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Sunday, November 8, 
11:39 am

Wachovia exec admits timing off on Golden West deal

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Sometimes when it comes to any relationship, timing is essential. One top executive at Wachovia Corp. said this week that the "timing was not good" in the Charlotte, N.C., bank's $24 billion acquisition of Golden West Financial Corp. That's the understatement of the year.

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Wachovia pulled the trigger on its biggest deal ever in July 2006 just as the real estate market boom was inching toward a downturn. Inside Golden West's mortgage portfolio was a land mine of loans based in California's Central Valley and Inland Empire. When the bottom of the mortgage industry caved in a couple of months ago, Wachovia was caught in the avalanche. Overall, the Golden State has become one of the leading states in the nation of default mortgages due to speculative investors, who now cannot payoff their mortgages. Wachovia recently announced it would have to take an added $1.1 billion pretax write-down for October and anticipates it has to increase its fourth-quarter allowance for loan losses by $500 million to $600 million because of the weakness in the housing market.

But, at the same time, with this disappointment, Ben Jenkins, Wachovia's general bank president, sees the light at the end of the tunnel. "We continue to feel that this acquisition will prove itself very positive when we get to the other side of the cycle," Jenkins told investors attending the Merrill Lynch banking conference in New York. The problem, however, looks like it will take a long time to get to the other end of that cycle. — Gerald Magpily

See San Francisco Business Times article
See Investmentnews article
See TheStreet.com article
See TheDeal.com: Wachovia buys Golden West





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