G. Kennedy Thompson, Chairman Lanty Smith sought to bring to the Charlotte, N.C. bank an outside executive with credibility on Wall Street and in Washington. While [RS], a former Goldman Sachs Group Inc. executive who became Henry Paulson's top financial-policy adviser in 2006, has never operated a retail bank, he fits both bills. ... Mr. Smith said the board's decision was unanimous. 'There's nothing about [the commerical and retail] business that Bob can't learn,' he said. ... [T]he selection of [RS] could fuel questions about the relationship between Wachovia and Goldman Sachs", my emphasis, WSJ, 10 July 2008.
Does "credibility" mean RS can open the Fed's coffers to Wachovia (WB-NYSE) by snapping his fingers? Supposedly RS may get $38 million in first-year compensation from WB. Compared to what Citigroup paid for Vikram Pandit, that's cheap. WB's board unanimously chose RS, wow. This is largely the same crew which authorized WB's $25 billion Golden West (GW) purchase from the Sandlers. At least 13 of WB's 17 directors were around for the GW purchase. Resign. Now. I suspect WB is in much worse shape than anyone will admit. Did RS design his policy recommendations to enhance his resume for when he left Treasury? WB's current market cap is $35.2 billion, after falling to $20.6 billion which was less than what WB paid for GW.