Monday, June 2, 2008

Wachovia, WaMu Fire CEOs

Troubled news has been frequent, but small, in the financial sector over the past couple of weeks—probably due to the lowering of the Federal Funds Rate and expansion of TAFs at the beginning of May, offering short-term support of a faltering industry.

However two CEOs of major banks being ousted by their boards can't be good, and perhaps signal the return of the long-overdue correction of our credit-laden economy—at least until the Fed thinks of something else to compound the problem and delay the solution. The article thankfully mentions no multi-million dollar retirement packages. The rationale for the removal of Wachovia's CEO was in part due to the "ill-timed" acquisition of Oakland-based Golden West Financial Corp, which heavily underwrote Option-ARM subprime loans during the rise of the housing bubble.

One wonders if this is going to have any impact on Bank of America's similar misbegotten effort to procure Countrywide.

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