Lost in the election rush — big co-inky-dink there, huh? — was Wachovia’s breathtaking announcement Tuesday that the company Q1 loss almost doubled to $708m. Now we get the second part of this well-managed PR cover-up, the announcement that Ken Thompson is stepping away from the Chairman slot, but keeping the CEO hat.
It will not work. It won’t work because there is no evidence that Thompson and crew have yet come to grips with the fact that perhaps the entire Golden West portfolio Thompson bought in 2006 is bad. Wachovia took on a huge exposure in Florida and California at precisely the wrong moment, then compounded the problem astronomically by denying there was a problem for far too long.
Besides, Thompson’s replacement as Chairman is no outsider champion of shareholders. Lanty Smith is the guy who told shareholders to shut up and sit down over Thompson’s dividend cut last month.
This will get worse before it gets better.
