Wachovia

About Wachovia

Wachovia was acquired by Wells Fargo in October 2008 for 15 billion in stock, avoiding collapse. Wachovia had acquired Golden West Financial in 2006 for 25 billion. Golden West specialized in option ARM mortgages, which allowed borrowers to pay less than the interest, increasing the loan balance. When housing prices fell, option ARMs defaulted at high rates. Wachovia lost 24 billion in the third quarter of 2008. The FDIC had been preparing to seize Wachovia and sell it to Citigroup when Wells Fargo made a higher offer. The Wells Fargo acquisition created the largest bank by deposits in the US. The Golden West acquisition, engineered by CEO Ken Thompson, was one of the worst deals in banking history. Thompson was forced out in June 2008.