Critics of mega-bank Wachovia call it "Walk All Over You" and the bank’s bullying tactics and shoddy business practices have led to a mega-loss.
Wachovia Corp posted a surprising first-quarter loss on Monday as credit problems from mortgages and other debt soared, prompting the bank to lower its dividend, raise $7 billion in capital and cut jobs.
"These actions are not without cost and I wish they were not necessary, but they are," Chief Executive Ken Thompson said on a conference call.
Wachovia, the fourth-largest U.S. bank, is the latest major lender battered by the global credit crunch.
It has also been hurt by Thompson’s ill-timed, $24.2 billion purchase of adjustable-rate mortgage lender Golden West Financial Corp in 2006, near the peak of the U.S. housing boom. The bank said the nation’s housing slump is only half over, and might not hit bottom until the middle of 2009.
Wachovia took over a well-established and respected Virginia banking company (Central Fidelity) and turned it into a greedy "customers be damned" monolith. We have good friends who were turned out of their home by the bank’s refusal to work with them when the value of their home dropped below the value of their mortgage. At first Wachovia promised a bridge loan to cover the shortfall, then backed out the day before closing on a sale that would solved the situation.
Analysts said Wachover needs to raise $7 billion to survive. Such bad news could not happen to a more deserving souless corporate entity.