US Treasury undersecretary Steel is new Wachovia CEO

10 July 2008

US Treasury undersecretary Robert Steel is set to takeover the reigns of Wachovia as the bank's new chief executive. The fourth-largest bank in the US has finally brought to a close its six-week quest for a new man at the helm after Ken Thompson was sent packing by the bank's board in June (See: US fourth-largest bank Wachovia fires CEO as losses mount; may be takeover target).

Thompson lost his job as Wachovia CEO due to a series of 'missteps', such as his decision to acquire mortgage lender Golden West Financial Corp in 2006 for around $25 billion at the height of the nation's housing boom.

The bank also warned that it had provisioned $4.2 billion pre-tax against bad loans for the quarter. Its estimated second-quarter loss ranges between $2.6 billion to $2.8 billion, amounting to $1.23 to $1.33 per share, not counting an expected write-down of goodwill, when Wachovia releases its second-quarter earnings on 22 July.

The 56-year old undersecretary has been the Treasury department's liaison with Wall Street since 2006, and has announced his resignation, which will be effective immediately. Steel has previously worked with investment bank Goldman Sachs, and is chairman of the board of trustees at his alma mater, Duke University. Wachovia's chairman and interim CEO Lanty Smith will continue to be the bank's chairman) (See: US fourth-largest bank Wachovia fires CEO as losses mount; may be takeover target. 

Smith too has Duke University as his alma mater, having earned his law degree there, and having served on the board of trustees from 1997 to 2003. The camaraderie was evident in Smith's statement to The Associated Press, saying, ''We love Bob's background. He has deep expertise in financial services, the experience in Washington with government, is somebody that's really smart and can look at things from an intellectual point of view and can also get in the weeds and really understand details and manage quite effectively."

Wachovia said that all business and staff units would report to Steel, and interim chief operating officer Ben Jenkins would continue as vice chairman and head of the general bank.