Can’t say I am surprised…..As a CEO if you promise something, it better come true.
Back in early May I said:
“Wachovia (WB) has stripped Chief Executive Ken Thompson of his chairman role. The move separates the top management position from the top oversight role and is long overdue. Wachovia named its lead independent director, Lanty Smith, to the position of nonexecutive chairman.
Thompson ought not get comfortable, why?
* The 2006 acquisition of California-based Golden West Financial Corp., a $25 billion deal whose timing, Thompson has acknowledged, “was not the best.”
* In April, Wachovia reported a first-quarter loss of $393 million and announced a 41 percent cut to its dividend.
* This week, that nearly doubled that number to $708 million, or 36 cents per share, after reviewing its portfolio of bank-owned life insurance.
* Last week, they said they may take an after-tax charge of between $800 million and $1 billion in the second quarter tied to past leasing transactions.
* A month ago, Wachovia agreed to pay $144 million to settle federal allegations that it failed to stop telemarketers who took advantage of thousands of elderly consumers.
* Rumors abound that federal prosecutors are investigating Wachovia in a probe into alleged laundering of drug proceeds by Colombian and Mexican money-transfer companies.
Far from getting comfortable, the move may be a precursor to letting Thompson “pursue other opportunities”. At this point, one can probably hear former Citi (C) CEO Chuck Prince saying “how the hell does he still have a job”? You know what? He actually has a point. Thompson has hit a bad patch not seen in banking in a long time.
Even if we let go the loan write downs because no one has escaped that. In all reality, others have fared worse so Thompson should not be let go because of it. It is all the other stuff that really has no excuse.”
This morning Thompson “retired at the Board’s request” and now Lanty Smith is the new interim CEO. Last week Wachovia said Thompson would be leading the upcoming call. One can only think that that call is going to hold more bad news for investors that are in excess of what Thompson has alluded to.
Disclosure (“none” means no position):Long WB,C
